World Bank Exits DC Ground Lease With $165M Deal

The World Bank Group, parent of the World Bank and its affiliates, has paid about $165 million to extricate itself from the ground lease at one of its multiple buildings in downtown Washington, D.C., according to the Washington Business Journal. The specific entity involved was the International Bank for Reconstruction and Development.

The sellers of the ground lease were affiliates of Benenson Capital Partners, 75 percent owner of the land, and Wiler-Arnow Investment Co., owner of the other 25 percent, the same source reported.

The deal will diminish the District of Columbia’s tax revenue, as the land was privately owned till now and therefore taxable, at northward of $800,000 a year. World Bank and International Monetary Fund properties, however, are tax exempt in the District.

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The mid-rise in question is the 487,894-square-foot property at 701 18th St. NW, the so-called J Building. The World Bank completed it in 1986, according to Yardi Research Data.

J Building reportedly contains a business center, conference rooms, a business lounge, a cafeteria and a visitor center. The LEED Gold-certified property rises 11 stories immediately across from the bank’s three-building main headquarters at 1818 H St. NW. The World Bank Group and International Monetary Fund occupy all or part of about a dozen office buildings in the capital’s downtown.

The World Bank had executed the 99-year ground lease in 1983, as part of a cluster of transactions that also included the organization’s purchase of the former headquarters of the U.S. Information Agency, at 1776 Pennsylvania Ave. NW, and the former Park Central Hotel at 705 18th St. NW. Both of those structures were demolished to build 701 18th.

D.C. office vacancies on the rise 

The Washington, D.C., office market continues to experience the split seen in so many metros, as trophy space sees increases in both occupancy and rents, while Class B and C properties struggle with net negative absorption and rising vacancies, according to a second-quarter report from JLL.

Overall, however, vacancy increased to 20.2 percent, in the context of federal agencies pausing leasing decisions. Still, JLL sees DOGE’s influence waning and the possibility that legislation later this year might restore much federal spending.

In August, international law firm Milbank LLP moved to more than 64,000 square feet over two floors in 1101 New York Ave. NW, a 12-story, 379,329-square-foot Class A, LEED Platinum office building in the metro’s East End submarket. The lease with building owners Oxford Properties and Norges Bank Investment Management had been signed the previous November.