HFF Closes $228M Office Sale in DC Between Invesco and UNIZO

By Gail Kalinoski

The Executive Building, Washington

Washington—Japanese company UNIZO Holdings Co. is increasing its office building holdings in Washington, acquiring The Executive Building at 1030 15^th St. NW for $228 million from Invesco Real Estate.

HFF marketed the 12-story, 332,022-square-foot building on behalf of Invesco and also obtained UNIZO as the buyer. The HFF investment sales team representing the seller of the Class A asset was led by Stephen Conley, Andrew Weir, Jim Meisel, Dek Potts and Matt Nicholson.

The LEED Gold-certified building at the corner of 15^th and L streets was completed in 2008. Invesco bought it in April 2008 for $181.2 million. It currently has 93 percent occupancy with tenants including The Atlantic Council of the United States and National Quality Forum. The building has a tenant-only fitness center, conference facilities, full-service concierge, on-site retail and a 178-spot underground parking garage.

UNIZO, which has acquired at least four other Washington office buildings in the last year, may have been attracted to The Executive Building because of its central location. It is steps from the McPherson Square, Farragut North and West Metrorail stations, which gives riders access to the Orange, Blue, Silver and Red lines. It is across from Midtown Center, the future headquarters of Fannie Mae, which will bring more than 3,500 new employees to the downtown area. The building is near many federal agencies and three blocks from the White House.

The Tokyo-based UNIZO bought 820 First St. NE, the home of CNN, in August for $140.5 million, according to the Washington Business Journal. Since March, when it paid $93 million for 1201 Connecticut Ave. NW, the company has also acquired 50 F St. NW for $109.5 million and 1100 First St. NE for $217.5 million, the business journal reported. With the closing on The Executive Building transaction, UNIZO has spent more than $700 million this year on D.C. office properties.

Colliers International reports that while overall demand for Class A office space in downtown D.C. isn’t as robust as it has been in the past, demand continues to grow for it while demand for Class B and Class C office properties is shrinking. That trend is leading developers to demolish older Class B and C buildings to make way for Class A building or other uses, according to the Colliers District of Columbia|Office Third Quarter 2016 report.

For the third quarter, the Class A vacancy rate for office properties was 11.7 percent, down 0.5 percent from the same time in 2015. Direct asking rates were up slightly—just 0.2 percent—in the third quarter of 2016 to $57.67 per square foot. The Colliers report notes that new deliveries in 2016 outpaced the demand for Class A office. The city’s office market is seeing about 4 million square feet of space under construction with 61.4 percent committed. But the leasing activity is mostly relocations from other properties in the market so Colliers expects large blocks of space will crop up. While demand for office space is expected to grow, it will be at a slower rate than new supply is ready, the report stated.

While UNIZO has been focused on the D.C. office market this year, last year it also made a big purchase in New York City. In October 2015, UNIZO acquired 370 Lexington Ave., a 26-story office building in Midtown Manhattan, for $247 million. The 295,016-square-foot building was 99 percent leased at the time of the sale.

Image courtesy of Yardi Matrix