Georgetown University Buys Downtown DC Office Asset
- Mar 21, 2019
Office Properties Income Trust has completed the sale of 500 First St. NW in Washington, D.C., for $70 million, excluding closing costs. The buyer was Georgetown Univerity.
The nine-story, 129,035-square-foot property is just two blocks from Union Station and is expected to become vacant in the second quarter. The property is on the northwest corner of First and E streets, adjacent to the law school, in the East End/Capitol Hill neighborhood.
“We had planned to substantially renovate and reposition 500 First St. after the (Federal) Bureau of Prisons vacated the building as early as the end of April, but at a sales price of more than $540 per square foot for a to-be-vacant building, we decided to be opportunistic and focus our capital elsewhere,” David Blackman, OPI’s president & CEO, said in a prepared statement. “This sale helps advance our deleveraging efforts, having now completed $268.5 million of asset sales so far in 2019.”
OPI was formed in December 2018, through the merger of Government Properties Income Trust and Select Income REIT.
Georgetown stated that it plans to use the property for a mix of classrooms, offices and collaboration areas. Relevant to the latter, various centers and institutes connected with Georgetown’s law school and the university’s McCourt School of Public Policy will relocate to 500 First St.
Georgetown is funding the purchase in part through a $10.5 million donation from law school alumnus Scott Ginsburg, the largest single donation to the law school in its history.
The Class A property built in 1969 last traded for $68 million in mid-2010, according to information provided to Commercial Property Executive by Yardi Matrix.
Rents rise despite ample pipeline
The D.C. office market saw 632,819 square feet of net absorption in 2018, for its second-best year in the past five, according to a fourth-quarter report from Newmark Knight Frank. Overall vacancy nonetheless rose 130 basis points year-over-year, to 12.7 percent, an increase is largely cause by substantial deliveries.
The report notes that “Core submarkets, such as the CBD, East End and Capitol Hill, still command the highest rents in the District. The substantial development pipeline continues to exert downward pressure on effective rents, yet asking rents continue to increase with the delivery of newer product.”
Asking rental rates, per NKF, increased 0.3 percent from one year ago, to almost $55.1 per square foot.
Image courtesy of Yardi Matrix