The 9 Largest New Office Leases Signed In The D.C. Area This Year
The D.C. area's office market slowed down this year during the coronavirus pandemic, but it didn't come to a full stop.
While many companies delayed decisions or renewed existing leases, a significant number of tenants signed new deals this year to relocate their offices or expand their footprint.
Using research from CBRE and Newmark, Bisnow identified the nine largest new office leases signed in the D.C. area this year. The tenants included government agencies, technology companies, automakers, law firms, nonprofits and banks.
Many of the deals were in the works before the pandemic and were able to close despite the challenges the coronavirus created for the market. In one case, a tenant pivoted to put its entire space on the sublease market within six months of signing the deal.
Boston Properties dominated the list by landing three new tenants of over 100K SF, including the year's largest deal at Reston Town Center.
- Tenant: Microsoft
- Address: 11955 Freedom Drive
- Square Feet: 400K SF
The largest D.C.-area lease this year was a new expansion that helped bolster the Northern Virginia office market just emerging from the depths of the pandemic. Boston Properties in May signed Microsoft to a 400K SF lease at Reston Town Center's Two Freedom Square office building.
The tech company in November signed on for a separate 45K SF space at Reston Town Center, and it inked a renewal in Q3 for its 186K SF Reston office at 12012 Sunset Hills Road, another building owned by Boston Properties. Microsoft said it would create 1,500 new jobs with the Reston Town Center office.
Microsoft said its new office would focus on software development, and it would also open a retail space in the building. The Two Freedom Square building was previously home to Leidos, which inked a deal in 2018 to shift to a new 17-story building at Reston Town Center.
2. D.C. Department of General Services
- Tenant: D.C. Department of General Services
- Address: 3924 Minnesota Ave. NE
- Square Feet: 240K SF
The D.C. government signed a major deal to relocate a 700-person agency to Ward 7 as part of Mayor Muriel Bowser's effort to spur economic growth east of the Anacostia River.
D.C. in May signed a letter of intent for the Department of General Services to anchor Cedar Realty Trust's redevelopment of the Senator Square shopping center on Minnesota Avenue NE. The parties finalized the deal in early August, according to CBRE and Newmark.
The District didn't announce the square footage of the deal at the time, but CBRE and Newmark both peg the lease at 240K SF. The agency plans to move from the Reeves Center at 14th and U streets NW, which the city plans to redevelop.
Developers and local officials viewed the move as a "tipping point" for Ward 7's development that would spark a host of new activity around the Minnesota Avenue-Benning Road intersection. The project, branded as Northeast Heights, is planned to include up to 1,300 units and 200K SF of retail in addition to the agency HQ.
3. Alexandria government
- Tenant: Alexandria government
- Address: 4850 Mark Center Drive
- Square Feet: 216K SF
Alexandria plans to move multiple city health agencies into a 216K SF space it leased at 4850 Mark Center Drive in May. The property is owned by the Institute for Defense Analyses, which plans to shift its headquarters from the building to a new project at Potomac Yard in 2022.
The 15-year lease included an option for the city to purchase the building. The Alexandria City Council in July authorized the city manager to execute a $58.7M purchase of the building, but the deal hasn't been finalized. Alexandria Department of General Services Director Jeremy McPike told Bisnow Tuesday he expects the city will exercise the purchase option in the spring, pending the results of the ongoing due diligence process.
The building is planned to house the city's Department of Community and Health Services, the Alexandria Health Department and nonprofit health provider Neighborhood Health. The deal also included 30K SF of office space for future expansions.
4. Volkswagen Group of America
- Tenant: Volkswagen Group of America
- Address: 12034 Sunset Hills Road
- Square Feet: 196K SF
Boston Properties landed two of the top four deals in the region this year at Reston Town Center. In October, the developer signed a 20-year, 196K SF lease with Volkswagen Group of America for the next phase of the development.
The project's 1.1M SF next phase, previously known as Reston Gateway, is under construction and expected to deliver in Q4 2022. The Volkswagen deal brought it to 85% leased, including a 2018 deal with Fannie Mae for 761K SF.
5. Wiley Rein
- Tenant: Wiley Rein
- Address: 2050 M St. NW
- Square Feet: 166K SF
One of the only major relocation deals this year from a law firm, typically one of D.C.'s most active sectors, came in June from Wiley Rein LLP. The firm signed a 166K SF lease at Tishman Speyer's new office building at 2050 M St. NW.
The firm plans to move from its current headquarters at 1776 K St. NW. CBRE's Lou Christopher, Jordan Brainard, Tim Dempsey and Greg Maurer-Hollaender represented the tenant in the deal.
The tenant will occupy floors three through seven of the 11-story office building. Another law firm, Paul Hastings, signed on in 2017 for the top three floors. The project was built on the site of the CBS News Washington bureau, and Tishman also built new facilities for the network with a separate entrance.
6. Walmart Labs
- Tenant: Walmart Labs
- Address: 2245 Monroe St. in Herndon
- Square Feet: 162K SF
The tenant that signed one of the largest new leases in the region this year quickly changed its mind about its need for the space.
Walmart Labs signed a 162K SF lease in April at 2245 Monroe St. in Herndon, a deal that represented new growth for the company in the region. Transwestern's Caulley Deringer represented the owner, Barings Real Estate.
In October, Bisnow reported that Walmart Labs doesn't plan to occupy the space and is putting it on the market for sublease. The company tenant decided it didn't need the space and would work remotely, but it still planned to honor the lease.
Sublease availability has risen throughout the region this year, a sign of weakness in the market that typically occurs during an economic downturn. The D.C. region's sublease availability has risen by over 1M SF this year, including 527K SF in Q4 alone, according to new data from Savills.
7. CACI International
- Tenant: CACI International
- Address: 12021 Sunset Hills Road
- Square Feet: 135K SF
Boston Properties landed yet another major office lease in Reston during the second quarter. It signed a lease at 12021 Sunset Hills Road with CACI International for 135K SF, according to CBRE.
The deal wasn't officially announced by either party, but a CACI spokesperson confirmed it to Bisnow Tuesday, adding that it is relocating employees from another Reston building. JLL's Robert Shue and Jeff Groh represented the tenant in the lease.
CACI, a $5.7B government contracting firm, is headquartered in Arlington. The building, known as Two Reston Overlook, sits less than a half-mile from Reston Town Center. Boston Properties developed it in 1999.
8. National Endowment for Democracy
- Tenant: National Endowment for Democracy
- Address: 1201 Pennsylvania Ave. NW
- Square Feet: 82K SF
A Pennsylvania Avenue office building that was renovated after losing its anchor tenant landed a new lease in June. National Endowment for Democracy signed on for 82K SF on the 10th and 11th floors of 1201 Pennsylvania Ave. NW, a building owned by New York-based Sentinel Real Estate.
The building's previous anchor tenant, Covington & Burling, vacated in 2014 to move to CityCenterDC. The owner then launched a $15M renovation, adding a fitness center, conference center, a new HVAC system and upgrading the lobby and rooftop terrace.
The June lease represented an expansion for the nonprofit, which previously occupied 65K SF at 1025 F St. NW. JLL's Doug Mueller, Evan Behr and Mac Hall represented the landlord, while Savills' Ben Plaisted and Greg Scheipers represented NED.
9. Wells Fargo
- Tenant: Wells Fargo
- Address: 1700 K St. NW
- Square Feet: 69K SF
Wells Fargo in March signed a 69K SF lease to relocate its D.C. office. The banking giant is moving from 1300 I St. NW to 1700 K St. NW.
The 390K SF office building at 1700 K St. NW is owned by a group of private investors and managed by JBG Smith. Constructed in 2005, it sits one block from the Farragut North Metro station.
CBRE represented the tenant in the deal, while Cushman & Wakefield represented the landlord. The building was previously anchored by Winston & Strawn, which signed a deal in 2018 to relocate to 1901 K St. NW.