Amazon Finalizes Deal With JBG Smith For HQ2 Office Leases, Land Buys
Amazon has made its plans to establish a second headquarters in Northern Virginia official.
JBG Smith announced Wednesday morning it executed three leases totaling 537K SF and two sale agreements for $294M with the e-commerce giant.
The leases around the Crystal City Metro station will provide Amazon office space that it can begin occupying this year as it prepares to construct the new buildings for HQ2.
JBG Smith said Amazon will begin moving in later this year to 191K SF at 1800 South Bell St. and 88K SF at 241 18th St. South. By the end of next year, it plans to move into 258K SF at 1770 Crystal Drive. Renovations to these buildings, connected via Crystal City's underground mall, are already underway.
The sale agreements transfer land near the Pentagon City Metro station to Amazon, where it can develop 4.1M SF of new buildings. The deals for the Pen Place and Metropolitan Park 6, 7 and 8 sites come out to $72/SF based on their development potential, JBG Smith said.
The sales have yet to close, and JBG Smith aims to time them up with acquisitions to execute 1031 exchange transactions, avoiding some real estate transfer taxes. It expects the Metropolitan Park sale to close this year and Pen Place next year. JBG Smith will stay on as the developer, property manager and retail leasing agent for the properties.
The agreements represent the latest step forward in the HQ2 development process that began in November when Amazon selected National Landing for HQ2, promising at least 25,000 jobs and 4M SF of office occupancy. They also represent more concrete steps toward making HQ2 a reality that New York City did not achieve, as Amazon pulled out of its agreement in February amid local opposition.
Amazon cleared a major hurdle last month when Arlington County approved a $23M incentive package, despite vocal opposition at the public hearing. The approval followed Virginia's passage of an incentive agreement that could give Amazon up to $750M, dependent on job creation.
The state also committed over $1B to improve infrastructure and develop a talent pipeline in the area with a new Virginia Tech campus, and the local jurisdictions have promised hundreds of millions in infrastructure and housing investments.
"We are pleased to report that our partnership with Amazon at National Landing is moving full steam ahead," JBG Smith CEO Matt Kelly said in a release. "With the execution of these agreements and recently legislated state and local government commitments to invest approximately $2B in the region's transportation, education and housing infrastructure, we are ready to welcome Amazon's first National Landing employees in the coming months."