BXP Bets on DC With Rare Office Development

BXP is bucking Washington, D.C.’s office market downturn by moving ahead with a 12-story trophy tower at 725 12th Street NW.

The $34 million site, perched above Metro Center and three blocks from the White House, will deliver 320,000 square feet of glassy workspace in late 2028, the Washington Business Journal reported. The real estate investment trust closed on the property in January and started demolition in August.

It has already locked down two anchor tenants: law firm McDermott Will & Emery, which took 150,000 square feet across the top five floors for 15 years, and Cooley, which inked 126,000 square feet for 20 years. The project is 87 percent pre-leased before construction is even underway. Demolition at 725 12th is expected to take about a year.

BXP is one of just a handful of landlords still willing to put fresh office space in the ground.

Metro D.C.’s vacancy rate hovered at 20.3 percent in the second quarter; the submarket around BXP’s site was even more desolate at 23 percent, according to Colliers. Still, rents north of $60 per square foot rival downtown Boston, BXP’s home turf, and trophy demand from law firms remains durable.

The development will be one of only two top-tier office projects rising in the capital, alongside the redevelopment of Metro’s former HQ at 600 Fifth Street NW, which is nearly half pre-leased to Crowell & Moring.

For BXP, the D.C. bet is part of a broader regional push. The firm controls seven area properties, including half of Marriott’s 785,000-square-foot HQ in Bethesda. It has also signaled plans for a 539-unit residential tower in the same neighborhood as 725 12th, though that project wouldn’t break ground until at least 2027.

BXP and joint venture partner Delaware North were just in the news for securing a $465 million refinancing loan for a portion of the Hub on Causeway in Boston, a retail and office development.

— Holden Walter-Warner