Hines Global Income Trust Inc. has acquired a 10-story, 396,000-square-foot trophy office property at 1015 Half St. S.E. in the Capitol Waterfront submarket of Washington, D.C., a market with the lowest office vacancy rate in D.C. at 7.9 percent.
The multi-tenant property is 96 percent leased, mainly by federal government and D.C. government agencies.
The seller and price were not disclosed by Hines. However, PGIM Real Estate is the most recent owner of the property, according to CommercialEdge data. Commercial Observer reported the property was built by Opus East and Prudential Real Estate Investors, now known as PGIM Real Estate. The Washington Business Journal reported the asset was sold for more than $215 million. The building has about 373,000 square feet of office space and approximately 20,000 square feet of first-floor retail. According to CommercialEdge, rent averages about $55 per square foot.
The property is a Class A, LEED Gold-certified building located near the Nationals’ baseball stadium and one block from the Metro. The area has strong connectivity to the Capitol and federal government districts, Reagan National Airport and Amazon’s second headquarters being built across the Potomac River in Arlington, Va.
Alfonso Munk, president and chief investment office – Americas, Hines Global, said in a prepared statement the international real estate firm believes in Washington, D.C., as an institutional market. He said the acquisition aligns with Hines’ conviction that high quality office product will outperform the market and provide tenants with a dynamic working environment. The acquisition is the REIT’s second office asset and first office acquisition since July 2016.
Hines research shows the Capitol Riverfront population has nearly doubled in the last 11 years and attracts a younger demographic for the live-work-play environment. The area has seen a recent increase in development with expected growth of approximately 15,000 residential units and 1 million square feet of retail by 2022. Hines said private and public sector office tenants are attracted to the “mixed-use feel” of the neighborhood that has more than 80 restaurants and more than 50 retailers.
Janice Walker, chief operating officer of Hines Global, said in prepared remarks the building is being acquired at a discount to replacement cost and the 2021 high-watermark trade in the submarket.
“The discounted basis plays well into the current environment and our thesis of investing in resilient markets,” Walker said in her comments.
The transaction was led by Geer LeBoutillier and Hasani Hayden on behalf of Hines in Washington, D.C. Hines Global was represented by Omar Throwfeek, Kimberly Magness and Aaron Mader.
This week, Hines also announced Hines Global, a public REIT sponsored by Hines, acquired an e-commerce fulfillment center in Jeffersonville, Ind., that’s fully leased to Amazon. In February, Hines purchased an office building leased by Apple in Santa Clara, Calif., for $68 million, according to Santa Clara County records. Hines Global acquired a four-building, 417,000-square-foot industrial and manufacturing portfolio for $107.1 million in August 2020.