Roadside JV Acquires 600 KSF Bethesda Office Campus
The buyers are planning a long-term repositioning for the Class B property.
Roadside Development, in partnership with Hudson Bay Capital, has acquired Bethesda Towers, a three-building, 600,000-square-foot office campus in downtown Bethesda, Md. The seller was Moore & Associates, which will continue to oversee property management.
A transaction price was not disclosed.
Roadside said its game plan is to gradually and strategically reposition Bethesda Towers, based on the company’s experience with mixed-use destinations such as City Ridge in Northwest D.C. and its longtime focus on retail-driven, mixed-use and adaptive reuse projects.
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The Class B Bethesda Towers were completed in 1971, according to Yardi Matrix. The 177,600-square-foot North tower holds a 21.7 percent vacancy rate and is the only building out of the trio to have its vacancy figure listed in the data provider.
Bethesda Towers is at 4330 East-West Highway, a transit-connected site in downtown Bethesda, walkable to retail, dining, cultural and lifestyle amenities, including Bethesda Row, the Capital Crescent Trail and the Bethesda Metro Station.
The location provides access to downtown Washington, D.C., Marriott International’s global headquarters, the National Institutes of Health, Walter Reed National Military Medical Center and other major employers.
Cohn Property Group Founder and CEO Mychael Cohn represented Roadside on the acquisition. Ackman-Ziff Managing Director David Borden and Principal Jason Krane represented the buyers in arranging the debt and equity financing. Brian Ashin, partner at Paul Hastings, was Roadside’s legal counsel.
Small signs of life
The office market in Washington, D.C.’s Maryland suburbs has seen a small bit of sunshine, with about 14,000 square feet of positive net absorption, after six straight quarters of net negative absorption, according to a first-quarter report from Colliers. Overall vacancy fell slightly to 19.2 percent.
High construction costs and limited demand pose a barrier to new development. The area has seen an increase in demolitions and conversions of older, distressed assets. In Bethesda specifically, overall office vacancy is 26.3 percent on an inventory of 12.8 million square feet.
Outside the Bethesda deal, Hudson Bay Capital recently provided mezzanine financing as part of a $321 million refinancing package for Cain and Alchemy-ABR Investment Partners’ 30-story, 260,000-square-foot office tower at 125 W. 57th St. in Manhattan. The deal, arranged by Walker & Dunlop, also included senior debt from JPMorgan Chase.
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