An office building near a new Silver Line station in Herndon has sold to an investor that closed without needing to obtain a loan, an increasingly common phenomenon in today's rising interest rate environment.

Spear Street Capital, a San Francisco-based office investor, paid $51.5M for the Dulles Station West office building at 2300 Dulles Station Blvd., Fairfax County property records show.

The seller, TA Realty, was represented by Cushman & Wakefield's D.C. Capital Markets team, with Executive Managing Director Drew Flood and Senior Director Shaun Collins leading the deal.

Collins told Bisnow the buyer closed on the deal without a loan, and it plans to put financing on the building at a later date. All-cash buyers have been the dominant players in the office market in recent months as rising interest rates and a pullback from banks have made it harder to finance new deals.

"That’s how they were able to close at this point in the cycle," Collins said.

Spear Street didn't respond to a request for comment. The investment firm owns one D.C. office building at 55 M St. SE, but this appears to be its first Northern Virginia acquisition, according to its website.

The Dulles Station West office building, totaling 178K SF, is 98% leased with its tenants having an average remaining lease term of eight years, Collins said. Tech giant IBM is the building's largest tenant, occupying 52% of the rentable space.

The building was constructed in 2007 by WashREIT. The developer sold the building in 2011 for $58.8M.

The property sits less than a quarter-mile from the Innovation Center Metro station, which opened last month as part of the Silver Line's second phase. Data released by Compstak last month showed the areas around the Phase 1 stations in Tysons experienced an acceleration in office rents compared to other nearby submarkets.

Collins said the building's stable cash flow and the upside of the new Silver Line station helped draw interest for the sale despite the larger uncertainties in the office sector and in the debt markets.

"This is still very high-quality real estate at a great emerging location, there’s a lot going on at this station with placemaking," he said. "There’s some real cash flow here on an existing basis, but it’s still good real estate to own short-term and long-term. It bridges the gap of having cash flow in place and having upside."

December is typically a busy month for investment sales as buyers, sellers and brokers race to close deals before the end of the year, but Collins said he expects this month to be slower than normal given the challenge of obtaining financing for office deals.

"Liquidity is limited given where the debt markets are," Collins said. "There’s going to be slower transaction volume here at the end of the year, with the expectation more properties will hit the market in the first quarter as lenders get a fresh bucket of dollars to allocate into their 2023 deals."