Brookfield Acquires East End Office for $106M

WASHINGTON, DC-Brookfield Office Properties has acquired 799 9th St., NW, for $106 million or $522 per rentable square foot. Located in the East End submarket, 799 9th is a 10-story, LEED Gold-certified building of 203,000 rentable square feet. GlobeSt.com reported in November 2006 that an unnamed client of AEW Capital Management paid $127.5 million for the property.

The acquisition is a value play, however, despite its pedigree location. All of the leases are expiring in December 2012 and January 2013. This could give some investors pause—there is some 2.2 million square feet of vacancy recently introduced or about to be introduced into the East End, according to Jones Lang LaSalle, due to the dissolutions of Howrey and Dewey LeBoeuf, the pending move-out by McDermott Will from 600 13th St. and other law firm relocations and downsizings.

That being said, the East End remains a hotly-sought after address for law firms and lobbyists, making the buildings in the submarket a core holding in many institutional portfolios. Indeed, Brookfield owns two other buildings immediately adjacent to 799 9th—701 9th and the Victor Building at 750 9th. Collectively, the buildings are 97% leased. Brookfield owns 31 office properties in the greater DC area totaling eight million square feet.

Another positive sign for the East End: it is continually active. Hamilton Square, a trophy building located at 600 14th St., NW, was acquired for $198 million by Commonwealth Partners earlier this month, as one example. In May, Jamestown Properties acquired 733 10th St., for $140 million. In another project, MRP Realty and ASB Real Estate Investments recently announced plans to redevelop 900 G St., NW.