California Investor Makes First D.C. Acquisition With $132M Office Building Deal
A California-based real estate investor has made its entrance into the D.C. market by acquiring an office building from another Golden State firm.
Nome Capital Partners last week acquired the building at 2550 M St. NW, a 206K SF property fully leased to a law firm, from Menlo Equities, according to documents posted in the D.C. Recorder of Deeds.
The deal was structured as a building sale and ground-lease transaction, with Menlo retaining ownership of the underlying land. Menlo sold the building to Nome for $93M, and it entered into a 99-year ground lease on the property for $39M, a Nome representative confirmed to Bisnow.
JLL's Andrew Weir and David Baker represented the seller in the deal. The firm began marketing the building for sale in April 2021, according to JLL marketing materials sent at the time.
Menlo Equities, based in Menlo Park, California, declined to comment. JLL didn't respond to a request for comment.
Nome, a Milpitas, California-based company founded in 2014 by Rohit Kumar, operates a 2.4M SF portfolio. This deal represented its first acquisition in the D.C. market, and it plans to continue operating the building in "Class-A condition," Nome's representative said.
Menlo Equities purchased the building in 2018 for $167M, according to a sale posted in D.C. records and dated Nov. 15, 2018.
At the time, the building was 100% leased to law firm Squire Patton Boggs. Squire has previously said it has occupied the building since 1978. In 2013, the firm renewed its lease at the address for another 15 years, according to a press release, and its new landlord said the firm still occupies the building.
The West End's office vacancy rate in the first quarter of 2022 was 21.7%, according to CBRE, the highest rate among submarkets studied by the brokerage firm.
D.C's office investment sales market had been slow for about a year after the pandemic began, but it began to heat up last spring, and new data shows it has returned to pre-pandemic levels. According to Newmark's Q1 office market report, the D.C. area recorded $8.6B of investment sales volume during the 12 months ending March 31, its highest mark in two years.