The 9 Largest D.C. Office Sales Of 2022 Show How The Market Changed

The D.C. office sales that fetched the highest prices this year illustrate a market that has transformed dramatically since the pandemic began, and they may be a sign of its future. 

The largest deal this year came from a foreign investor snapping up a Class-A office building with cash, a phenomenon experts think is likely to continue as long as fluctuating interest rates keep buyers that need debt on the sidelines.

Meanwhile, the property slated for D.C.'s largest office-to-residential conversion also cracked the list of this year's nine biggest office sales. Post Brothers acquired the Universal North and South buildings in April for a conversion slated to top 500 units.

A majority of the list’s buyers were acquiring their first D.C. property: Mori Trust, Commerz Real AG, Post Brothers, Nome Capital Partners and Ritz Banc Group all entered the market this year.

While office market players this year navigated the slow return to office, weak leasing demand and rising signs of distress in the market, they still managed to close a series of major property sales over the course of 2022. 

Read on to see the top office deals this year, based on data from CBRE and RCA.

601 Massachusetts Ave. NW

Buyer: Mori Trust
Seller: Boston Properties
Price: $531M
Size: 479K SF

The largest office deal this year was also the only deal to surpass $1K per SF — reaching $1,109. Tokyo-based Mori Trust acquired the property in August, six years after anchor tenant Arnold & Porter moved in.

Mori Trust is a foreign, all-cash buyer looking to expand its U.S. holdings, while Boston Properties has looked to pivot away from office at a nearby Mount Vernon Triangle site, avoiding softness in the office sector.

The Patrick Henry Building — 601 D St. NW

Buyer: Nuveen
Seller: Tishman Speyer
Price: $375M
Size: 520K SF

Tishman Speyer sold this downtown office building in March for a tidy profit, reaching $722 per SF. The Patrick Henry Building was built in 1973 and was leased by the Department of Justice until the federal agency vacated to consolidate its operations in a new NoMa property.

The seller acquired the property for $163M in 2019, and at the time planned extensive renovations that were later pared back. The Patrick Henry Building is located about a block away from the Archives-Navy Memorial-Penn Quarter Metro station in the Central Business District.

1900 N St. NW

Buyer: Commerz Real AG
Seller: JBG Smith/Canada Pension Plan Investment Board
Price: $265M
Size: 271K SF

German investor Commerz Real AG made its first D.C. acquisition in June through its Hausinvest fund, acquiring 1900 N St. NW at a price of $976 per SF. The property was 82% leased at the time of sale, and JBG is staying on as property manager and leasing agent.

Commerz CEO Henning Koch told Bisnow in November that his firm was having an easier time acquiring U.S. properties this year after the Federal Reserve began raising interest rates, as buyers seek the certainty of all-cash buyers like Commerz.

1825-1875 Connecticut Ave. NW

Buyer: Post Brothers
Seller: JBG Smith
Price: $228M
Size: 762K SF

Post Brothers’ first D.C. acquisition, which totaled just under $300 per SF, is a property it has planned for an office-to-residential conversion. The buildings were developed in the 1950s and 1960s and last went through major renovations in the 1990s, Bisnow reported in April. 

The new owner has already filed plans for the conversion, which will add density to surpass 500 residential units and build new amenities like an indoor pool and interior courtyard.

1730 M St. NW

Buyer: Fortress
Seller: JBG Smith
Price: $112M
Size: 203K SF

JBG Smith included this downtown D.C. office building as part of a broader recapitalization of a seven-property office portfolio. Fortress spent $580M to become a joint venture partner in the portfolio, which also included properties in Reston, Arlington and Bethesda.

The property was built in 1964 and last renovated in 1998, according to JBG’s website. The deal pencils out to $552 per SF.

2550 M St. NW

Buyer: Nome Capital Partners
Seller: Menlo Equities
Price: $93M 
Size: 207K SF

California-based Nome Capital Partners made its entrance into the D.C. market this year, acquiring this West End office building at a price of $449 per SF. As part of the transaction, Nome entered into a 99-year ground lease for $39M, Bisnow reported in April. 

The building is fully leased to law firm Squire Patton Boggs, which has occupied it since 1978. The firm renewed its lease for 15 years in 2013.

Georgetown Center II — 2115 Wisconsin Ave. NW

Buyer: Ritz Banc Group
Seller: JBG Cos.
Price: $91.5M
Size: 185K SF 

Ritz Banc Group, a firm that has been active in Virginia, acquired its first property in D.C. proper. The medical office building sold for $495 per SF, which the buyer said was “below replacement cost” in a March 31 press release.

The Glover Park property was substantially renovated in 2019, according to the release. Georgetown Center II was built in 1987, according to Commercial Cafe.

The Car Barn — 3600 M St. NW

Buyer: Georgetown University
Seller: Douglas Development
Price: $70M
Size: 82K SF

The oldest property on this list, The Car Barn in Georgetown, was constructed in 1895 and was acquired by Douglas Development in 1997. It sold for $856 per SF.

The historic property has undergone renovations several times since Douglas acquired it and redeveloped it into office space. Georgetown University uses the building for its school of business, and it recently renovated the ground floor to include a new office for the Georgetown University Press and graduate student space, The Hoya reported in 2017.

1801 L St. NW

Buyer: Cogent Communications CEO Dave Schaeffer
Seller: Eleven Eighteen LP
Price: $63M
Size: 207K SF

One of the region’s wealthiest entrepreneurs made some real estate moves this year, including buying 1801 L St. NW for about $313 per SF. The property, constructed in the 1980s, has long been leased by the General Services Administration. It is expected to remain 80% leased by the federal government for the next seven years, Bisnow reported in July.

The limited partnership that sold the property was involved in its development and included more than a dozen investors. The building’s new owner has invested in D.C. real estate for decades and had owned over 1.7M SF as of 2019.