CommonWealth REIT Makes Smart Concession to Attract New Tenant

GAITHERSBURG, MD-CommonWealth REIT inked a lease last month with Adventist HealthCare for 69,379-square feet in a office property here that has been sitting nearly empty since 2008 when the National Institute of Standards and Technology vacated it. 

To get the marquee-name company to sign on for space in the building, located 820 W. Diamond Ave., the REIT granted what turned out to be a smart concession: it allowed Adventist HealthCare to start the lease in May 2013 when its current lease expires, CBRE’s Andy Cole tells GlobeSt.com. “One of the great things that happened as a result is that the Adventist HealthCare lease attracted the interest of other tenants. There are a number that are looking at it right now that could bring us to 100% occupancy within 90 to 100 days,” he says. Before the Adventist HealthCare lease, the building was 23% occupied, according to Cole. With the lease secured, occupancy will rise to 78% when the company moves in.

There is also a good possibility that Adventist HealthCare will expand its space in the building over the next three months, under an option in its lease, Cole adds. “They can take an additional 19,000 square feet on the first floor and they will probably take all or a portion of that.”

Adventist HealthCare, currently located in Rockville, MD, had needed to move but didn’t want to go too far beyond the 1-270 Corridor. It views the new building as an improvement because it is closer to Germantown, where many of its employees live, Cole says. “Also CommonWealth REIT’s building is located to many more amenities within walking distance.” The negotiated rent, he says, was based on the market rate for the submarket. 

Besides Cole, CBRE’s Dan McGiveny also represented CommonWealth REIT in the transaction.  Larry Walker and Jason Klein of the Walker Group represented Adventist HealthCare. CommonWealth REIT renovated the building in 2008.  It had been constructed in 1995 as a build-to-suite for NIST.