KBS Sells Suburban DC Office Park for $106M

Willow Oaks Corporate Center, Fairfax, Va. Image courtesy of KBS

KBS has sold Willow Oaks Corporate Center, a Class A office park in Fairfax, Va., to Bridge Investment Group in a transaction valued at $106 million. The trade comes after a hold of a dozen years. KBS had acquired the approximately 584,100-square-foot, suburban Washington, D.C., asset on behalf of KBS Real Estate Investment Trust II in 2009.

KBS took a bit of a loss on the disposition, having paid roughly $112.2 million when it purchased the three-building complex at 8260-8280 Willow Oaks Corporate Drive 12 years ago. However, the discrepancy in sale price may have had something to do with the occupancy level. At the time of the 2009 sale, Willow Oaks was just over 93 percent leased; currently, the property is approximately 65 percent leased, with roughly 208,600 square feet of space available, according to the website of Newmark, the leasing agent for the property under KBS’s ownership.

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Located on 11 acres in Northern Virginia’s blossoming Merrifield submarket, Willow Oaks consists of three six- and seven-story structures erected in 1986, 1989 and 2003. KBS submitted the campus to a premier renovation and today, the property is home to amenities, such as a fitness studio, large conference center, tenant lounge with catering kitchen and a carwash/detail service. Additionally, the Willow Oaks boasts WiredScore Gold and Silver certifications.

What buyers want

The Newmark team of James Cassidy, Jud Ryan and Grant Marley represented KBS in the Willow Oaks sale transaction. While the asset didn’t fetch top dollar, it did attract a certain amount of attention. In a prepared statement, James Cassidy, executive managing director with Newmark, said Willow Oaks Corporate Center offers appealing features that investors can’t find at other properties in the area.

“The intensity of the amenity arms race will continue to grow as landlords seek to attract companies back to the office and compete with one another to secure new leases from a shrinking pool of potential tenants,” according to Avison Young’s third quarter 2021 Northern Virginia office market report.

Another feature of Willow Oaks that may have attracted investors is the opportunity to lease-up the property. As noted in the Avison Young report, “Although investors in many markets have targeted safer, stabilized assets during the downturn, value-add investments continue to account for an increasing share of sale volume in Northern Virginia.”