Paramount Marketing Leased-Up DC Offices
Paramount Group has listed a prime office building in downtown Washington that it leased up following the loss of the lead tenant.
The 209,000-square-foot building, at 2099 Pennsylvania Avenue NW, is 89% occupied under long-term leases. Bids could reach about $1,100/sf, or $230 million, thanks to the strong leasing profile, the property’s high-caliber finishes and its desirable location four blocks from the White House. Eastdil Secured is representing New York-based Paramount.
The initial annual yield at the estimated value couldn’t be learned. But high-quality Washington offices usually command capitalization rates of 3.8-4.5%, depending on the rent roll.
The 12-story building, in the Central Business District, was distressed when Paramount scooped it up in 2012 for $155 million. Law firm Holland Knight was preparing to vacate 60% of the space, which would leave the building nearly empty. Paramount recruited new tenants, including law firms Ropes & Gray and Sheppard Mullin, which each occupy roughly 60,000 sf. Other occupants include Avison Young and a host of financial-services firms.
The Class-A property, at 21st Street, ranks among the top 10% in the market in terms of occupancy and rents, according to JLL’s Skyline report. Its occupancy rate is in line with the 90% average for its competitive set. Asking rents average $77/sf.
The glass-clad building, designed by architect Pei Cobb, was completed in 2001. It has trophy-caliber finishes, including a two-story marble lobby. There is also a fitness center and underground parking.
The previous owner, Vico Capital of Dublin, acquired the property in 2008 for $172.5 million. But the private equity firm, led by Brian and Mary Patricia O’Donnell, struggled with its debt load amid the subsequent downturn and ended up selling off holdings.