at least not yet.
WASHINGTON, DC-The leasehold on an East End building, Carroll Square, has traded for $121.4 million. The 178,000-square-foot, class A building, located at 975 F St., NW, is being acquired by GLL Partners from Seaton Benkowski & Partners. GLL Partners is assuming an existing loan on the 10-story property. HFF’s Stephen Conley, Jim Meisel, Dek Potts and Andrew Weir represented the seller in the transaction.
Carroll Square is comprised of both new construction and seven late-19th century commercial townhomes. It houses a small public art gallery, three rooftop terraces and a small park between the office building and St. Patrick’s Catholic Church. The property is encumbered by a ground lease with the Archdiocese of Washington, D.C. through 2102. It is fully leased to tenants including the law firms of Seyfarth Shaw, Holland & Hart, and Fitzpatrick, Cella, Harper & Scinto and retail tenants Le Pain Quotidien, Leica Camera and Coco Sala.
At $121.4 million, the building’s trade shows that prices are not softening here even though sales volume has fallen year-over-year, Jones Lang LaSalle research director Scott Homa tells GlobeSt,com. “Pricing for core, class A buildings averaged $645 per square foot during the first half of 2012, and cap rates remained well under 6% for long-term stabilized assets.”
However, he continues, as the realities of the marketplace begin to sink in, buyer and seller expectations are diverging—again. Tenant demand has slowed and market participants are not anticipating any real growth in net effective rents.
Underwriting assumptions have become more conservative, and this is resulting in more assets being pulled from the market. “Overall, with the federal election looming and little progress being made in establishing a clear fiscal policy, we expect investors to adopt a ‘wait-and-see’ posture heading into November,” Homa says.