D.C.’s Capitol Plaza Sells for $150M to Principal Real Estate Investors
- Jul 27, 2011
July 26, 2011
By Nicholas Ziegler, News Editor
Despite a slowdown in office leasing during the second quarter of this year, there continues to be pockets of activity for Washington, D.C. One of the brightest spots, the NoMa district, has just seen its Capitol Plaza office building change hands to Principal Real Estate Investors, L.L.C., for $149.5 million. The property, held since 2007 by AREA Property Partners and Van Ness Property Group, is home to 291,838 square feet of class A office space.
While the first quarter of 2011 brought robust growth to the Washington, D.C., regional office market, the activity decelerated primarily due to a slowdown in federal-government spending, according to a report by Cassidy Turley. In the last few months, net absorption was down to 164,200 square feet, lower than normal levels due to the departure of high-profile law firm Howery. Despite the reliance on government leasing for much of the available space, private-sector leasing looks to gain momentum, according to the report.
And it’s in the highly competitive class A space that the movement is coming from. “This is one of the preeminent office properties in a growing submarket with limited Class A office product,” said Jim Halliwell, managing director at Principal Real Estate Investors. “It presented Principal Real Estate Investors with the opportunity to acquire a top-tier asset with a credit-worthy tenant roster and long-term lease commitments, providing stable returns with projected growth.”
That growth will come from the momentum generated by the former owners who, since taking over the property, moved it from zero occupancy to 97.6 percent of all space leased, primarily to the Washington D.C. Public Schools, U.S. Internal Revenue Service and U.S. Department of Homeland Security. “AREA, together with our joint venture partner, recognized the opportunity to acquire the property at an attractive cost in a market poised for growth, with improving fundamentals, rising demand and a high barrier to entry,” said Steve Wolf, AREA partner.