First Potomac Sells DC Office Development JV Interest for $43.7M
- Aug 29, 2012
First Potomac Realty Trust, which specializes in office and industrial property ownership in the greater D.C. area, has sold its 95 percent interest in 1200 17th Street NW for $43.7 million. The company had been in a joint venture with Akridge to develop a new office building on the site.
The buyer of the joint venture stake is Japanese real estate giant Mitsui Fudosan, acting through its U.S. subsidiary, Mitsui Fudosan America Inc. The company has been active in the market before, in fact partnering with Akrdige before. The two previously bought 700 Sixth St., 1090 Vermont Ave., and most recently the Homer Building at 601 Thirteenth Street NW, near the White House, in January.
1200 17th Street is a Washington CBD site, and development plans call for an office building of about 168,000 square feet. Located between M Street and Rhode Island Avenue, the previous structure–which is now being demolished–was an eight-story office building constructed in 1964 and measuring about 85,000 square feet. The building was recently occupied by the National Restaurant Association, and its best-known nearby neighbor is the historic Mayflower Hotel.
The new building will be a glass-skinned structure, and according to the JV, will include high ceiling heights, broad column spacing, a rooftop terrace, and a fitness center. The project is slated for completion in the fourth quarter of 2014, and is targeting LEED platinum certification.
Greater D.C. has been one of the nation’s most robust office markets even during the recession, though things have slowed down a bit recently. Downtown is one of the stronger submarkets in the area, according to investment specialist Marcus & Millichap. As of the end of the second quarter, the submarket’s vacancy rate was 8.2 percent, down 40 basis points since the same quarter in 2011. Year-over-year, effective rents in the submarket have gone up 1.1 percent to $42.28 per square foot.