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REA
January 18, 2017  

Va. Office Deal to Set Suburban DC Record

Morgan Stanley Real Estate has won the bidding for a Northern Virginia office property at a record price for the Washington suburbs.

The investment manager has offered nearly $470 million for the 647,000-square-foot Waterview, a trophy building in the Rosslyn section of Arlington. At the valuation of roughly $725/sf, the initial annual yield would be in the vicinity of 5%. Eastdil Secured is brokering the sale on behalf of Paramount Group of New York.

The 24-story tower, at 1919 North Lynn Street, is virtually fully occupied, according to CoStar. CEB, a business services company headquartered in the building, and Deloitte occupy a majority of the space. Rosetta Stone is also a tenant.

The current record for a single office-property trade in Washington’s Virginia and Maryland suburbs is $435 million — set when Paramount bought the same building in 2007, while it was still under construction. The seller was a group that included developer JBG Cos. of Chevy Chase, Md. The previous highest per-foot price for suburban Washington office space was the $691/sf paid by KBS Realty of Newport Beach, Calif., two years ago when it bought a new, 216,000/sf building at 3003 Washington Boulevard in Arlington for $149.2 million.

The Waterview, designed by architectural firm Pei Cobb, was completed in 2008 as part of a mixed-use development at 19th and Lynn Streets. The other components, which aren’t included in the pending sale, are a luxury Le Meridien hotel, a residential building and a garage. The property is within a few blocks of the Francis Scott Key Bridge to Washington and the Rosslyn Metrorail station.

Rosslyn, just across the Potomac River from Washington’s Georgetown neighborhood, checks the boxes for investors seeking urban environments with walkable amenities and easy access to public transportation. Office properties in such submarkets in Greater Washington have had better luck finding both tenants and buyers than those further out in the suburbs.