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Penzance, Greenfield Sell Watergate Retail Space For $15M

The Watergate complex in Washington, D.C.

A retired Northern Virginia doctor is now the owner of a piece of the Watergate complex. 

Penzance and Greenfield Partners sold the retail portion of the complex, three levels of shops and restaurants totaling 57K SF, to the doctor, who declined to be named.

The deal closed for $15.4M, according to a document filed Wednesday in the D.C. Recorder of Deeds. The document lists the buyer as Watergate Partners LLC, an entity registered to the address of a MedStar urgent care center in McLean, 6858 Old Dominion Drive.

Marcus & Millichap Senior Director Dean Zang, who represented the seller, said he is increasingly seeing wealthy individuals enter the market to buy retail space as some institutional buyers pull back. He said he closed a similar deal in Manassas with the owner of a tech company making his first retail purchase.

"There is this new emerging buyer pool that is under the radar of more institutionalized brokerage shops that we are finding to buy assets over $10M," said Zang, who also worked with Marcus & Millichap's Nathan Pealer and Josh Ein on the deal. "New faces are coming to town." 

The buyer acquired a long-term ground lease on the retail portion of the complex, which is owned by the Watergate's condo association. The deal also included a 135-space parking garage.

The retail property, known as Watergate Shops, is roughly 85% leased. It consists of restaurants Campono and Zeitoun, a CVS, a nail salon, a deli, a barbershop, a frame design store, a pastry shop and a travel agency. A KinderCare child care center will soon open in the space. One of the remaining vacancies is for a street-level café space, which Zang expects to be an early target for the buyer to lease up. 

The deal comes a year after Penzance sold the Watergate office building at 2600 Virginia Ave. NW for $80M to Rockwood Capital. WashREIT acquired another piece of the Watergate complex, a 309K SF office building at 600 New Hampshire Ave. NW, in March for $135M.