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WASHINGTON, DC-New York City-based ING Clarion will deliver 52,000 sf along the K Street Corridor later this year when its $30-million expansion and renovation at 2121 K St. is complete. This project is following the lead of several other properties on K Street that have added floors in response to the huge demand for space in this part of the District and the accompanying rise in asking rental rates.

ING Clarion purchased the eight-story, 140,000-sf building in December 2005 from Chicago-based M & J Wilkow Ltd. for $67.5 million. The plan to build out and renovate the property originated with Wilkow. Other improvements will include a new facade, lobby, restrooms, common areas, mechanical systems, fitness center and rooftop terrace.

However it is the top three floors and the potential revenue stream that most intrigued ING, according to Marc Nathanson, managing principal of WDG Architecture, a local firm that originally designed the building in 1981 and has also designed the addition.

“Besides increasing density, adding three floors would make the building higher than the surrounding ones,” he tells GlobeSt.com. “Because the view is going to better, they will be able to command a premium in rent for those floors.”

“This will now be the tallest building in the west end of the CBD,” says Trip Howell, regional managing director with Jones Lang LaSalle, who is serving as leasing agent for ING Clarion along with Amy Bowser, vice president. “The vertical addition is creating the platform for some of the best views in the city.”

Currently the building’s eighth floor is vacant, bringing the total available space to approximately 70,000 sf at the top of the building. Rockville, MD-based James G. Davis Construction Corp. is the project’s general contractor. Construction began in July. The new space is anticipated to be available in the fourth quarter of 2007.

Besides 2121 K St., there are several other buildings along the corridor undergoing similar construction, Tonya Ginter, research director for GVA Advantis, tells GlobeSt.com.

Typically they have been class B buildings brought up to class A standards along with additional space to rent. “There is not a lot of space in the CBD available for development,” Ginter says. Building owners are finding that to capitalize on the huge price increases for buildings and the growth in rental rates the benefits of renovation and expansion outweigh the considerable construction costs.”

“Some of these investors like the idea of building out and then selling for much more than they could get now five to seven years down the road,” she says.

At least three buildings in the area are currently planning build-outs: 2021 K St. and 2175 K St., both of which are planning to add three floors. Two additional floors are being planned for 1129 20th St.

Buildings that have already undergone renovations include 1909 K St., which went to 12 from eight stories and 2020 K St., which added three stories. Nathanson reports there is increased interest from clients in expanding space, especially along the K Street Corridor.

Changes in zoning laws five or so years ago made the expansions possible. More property owners now, though, are capitalizing on these changes in response to the investment sales and rental markets in the District.

For instance, Nathanson says while anecdotally it appears as though much of the redevelopment is occurring along K Street in truth most parts of the city are available for this kind of build-out.

“Transfer development rights have become available to certain areas in recent years. Also, certain streets are wide enough to allow an increase in the height, under the Height Act.” He says the widespread understanding that buildings in DC cannot top the Washington Monument or Capitol is a myth. There is a height restriction, but it is not pegged to any particular building.

“Buildings restricted by zoning can be increased under the Height Act if there is a mechanism available to do it. That mechanism is the TDRS.”

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