CoStar is acquiring the10-story property for $41.25 million. Itis a loss for theassociation, which acquired it for $76 million afew years ago withplans to occupy much of it and lease out therest. CoStar, for itspart, expects to save approximately $1 milliona year in occupancycosts versus leasing space in a comparablebuilding after the periodof overlapping occupancy costs is over.CoStar's current lease expireson Oct. 15, 2010.

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To woo CoStar, the District offered approximately $6.1 millionin realestate property tax abatements over a 10-year period if itrelocatedand hired 100 District residents. CoStar Group may also beeligiblefor additional incentives such as a five-year eliminationof Districtcorporate income tax and certain sale and use taxexemptions. Thiscampaign to bring CoStar was a major initiative bythe Fentyadministration, whose efforts CoStar CEO Andrew Floranceacknowledgedin a prepared statement. "We appreciate the supportfrom the Districtand respect Mayor Fenty and the Council memberswho supported thebill, and for their continued efforts to generatemore jobs and taxrevenue for local small and disadvantagedenterprises in DC," hesaid.

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CoStar, though, likely moved forward as much for the opportunityto buy adistressed asset as it did to situate itself in theDistrict. The property iscurrently 50% vacant, allowing CoStar tograb it for $243 per squarefoot--less than half the current marketrate median of $518 persquare foot, CoStar said. The building,which has 169,429 square feetof rentable space, cost $90.6 millionto construct and is Gold-certified.CoStar was not able to return acall to GlobeSt.com intime for publication.

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Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.