Commercial property

JBG SMITH drives change forward with $228 million DC deal

Universal North and South. Image courtesy of Newmark

JBG SMITH the sale of a pair of office buildings in Washington, DC, is helping its transition to a multi-family orientation and its flagship National Landing project.

The latest move is the $228 million sale of two Class B office buildings in downtown Washington, D.C. post brothers acquired Universal North and South, which take up an entire city block near Dupont Circle.

For Post Brothers, the acquisition marks its debut in the metro Washington, DC market, after developing several projects in Philadelphia. Although the acquisition of 659,459 square feet was announced Tuesday by Newmarkwho arranged the sale, the closing had taken place in early April, a Newmark spokesperson confirmed to commercial real estate director.

The move is part of the REIT’s strategy to divest at least $1.5 billion of non-core office and land assets. JBG SMITH said it plans to focus its investment in the National Landing Project offices in Arlington, Virginia, where Amazon is developing its second US headquarters. Outside of National Landing, the company is turning to multifamily.

The sale of the property this week follows an agreement with Fortress Investment Group to recapitalize a 1.6 million square foot portfolio of seven office properties. The portfolio includes properties in Bethesda, Md., Arlington, Va., Reston, Va., and Washington, D.C. Fortress contributed $131 million to take a 66.5% stake in the company, according to the report from the first quarter of JBG SMITH. In a related move, the company sold a 99-year leasehold interest in a Reston, Virginia development asset.


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For Post Brothers, the acquisition marks its debut in the metro Washington, DC market, after developing several projects in Philadelphia. Although the acquisition of 659,459 square feet was announced Tuesday by Newmarkwho arranged the sale, the closing had taken place in early April, a Newmark spokesperson confirmed to commercial real estate director.

Universal North and South include a two-building office complex at 1825 and 1875 Connecticut Ave. NW. Universal North is a 12-story, 368,071 square foot value-added asset that is 40% leased. Universal South is a 10-story, 291,387 square foot, 98% cash flow leased asset.

The project could accommodate an additional 73,428 square feet of right density. The profile and location of the assets, according to Newmark, “provided investors with an opportunity to execute multiple strategies, including renovation, repositioning or redevelopment for alternative uses.”

Newmark’s executive managing directors, Jud Ryan and James Cassidy, represented the seller in the transaction.

In a prepared statement, Ryan called the deal “one of the District’s largest office property sales of 2022.”

Offices vs apartments

Post Brothers could not be reached for comment, but the suggestions for repositioning or redevelopment are intriguing, given that the company is primarily known for its multi-family projects.

Beginning in late 2019, for example, Post Brothers repurposed a former warehouse at 900 N. Ninth St. in Philadelphia’s North Submarket into The Poplar, a project comprising both offices and 285 apartments.

Although better than a year ago, the District of Columbia office market has “softened slightly” since the start of the year, as evidenced by demand for rent compression and net losses occupancy, according to a first-quarter report from Newmark.

Average asking rent fell in the first quarter to $56.63 per square foot, under what Newmark described as “prolonged low-demand market stress.”

In contrast, the district’s apartment market has reached record net absorption, thanks to factors such as many high-paying jobs; an influx of educated young workers; and one of the most expensive single-family housing markets in the country, according to second-quarter figures from Marcus & Millichap.