DC's Watergate Office Building Up for Sale

A nearly-fully occupied Watergate Office Building is up for sale as Eastdil Secured has been retained to market the globally-recognized property. Washington, DC-based investment company Penzance is selling the property at 2600 Virginia Ave. NW after acquiring it for $76 million in 2011 from a group led by BentleyForbes, a private Los Angeles-based investor in high-end office buildings; prior to that, it traded from TrizecHahn Corp. to BentleyForbes' group in 2005 for $84.5 million. The offering comes as $125 million in renovations to the Watergate Hotel wrapped up last summer when the hotel was reopened. The building is not listed for a specific price.

The 11-story, 198,000-square-foot office building was still new in 1972 when thieves broke into the sixth-floor offices of the Democratic National Committee, alerting a security guard and beginning a chain of events that drove Nixon from the presidency and gave the building's name to the historic scandal. When BentleyForbes purchased the office building in 2005, it issued a press release saying, "the underlying market fundamentals, stable tenant base and quality of the asset made this investment a strong addition" to the company's portfolio.

In mid-2012, Penzance began a multimillion-dollar upgrade to the Watergate Office Building's lobby, common areas, and Virginia Avenue entrance. The modernization was complete in December 2012, and the building began leasing space again in January 2013. Penzance decided to offer the building for sale after boosting occupancy from 45% to more than 90%, said Penzance Senior Vice President Matt Pacinelli.

For more news and information visit Blumberg Partners.

Penzance Picks Up Reston Office Buildings

Penzance, a D.C. based real estate development and operating company, announced this week that it had purchased Corporate Plaza I and II in Reston, VA for $22.6 million, or about $158 per foot. Transwestern's Institutional Commercial Group brokered the sale to Penzance on behalf of Piedmont Office Realty Trust; terms of the deal were not disclosed.

"The transaction achieved the strategic goals of both the buyer and the seller," said Gerry Trainor, Transwestern's managing executive director. "In the case of Piedmont, the sale is in line with its strategic plan of exiting non-core properties and focusing on aggregating Class A assets near transportation nodes in specific submarkets. For Penzance, the acquisition is consistent with its suburban value-add strategy and thesis that the Dulles Toll Road will lead the suburban recovery."

Matt Pacinelli, senior vice president of leasing for Penzance, said Metro access is a strong amenity. "I've probably gotten more activity in the building than I have in any of my other properties, and the reason for that is it's unique," Pacinelli said. "The Silver Line, it's not the main reason to acquire it, but it is a bonus." The two office buildings at 11107 and 11109 Sunset Hills Road total 142,394 square feet and are situated along the Dulles Toll Road (Route 267), just 0.75 miles from the new Wiehle Avenue Metrorail station and 1.7 miles from the Reston Town Center.

For more news and information visit Blumberg Capital Partners.

Construction Dipped in Arlington Q2

A new article from the Washington Business Journal examines the slowdown in construction activity in Arlington, VA during the second quarter of 2012. Even though there is over 4 million square feet of office space planned and approved by the county, none of the projects are yet under construction, making the second quarter the first quarter in the past decade without any new commercial construction started. An excerpt from the article:

But Arlington doesn't consider a project as "started" until it's above ground, so work at The Penzance Cos.' office building in Clarendon or Virginia Square Towers, both of which were in the dig or demolition phase during the second quarter, wasn't counted.

Robert Ruiz, who leads Arlington's urban planning research team, said the slow quarter was "definitely an anomaly," though it may be the result of several factors: the recession, the lag between county approval and construction, or a delay-spurred rethinking of projects.

Projects under construction during the second quarter will eventually total 962,282 square feet of office space, 147,660 square feet of retail, 1,404 residential units, 183 hotel rooms and 929,828 square feet of "other" space (public facilities, school, health care, etc). Much of the work now underway is found in Rosslyn, at Monday Properties' 1812 N. Moore St., The JBG Cos.' Sedona and Slate residential project and Abdo Development LLC's Gaslight Square.

For more news and information visit Blumberg Capital Partners.

Watergate Building Sold for $76M

Penzance purchased one of two Watergate office buildings in Washington, DC for $76 million according to a CoStar report. Capri Capital Partners finalized the sale of the building at 2600 Virginia Avenue, NW for nearly $287 per square foot. According to the report, a group of investors led by BentleyForbes purchased the structure in 2005 for $86.5 million. Capri recently took over its management.

"The iconic Watergate office building and retail plaza, with its prime location in Foggy Bottom, has Potomac River frontage, proximity to the Kennedy Center, Georgetown and downtown," said Penzance Managing Partner and Co-Founder, Victor K. Tolkan. "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. We are thrilled to have the opportunity to own and manage 2600 Virginia Avenue, which will once again become known for its architecture, amenities and its prime location in the Washington landscape."

Penzance's plans include marketing and leasing the vacant office space, 80,000 contiguous square feet of which is located on the top floors of the building. Penzance will manage both the office building and the retail plaza.

For more news and information visit Blumberg Capital Partners.