WASHINGTON, DC–With the first half of 2017 in the bag, it is clear that office sales activity in the Washington DC area is on track to exceed 2016's levels, according to JLL. It reports that Metro DC saw sales volume equal to 62% of the 2016 total in the first half 2017.
Some trends within these sales are new: for example, the suburban markets are capturing an increased share of federally leased asset sales. In 2017, 90% of such sales have been in Northern Virginia and Suburban Maryland.
Other trends we are seeing are very familiar: per the last few years foreign investment is driving area sales. For instance, though DC accounted for only about half of regional sales volume, it received 77% of foreign investment in the first half of 2017, according to JLL.
Trophy Pricing's High Water Mark
Another familiar trend seen this year: the trophy office product is highly valued by investors. JLL notes that trophy sales pricing hit a new high note (Oxford Properties and Norges Bank Investment Management's $1,252 per square foot purchase of 900 16th St., NW, raised the city's high watermark pricing by more than $150 per square feet) despite minimal rent growth.
It writes:
Trophy high watermark sales pricing has grown 69% since 2007, even as Trophy high watermark rents have grown just 31%. Looking at average Trophy sales pricing vs. average Trophy rents, the story is no different with 59% growth in average Trophy sales prices from 2007-2017, while average Trophy rents have increased just 23%.
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