Washington REIT acquires Virginia office tower for $250m

Washington REIT, a self-administered, equity real estate investment trust investing in income-producing properties in the greater Washington, D.C., metro region, has entered into a definitive agreement to purchase Arlington Tower in Arlington, Va., for approximately $250 million.

The 398,000-square-foot, 19-story, class A office building is located in the heart of the Rosslyn submarket. The company expects to close the acquisition in the first quarter of 2018, subject to the satisfaction of customary closing conditions.

Arlington Tower is leased to prestigious tenants, including B. Riley FBR, Raytheon/BBN Technologies, Promontory Interfinancial Network, Graham Holdings, Pepco and the National Electrical Manufacturers Association. The abovementioned renovation provided a new plaza, lobby, destination dispatch elevators, tenant exclusive rooftop deck, state-of-the-art fitness center and updated onsite retail amenities.

Washington REIT has also executed a non-binding Letter of Intent with an institutional buyer to sell 2445 M Street NW, a 292,000-square-foot Washington D.C. office building where the sole tenant, the Advisory Board Company, is expected to vacate on May 31, 2019.

Washington REIT owns a diversified portfolio of 49 properties, totaling approximately 6.3 million square feet of commercial space and 4,268 multifamily units, and land held for development. These 49 properties consist of 20 office properties, 16 retail centers and 13 multifamily properties.

In virtually every submarket in Washington, D.C., cranes are busy constructing office buildings, multifamily dwellings, retail and mixed-use projects at an incredible pace, according to Colliers. Office product alone has more than 6.5 million square feet under development. The market had a similar look 10 years ago when 6 million square feet of office product was being constructed.

However, for the fifth quarter in a row, demand for office space in the District

has fallen, with net absorption measuring negative 443,618 square feet. Tenants have continued to move from aging product to newer class A space. Yet, demand for class A space has been positive in three of the last five quarters, with 603,537 square feet absorbed, according to Colliers.