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2018 Washington DC and Northern Virginia Investment Sales Office Report

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Investment Sales 

WASHINGTON, DC INVESTMENT SALES ACTIVITY - 2018

The 27 investment sale transactions in the downtown Washington, DC market in 2018 totaled $3.98 billion, a 13.4% decrease from the total transaction volume in 2017. 

  • ‘Core’ / ‘Trophy’ asset sales accounted for over half of the gross value generated, and capitalization rates averaged 4.69%; initial yields for ‘core plus’ assets averaged 5.5%;
  • While the CBD has historically accounted for the majority share of sales in the market - both in terms of gross dollar value and square footage - the East End dominated the sales market in 2018. A combination of the larger inventory of office space (34 million square feet) and positive net absorption (922,174 square feet) are contributing factors to this volume:
    • 54.3% of the market share in terms of dollar volume;
    • 91.4% increase from 2017 ($1.13 billion in nine (9) transactions);
    • This submarket posted high-water mark sales of $1,274 per square foot (900 G Street, NW) and $1,190 per square foot (1440 New York Avenue, NW) – both assets were acquired by cross-border investors;
    • Five (5) of the eight (8) ‘core’ transactions and six (6) out of the twelve (12) ‘core plus transactions occurred there;
    • With one (1) building under contract and six (6) additional office properties on the market in the East End, we anticipate the velocity within the submarket to continue into 2019.
    • As of the end of the year, there were thirteen (13) assets on the market totaling 2.8 MM sf; the majority of these assets have a ‘core plus’ or ‘value add’ profile and are located in various submarkets within the District. 

NORTHERN VIRGINIA INVESTMENT SALES ACTIVITY - 2018

The Northern Virginia investment sales market remained steady in 2018 with 50 transactions (over $10 million) totaling nearly $3.0 billion, which is comparable to the $2.99 billions of volume in 2017.

  • There were six (6) ‘core’ transactions and the capitalization rate for these averaged 6.48% - a significant premium to ‘core’ asset yields in the downtown Washington, DC market;
  • ‘Core plus’ sale transactions comprised nearly 50% of the gross dollar value
  • The Reston-Herndon submarkets had significant gross dollar volume with $1.06 billion in total sales in 13 deals:
    • Two (2) transactions comprised 50% of that volume with Rockpoint Group’s recapitalization of Brandywine Realty Trust’s Dulles Corner portfolio ($312 million) and Harbor Group’s purchase of 13200 Woodland Park Road ($226 million);
  • The next highest grossing submarket in terms of dollar value was the Rosslyn-Ballston submarket with five (5) transactions totaling $550 million:
  • The second largest transaction in Northern Virginia was Arlington Tower (398,000 square feet), which sold in January 2018 for $250 million to Washington REIT;
  • Tysons continued to perform strongly with seven (7) transactions totaling $476 million (an average price per square foot of $272);
  • Although the Route 28 Corridor (with nearly 370,000 sf of positive net absorption) also had seven (7) sales, the total transaction volume for that submarket was only $237 million (with an average price per square foot of $203).'

Please view the full report, 2018 Washington, DC and Northern Virginia Office Investment Sales Report.

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2018 Washington DC and Northern Virginia Investment Sales Office Report

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