Contact Us
News

Earnings Blitz: WeWork Leases, AvalonBay Buys, Park Hotels Prepares For Merger

Want to get a jump-start on upcoming deals? Meet the major D.C. players at one of our upcoming events!

The second-quarter earnings season is upon us, and a series of releases this week revealed a new WeWork lease in Ballston, a Silver Spring apartment building sale and an update on a merger between Northern Virginia hotel REITs. 

The Arlington Gateway office building at 901 N. Glebe Road
The Arlington Gateway office building at 901 North Glebe Road

Piedmont Office Realty Trust signed a 29K SF lease with WeWork at its Arlington Tower office building at 901 North Glebe Road in Ballston, the REIT said in its Q2 earnings release Wednesday evening.

The coworking giant will take the entire fifth floor and plans to open before the end of the year, Piedmont Director Chris Poppell tells Bisnow.

WeWork, which is racing to prepare for an anticipated September initial public offering, declined to comment. The company's website features a page with the 901 North Glebe address that says the new location is "coming soon."

The lease helps Piedmont fill a 120K SF vacancy that insurance brokerage firm Towers Watson left behind in 2017 when it relocated following its merger with Willis Group Holdings. The 334K SF building is now about 85% leased, Poppell said. 

"This WeWork deal was really us almost finalizing the backfill of Towers Watson, so now we have a couple of smaller blocks, but really the building is closed to stabilized," he said. 

The building was constructed in 2005 and Piedmont acquired it in 2013. Poppell said having a coworking space as a tenant is appealing because it can help generate leasing activity for its other space. The REIT also owns the 3100 Clarendon Blvd. building where coworking provider MakeOffices is located, and Poppell said multiple former users have signed direct leases with the landlord after expanding beyond the size of their coworking space. 

"What we've seen is a lot of tenants outgrow the coworking space and have moved directly into the building with a lease with us because they get used to the building, the commutes and the routine," Poppell said. "It's a feeder for prime leasing."

The property is not the only Ballston building WeWork has been eyeing. The coworking provider is rumored to be leasing nearly 70K SF at Shooshan Cos.' under-construction 4040 Wilson Blvd. project, the Washington Business Journal reported last week. Shooshan Cos. Chairman John Shooshan tells Bisnow that WeWork is one of several prospective tenants in talks for the building, but a deal has not been finalized. 

WeWork has been expanding rapidly throughout the D.C. region in recent months. It signed on at Carr Properties' The Wilson project in Bethesda, the developer announced Tuesday, though it did not disclose the square footage. The coworking company has also signed 100K SF-plus leases this year at Midtown Center, Capitol Crossing and 1701 Rhode Island Ave. NW, which later sold for over $1K/SF. 

The Portico at Silver Spring Metro apartment building
The Portico at Silver Spring Metro apartment building

AvalonBay Communities last month acquired the Portico at Silver Spring apartment building for $43.5M, the REIT said in its Q2 earnings release Wednesday evening. 

The 151-unit apartment building at 1203 Fidler Road sits about a quarter-mile from the Silver Spring Metro station. It was previously owned by UDR, which acquired it in 2010 for $43.1M, property records show. 

The deal is one of three apartment properties Arlington-based AvalonBay has acquired this year. The REIT in Q1 acquired a 338-unit property in Aurora, Colorado, for $91M, and in Q2 it acquired a 132-unit property in Cerritos, California, for $60.5M. 

The REIT has also sold three properties this year. In Q1, it sold the 184-unit Oakwood Arlington property for $70M. In Q2 it sold the 474-unit Archstone Toscano property in Houston for $98M. And in July, it sold the 306-unit AVA Stamford property in Stamford, Connecticut, for $105M.  

The Capital Hilton
The Capital Hilton, a Downtown D.C. hotel owned by Park Hotels & Resorts

Tysons-based Park Hotels & Resorts also released its Q2 earnings Wednesday evening and provided an update on the $2.7B acquisition it announced in May of Arlington-based Chesapeake Lodging Trust. Chesapeake's shareholders are scheduled to vote on the acquisition Sept. 10 and if approved, Park Hotels said it expects the deal to close in mid-to-late September.  

Park Hotels is undergoing a strategy of selling assets to reduce the leverage of its portfolio as it prepares for the Chesapeake acquisition to close. The REIT sold three U.S. hotels in Q2 in Atlanta, New Orleans and New Jersey for a combined $166M. It is also part of a JV that sold the Conrad Dublin in Ireland for $130M, and its proceeds from the deal came to $62M. 

Chesapeake is pursuing a similar strategy ahead of the acquisition's closing. It announced last week it entered into an agreement to sell two New York City hotels, the Hyatt Place New York Midtown South and the Hyatt Herald Square New York, for a combined $138M. 

"We certainly believe it's a compelling and unique opportunity to combine both companies," said Park Hotels CEO Thomas Baltimore on a Thursday earnings call. "It provides for us improved portfolio quality, gives us the brand and operating diversification, an expanded and improved geographic footprint and improves our growth rate for next year."