DC Area Racks Up $5B in Investment Sales

WASHINGTON, DC-The Washington, DC area saw some $5 billion in commercial real estate sales close in 2010, according to new figures from Jones Lang LaSalle. This equates to more than double that of 2009 and $1 billion more than 2008. Indeed the year was a pivotal one for the area’s commercial real estate markets, which saw three trades breach the $800 per square foot sales price, out of a total of seven all together. These top three were 1225 Connecticut Ave., NW; 1899 Pennsylvania Ave., NW; and Evening Star Building.  In fact, 1225 Connecticut became the first building in DC ever to eclipse the $900 per square foot mark.

In short, by both transaction volume and pricing, 2010 greatly exceeded Jones Lang LaSalle’s expectations, Scott Homa, research director for JLL tells GlobeSt.com. “To have three of the highest-priced deals of all time occur this year, especially given the continued distress across most markets nationally, really highlights the durability and desirability of assets in Washington, DC,” he says. “The speed and magnitude of the economic recovery in Washington, DC has been astonishing.”

In general, 2010 is finishing the year with pricing having returned to relatively high levels, JLL concluded, pointing to One & Two Potomac Yard’s trade at $386 per square foot, and 3190 Fairview Park in Virginia, which went for $320 per square foot. Even quality properties in outer-lying suburbs such as Herndon, which saw 2303 Dulles Station trade for $363 per square foot, are doing well.

Suburban Virginia registered a huge uptick in sales, at 23 transactions for over $1.3 billion. In 2009, those figures were 14 transactions for $600 million. Suburban Maryland, by contrast, posted a fairly low volume of sales for the year, with only five deals for $220 million.

JLL notes that buyers were mainly focused on core and core-plus product this year, but there was a noticeable move to value-add and opportunistic plays as well, especially in the suburbs. This is a reflection of the growing willingness on the part of some investors to take on more risk. As illustration, JLL points to the trade of eight vacant properties in the area in 2010, the most recent being 3120 Fairview Park in Merrifield, VA, which sold for $235 per square foot, despite the leasing risk assumed by the buyer.