BXP In Talks With Law Firm To Anchor New Office Development
BXP is finalizing a deal to build a new office project in Washington, D.C., for a law firm, another big leasing win in the city for the publicly traded developer.
The Boston-based REIT has been in talks with law firm Sidley Austin to anchor a new office building it plans to develop at 2100 M St. NW in the West End, five market sources told Bisnow.
The lease is expected to span more than 200K SF, sources say, with the rental rate around $100 per SF. The deal would be D.C.’s largest private sector lease of the year, brokerage market reports through September indicate.
BXP and Sidley didn’t respond to requests for comment. CBRE’s Lou Christopher, who sources say is working on the deal, declined to comment.
The project is planned for the site of a vacant 1960s-era office building that was previously approved for a residential conversion from Post Brothers. The site went through foreclosure, and lender AllianceBernstein took control of it in August.
The deal is an increasingly rare occurrence in a city that has just two office buildings under construction, one of which was just started by BXP after landing a pair of law firms.
The 2100 M St. NW property has been a highly sought-after site for new office development. Half a dozen brokers who spoke with Bisnow this spring said it was seen as a prime site for such a project, given that it is a vacant building on a corner site on the west side of downtown.
Sidley for years has been located less than a mile away at 1501 K St. NW. The firm signed a 289K SF renewal there in 2013 that expires in 2031. That building is owned by Ponte Gadea, the investment vehicle of Spanish billionaire Amancio Ortega.
BXP began construction this fall on its other law firm-anchored office project: a 320K SF tower at Metro Center with anchor tenant McDermott Will & Emery. It announced the plan in January after purchasing the site — another vacant office building it is demolishing — at the end of 2024 for $34M.
In April, BXP announced Cooley also signed on to the development, making the property around 90% preleased before shovels were in the ground. That building is expected to deliver in 2029.
BXP, the largest publicly traded office owner, with holdings in several major markets, in recent years has achieved its best development returns in the D.C. area, according to a Piper Sandler report published in October.
The REIT has long led the way in landing new build-to-suit office deals with major tenants in the region. In 2017 and 2018, it signed several such deals totaling 3M SF with Marriott International, Fannie Mae, WilmerHale and the Transportation Security Administration.
D.C. has only one other office building under construction: Stonebridge and Rockefeller Group’s redevelopment of the former WMATA building next to Capital One Arena. The 398K SF development at 600 Fifth St. NW is just over half preleased to law firm Crowell & Moring. It is expected to deliver next year.
Although D.C.’s overall office market was 22.4% vacant at the end of September, according to CBRE, its trophy market has become tight, with vacancy for the top-tier buildings at 10.2%.
