A developer focused on urban infill properties in the D.C. region is planning to replace an office building with residential near downtown Bethesda.
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Perseus TDC bought the 65K SF office building at 4405 East-West Highway in Bethesda, but plans to tear down the five-story property and build a 10-story apartment building with retail, the development firm said in a release. Perseus officials declined to disclose a sale price, but the property's assessed value last year was $10.9M, according to Montgomery County property records.
Nihar Shah, vice president of development at Perseus TDC, said the developer wants to expand the downtown Bethesda core east of Wisconsin Avenue with the development. Perseus plans to build more than 300 units and 8K SF of retail, taking advantage of its location three blocks from the Bethesda Metro station. Construction is expected to begin in 2024.
"We're hoping the jobs, the retail and the amenities of Bethesda are going to attract our target demographic," Shah said.
The building's previous owner, Klinedinst Management, will remain on as property manager for the building's 38 tenants until entitlement and design are complete, which will take roughly two years, Shah said. The current tenants include offices for dentists, medical specialists and professional services firms.
CPG Realty represented the Klinedinst in the deal.
Strong Class-A apartment absorption helped push vacancy down to 3.4% by the end of 2021, indicating a strong pool of renters for the property in Bethesda, according to a Delta Associates report.
Shah said the building would be predominantly market-rate, with 15% of the units affordable through Montgomery County’s Moderately Priced Dwelling Unit Program.
Perseus TDC is an affiliate of Houston-based Transwestern Development Co. formed in 2017 through a joint venture with Perseus Realty. The firm is focused on urban infill projects, particularly those near transit.
This is the second property Perseus has planned to redevelop in recent years to take advantage of transit-adjacent properties in Maryland. The firm expects to begin construction this summer on a 316-unit project at 6400 America Blvd. in Hyattsville.
That property, near the Prince George's Plaza Metro station, is on schedule to begin construction by July, Shah said, and open for leasing two years later.
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