AREP Grows DC-Area Office Footprint
- Oct 09, 2019
American Real Estate Partners has purchased a 212,371-square-foot office property in the Washington, D.C. metro area for $71 million. An affiliate of AREP’s Strategic Office Fund II LP, along with an institutional partner, acquired 1660 International Drive, a Class A office building in the Tysons Corner submarket of McLean, Va. from seller MEPT, an open-end commingled real estate equity fund.
The 10-story office building is located across the street from the Tysons Galleria mall and close to several major thoroughfares, including Interstate 495. The property was built in 1998 and has a vacancy rate of 26 percent, per Yardi Matrix data. In September, the property became subject to a $59 million loan provided by JPMorgan Chase Bank.
The deal marks the eight transaction for AREP’s Strategic Office Fund II, which has acquired more than $900 million in assets to date, including last month’s acquisition of the 195,128-square-foot office building Arlington Plaza in Arlington, Va.
The Herndon, Va.-based company said in its announcement that they were attracted to the submarket due to the significant rent growth in the area that has been spurred by new development projects. The company plans to upgrade the design elements of the main lobby and common areas to a contemporary style, add amenity programming to conference facilities, collaborative spaces, outdoor lounge areas and other spaces at the building.
A spokesperson for AREP told Commercial Property Executive that the firm is anticipating “one or two” more deals by the end of the year. The firm has more than 4 million square feet in the metro, according to Yardi Matrix data.
A submarket on the rise
The Tysons Corner submarket has experienced significant investment activity in the office sector, as well as mega-sized mixed-use projects such as The Boro, a 4.2 million-square-foot transit-oriented development rising on 18.1 acres in Tysons, Va. The project includes the 20-story office property Boro Tower, a Gensler-designed and LEED Gold certified trophy building currently under construction that has signed tenants such as Alion Science and Technology and flex provider Spaces.