The Watergate: Tapping into
the leasing market.

WASHINGTON, DC-After an investment of “several millions of dollars” for renovations, Penzance is actively marketing one of the two storied office and residential buildings in the Watergate complex. Penzance acquired the 200,000-square foot building at 2600 Virginia Ave., at the end of the last year. Jones Lang LaSalle is handling the leasing for the complex.

“It’s a Washington landmark,” Matt Pacinelli, senior vice president of leasing at Penzance, tells GlobeSt.com. Among its attributes, the building is only one of two in Northwest sector assets that is on the Potomac River. It is also one of the few premier office buildings that can offer such a large block–75,000 square feet–of contiguous space, he adds, which are on the top four floors. The total they’re looking to lease up is 100,000. The renovations are scheduled for completion in Q3. Asking rates are in the mid to upper 40s per square foot, full service.

Penzance is marketing the space in a city that has been experiencing lackluster leasing activity. However, the trophy office space has been a little more robust, according to JLL’s Winter 2012 Skyline Report, which noted that DC’s trophy market added more than 250,000 feet in new leases so far in 2011.

In addition, DC’s trophy market pipeline is on the skimpy side, with only four projects under construction: 1000 Connecticut Ave., NW, 815 Connecticut Ave., NW, 850 10th Street, NW and 800 10th Street, NW. Given the pullback in new construction, groups seeking large blocks of trophy space will find the market increasingly supply-constrained over the next 24 months, the report concluded.