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Chemonics Puts Over Half Of Its Navy Yard Headquarters Up For Sublease

Chemonics International, an anchor tenant for the latest phase of development at The Yards, is looking to offload more than half of its footprint, the latest downsizing move in D.C.'s struggling office market. 

The international development organization has listed 153K SF of its 287K SF in the Brookfield Properties building at 1275 New Jersey Ave. SE for sublease as it reevaluates its footprint after pandemic-led workplace shifts, a Chemonics spokesperson confirmed to Bisnow

Chemonics International's headquarters lease at 1275 New Jersey Ave. SE allowed Brookfield Properties to begin construction on Phase 2 of The Yards.

“Post pandemic, our office space needs changed as we transitioned to a hybrid work model,” the spokesperson wrote. “This decision has allowed us to be a more globally-minded and flexible community that prioritizes the needs of our staff.” 

CBRE listed most of that sublease footprint on the market last year, and Cushman & Wakefield has taken over the listing in recent weeks. Cushman & Wakefield’s Michael KatcherLaurie McMahon, Geoff Dye and Ellison Cook are Chemonics’ brokers. 

McMahon and Katcher said in a written statement to Bisnow that the space can be broken into a variety of sizes, and the building offers amenities including a conference facility, fitness center, bike storage room and rooftop space. 

“We are very excited about this unique, plug and play opportunity in the heart of the Capitol Riverfront market,” the brokers said in the statement. 

Brookfield Properties declined to comment on the sublease listing. 

Chemonics is offering the top four floors, totaling 97.5K SF, of the 11-story mixed-use building, according to Cushman & Wakefield’s brochure. The rest is available through spec suites on the fourth through sixth floors.

Chemonics in 2019 inked a full-building, pre-construction lease at the 48-acre project near Nationals Park. That lease kick-started the developer's second chapter of The Yards, where it plans to build 3.4M SF of office, residential, retail and public space. 

This is the second time Chemonics has downsized since the onset of the pandemic. In 2021, one year before it was set to move in, it decided to take 27K SF less than it had agreed to, forgoing its tax incentive from the city, the Washington Business Journal reported at the time.

Before moving to The Yards, Chemonics had occupied about 226K SF between two buildings in downtown D.C. and one in Crystal City. 

Two subtenants have since inked space on two of its floors — Epirus has 5,400 SF on the fourth floor, and Redbrick LMD occupies nearly 14K SF on the sixth, Katcher told Bisnow

Boutique grocer Foxtrot opened a 4,300 SF ground-floor retail space at the property last May, and houseplant purveyor Jungle & Loom is set to open 2K SF this year.

Across the street, French bakery Maman and glasses store Warby Parker opened this winter in The Yards' new multifamily property, Vela, and Playa Bowls is set to open this year. Next door, Brookfield’s next multifamily building at the project, the 478-unit The Yards DC Urby, is under construction.  

D.C.’s office market has seen a series of tenants giving back space and looking to downsize over the last year.

In January, International Baccalaureate put its 100K SF at City Ridge on the sublease market. Fannie Mae's 720K SF at Midtown Center has come back on the market as the company plans to vacate early in 2029. In June, tech giant Meta put 122K SF at Terrell Place on the market for sublease. 

Shrinking tenants have contributed to D.C.'s office vacancy rate hitting new record highs, reaching 21.2% at the end of the year, according to CBRE.

The trophy market, though, has been an outlier. The top stack of the market was at 11.4% vacancy at the end of 2023, with tenants facing tough competition for the limited supply of headquarters or law firm-sized trophy spaces.

New office developments in waterfront areas like Navy Yard and The Wharf have lured some tenants away from the downtown area, such as Williams & Connolly, which moved from Metro Center to anchor The Wharf Phase 2.