AREP-Investcorp JV Purchases Metro DC Office Complex
- Oct 27, 2014
For $176 million, AREP announced Friday. The seller was Tishman Speyer, on whose behalf Cassidy Turley had marketed the property starting this past May.
The acquisition is AREP’s second investment through its American Real Estate Partners Strategic Office Fund and its fourth in partnership with Investcorp.
Canal Center, which dates to 1987, is currently 83 percent leased, with no major tenant expirations until 2018. The complex reportedly offers panoramic views of the Potomac River and the Washington skyline and is minutes from downtown Washington and from Reagan National Airport.
“The northern Old Town Alexandria submarket has been going through a dramatic redevelopment in the last several years,” AREP president Brian Katz said in a release. “Alexandria is one of the strongest markets in the Washington metropolitan area, and Canal Center enjoys an unparalleled location within the city and the Washington, D.C., region. Couple this with the extensive capital improvement projects we have planned, and we believe that Canal Center will be one of the best conceived mixed-use environments in the region.”
Those “extensive capital improvement projects” will total about $10 million for “a variety of exterior hardscape and landscape upgrades, as well as interior common area rehab,” an AREP spokesperson told Commercial Property Executive.
Canal Center’s public spaces include a brick plaza leading to a rectangular pool, a waterfall that leads to twin spiral staircases and a sculpture garden by Anne and Patrick Poirier, French artists who incorporate archaeological and mythological references into their works.
The metro Washington office market is rather contradictory, according to figures from a third-quarter report by Marcus & Millichap. Office construction (about half of it spec) remains strong, despite a metro-wide vacancy average of nearly 20 percent and “disappointing” job growth in both the federal and private sectors. Yet investors somehow still maintain optimism about the region’s future, as shown by rising sales activity over the past year in both the traditional and medical office sectors.