November 30, 2011
By Nicholas Ziegler, News Editor
Penzance has just purchased its own slice of American history for the price of $76 million. Yesterday, the private-equity real estate investment company announced that it had acquired the famous Watergate office building at 2600 Virginia Ave. NW, in Washington, D.C. The 12-story, 200,000-square-foot Class A building is one of the two in the Watergate complex. Chicago-based Capri Capital Parnters L.L.C. was the seller.
The area has seen its fortunes fall of late. According to a report in The Washington Post, the iconic Watergate complex was also well-known around the city for having its own grocery store, featuring a Safeway that served as an anchor tenant for many other retail stores. The Safeway, however, will be closing its doors on Dec. 3 of this year, yet another example of a decline that wasn’t helped when the Watergate Hotel closed for renovations in 2007. It has yet to reopen.
The new owners of the office tower, however, are optimistic on the site’s potential.
“Penzance will be applying a broad array of value enhancement strategies and an intense focus on day-to-day operations in order to reposition and revitalize this property,” Victor Tolkan, managing partner and co-founder of Penzance, said. “We are thrilled to have the opportunity to own and manage 2600 Virginia Ave., which will once again become known for its architecture, amenities and its prime location in the Washington landscape.”
A third-quarter 2011 report by services firm Marcus & Millichap claimed that both investors and developers are bullish on the Washington office market, noting that it “will remain among the tightest in the nation through 2011” which will support “the resumption of rent growth and encouraging developers to move forward with planned projects.” The report went on to note that office-using job growth and limited new supply will contribute to a 70-basis-point decline in office vacancy citywide, pointing to a 12.5 percent vacancy rate by year’s end.
The Watergate office building was built in 1967 as part of the 10-acre Watergate complex and, at the time, was the largest privately funded urban renewal project in the history of Washington, D.C.
According to CoStar Group, A group of investors led by BentleyForbes purchased the structure in 2005 for $86.5 million. Capri recently took over its management.