CoStar is acquiring the10-story property for $41.25 million. It is a loss for theassociation, which acquired it for $76 million a few years ago withplans to occupy much of it and lease out the rest. CoStar, for itspart, expects to save approximately $1 million a year in occupancycosts versus leasing space in a comparable building after the periodof overlapping occupancy costs is over. CoStar's current lease expireson Oct. 15, 2010.
To woo CoStar, the District offered approximately $6.1 million in realestate property tax abatements over a 10-year period if it relocatedand hired 100 District residents. CoStar Group may also be eligiblefor additional incentives such as a five-year elimination of Districtcorporate income tax and certain sale and use tax exemptions. Thiscampaign to bring CoStar was a major initiative by the Fentyadministration, whose efforts CoStar CEO Andrew Florance acknowledgedin a prepared statement. "We appreciate the support from the Districtand respect Mayor Fenty and the Council members who supported thebill, and for their continued efforts to generate more jobs and taxrevenue for local small and disadvantaged enterprises in DC," hesaid.
CoStar, though, likely moved forward as much for the opportunity to buy adistressed asset as it did to situate itself in the District. The property iscurrently 50% vacant, allowing CoStar to grab it for $243 per squarefoot--less than half the current market rate median of $518 persquare foot, CoStar said. The building, which has 169,429 square feetof rentable space, cost $90.6 million to construct and is Gold-certified.CoStar was not able to return a call to GlobeSt.com intime for publication.
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