Rockrose Development Spends $120M on Downtown D.C. Office Building
Continuing the trend of Washington, D.C., office transactions, Rockrose Development Corp. has picked up the building at 1776 Eye Street, N.W., a class A office structure totaling 224,666 square feet, for $119.7 million. The seller, Washington Republic L.L.C., was represented by Transwestern in the transaction.
1776 Eye Street, N.W., is a 90 percent leased office building originally constructed in 1987. The property is located in Washington, D.C.’s Central Business District at the corner of 18th and Eye Streets, directly across from the Farragut West Metro Rail Station and two blocks from the White House. Current tenants include The Gavi Fund, Carr Properties, Trak Legal Staffing and Conoco Phillips.
According to Transwestern’s research affiliate, Delta Associates, vacancy rates in the Central Business District currently stand at 7.2 percent, but are beginning to fall. With concessions drying up and limited product under construction in the area, rental rates are anticipated to spike as vacancy continues to decline over the next few years.
Findings by services firm Jones Lang LaSalle Inc. mirrored those of Delta, but the company also found that the recent spate of signings in the city come as something of a surprise. “The inability of Congress to agree on a long-term federal budget is expected to prolong the stalled state of leasing activity in the Metro D.C. market,” JLL wrote. “Without clear guidance on agency budgets — and an uncertain future in terms of government leadership — tenants across industry sectors are likely to adopt a “wait-and-see” approach to real estate decisions heading into the November 2012 presidential election and possibly beyond.”
But despite that outlook, the D.C. office market has been buzzing of late. Earlier this month, Japan-based N.S.P. Ventures acquired 801 Ninth St., N.W., a 236,000-square-foot building occupied in its entirety by the U.S. Mint, from the Netherlands-based Wereldhave USA for $147.5 million. In late February, CBRE Capital Markets arranged $181 million in financing for the first two phases of Sentinel Square, an office development in Washington, D.C., that will eventually total 1.3 million square feet. CBRE arranged the funding on behalf of Trammell Crow, Crow Holdings Capital Partners and Cottonwood Partners.