Transactions - OCTOBER 12, 2017

Columbia Property Trust JV pays $421m for Washington, D.C., office

by Andrea Waitrovich

A joint venture between Columbia Property Trust and Allianz Real Estate of America has purchased 1800 M St., a 580,930-square-foot, recently repositioned, class A office building in Washington, D.C.

The sales price was $421 million.

The seller was PGIM Real Estate.

1800 M St. is a 10-story office building situated at the corner of 18th and M Streets in Washington, D.C.’s, Golden Triangle area.

The acquisition represents Columbia Property Trust’s third D.C. property. It owns Market Square on Pennsylvania Avenue, and 80 M St. SE in Capitol Riverfront.

In addition to 1800 M St., the joint venture of Columbia and Allianz also owns University Circle in Palo Alto, 333 Market St. in San Francisco, and 114 Fifth Ave. in Manhattan.

Recent high-priced transactions include the $420 million acquisition of 1101 New York Ave. and the $159.8 million purchase of 900 16th St. by Norges Bank and Oxford Properties. Both were completed during the third quarter.

During the third quarter 2017 office vacancy remained unchanged at 12.3 percent, according to Cushman & Wakefield. Overall asking rents rose 2.1 percent quarter over quarter and 5.8 percent year over year, closing the third quarter of 2017 at $54.96 per square foot on a full service basis. And leasing activity totaled 1.19 square feet in the third quarter of 2017, 4 percent below the historical quarterly average for downtown Washington, D.C.

The third quarter followed the rising development across Washington, D.C., during the second quarter 2017. Seven projects totaling 2 million square feet broke ground, with eight others expected to break ground over the next 12 months, according to JLL.

The majority of the construction is located in downtown Bethesda, in addition to the new and renovated development already well underway in the District of Columbia and Northern Virginia, according to Cushman & Wakefield. The development pipeline is expected to bring a total of 15 million square feet of class A product to the D.C. Metro by 2021.

At the close of the second quarter, 44.4 percent of the pipeline was preleased, leaving a number of large blocks available for tenants. The overall vacancy rate for existing product in the D.C. Metro area closed the second quarter of 2017 at 18.1 percent, which is expected to continue to climb as new product is delivered to the market.


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