Capital City Office Building Lures Big Bucks

Another Washington, D.C., office building has hit the market and fetched a robust, nine-digit sum. Chicago-based office REIT Trizec Properties (TRZ) bought 1200 K Street, N.W. for $190 million last week. The 389,000 sq. ft. property was sold by a group of unidentified private investors. Tenant firm Pension Benefit Guaranty Corp. leases 385,000 sq. ft. of the space through 2018.

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The 1200 K St. sale price ranks as the D.C. office market’s second richest so far this year. Two other buildings have sold for more than $100 million over the past four months: 555 11th St. NW sold for $270 million during the first quarter while 1875 K St. NW fetched $113 million during the same period.

Roughly $3.2 billion in office properties were sold during the first quarter, reports Manhattan-based real estate research firm Real Capital Analytics. That total represents an 18% decline over first quarter 2004 volume. The average price per sq. ft. during the first quarter registered $389 while the average capitalization rate (or initial yield) was 6.7%. As these numbers suggest, buyer demand continues to outstrip the supply of available offerings in Washington, D.C.


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