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JPMorgan To Foreclose On Downtown D.C. Office Building Owned By Manulife

As Downtown D.C.'s office market continues to struggle, a prominent 12-story building near Dupont Circle is heading to a foreclosure auction. 

The office building at 1850 M St. NW has been scheduled for an Aug. 3 auction with Alex Cooper Auctioneers, according to a listing page on its website. This comes after the lender, an affiliate of JPMorgan Chase,  filed a notice June 29 to foreclose on the building's owner, an affiliate of Manulife Investment Management, D.C. deed records show. 

The office building at 1850 M St. NW in D.C.

Manulife, a Canadian insurance company and financial adviser, appears to have owned the 224K SF building since it was constructed in 1985, but in 2017 the deed transferred to a different entity controlled by Manulife for $108.8M, according to deed records.

Along with that 2017 transfer, it secured a $46.2M loan from JPMorgan. In 2018, it took out a separate $63.3M loan on the property, also from JPMorgan. The remaining debt on the building is $61M, according to last month's foreclosure notice. 

The building is 70% occupied, with a scheduled annual rent of $10.9M, according to Alex Cooper's listing page. Transwestern leases the office space and Miller Walker leases the ground-floor retail. 

A leasing breakdown on Transwestern’s website shows 66K SF of total availability, or 27% of the property. It advertises full availability on floors six and seven, each 21K SF, and smaller availabilities on floors three, eight, nine and 10. 

Office tenants include the National Association of Attorneys General, nonprofits Freedom House and RMI, and the American Academy of Architectures, according to their websites.

Ground-floor tenants include 7-Eleven, FedEx and Salon Balayage. Roti, which opened in 2019, is no longer listed as a location on the quick-service chain’s website, but building permits have been issued over the last month with Roti's name on them.

Manulife classifies the property as Class-B. It renovated the building in 2020, according to the Alex Cooper listing, including a new 2K SF, fifth-floor tenant lounge with a 50-person conference center and a new fitness center. 

The public auction for 1850 M St. NW is scheduled for Thursday, Aug. 3, at 11 a.m. at 4910 Massachusetts Ave. NW.

JPMorgan and Manulife declined to comment on the foreclosure auction. 

Class-B and C office buildings have performed worse than their newer competitors in recent years as they struggle to keep tenants, and as employers look to incentivize workers to come back to the office. Trophy office buildings were at 13.6% vacancy in the second quarter of this year, according to CBRE data, compared with 23% for Class-B and 21% for Class-C. 

Slow return-to-office rates, which two weeks ago were at 46% percent of pre-Covid in D.C. according to Kastle, have caused heartache for older buildings downtown as employers downsize or move to newer properties.

Hines last year handed back the keys on a 302K SF office building at 700 11th St. NW after it lost anchor tenant Williams & Connolly to The Wharf

Meanwhile, some office buildings are slated for conversion to residential, including a 1980s-era property between Metro Center and McPherson Square that’s poised to become an all-affordable residential building, with funding from Amazon’s Housing Equity Fund. JLL is tracking three conversions in the downtown area under construction: Cadillac Fairview’s 1313 L St. NW, Lincoln Property Co.’s Midtown Square in the East End, and Wilco's Vanguard Building, which is being converted to Elle Apartments at 1111 20th St NW.