DC Office Market Still Uncovering Rock Bottom Sales

Despite a stabilizing leasing market, the nation’s capital is still seeing office sales at astonishingly low prices.

WC Smith offloaded its own headquarters at 1100 New Jersey Avenue SE to an affiliate of Onward Investors for $43 million, the Commercial Observer reported. That breaks down to $143 per square foot for the 300,000-square-foot property.

The sale of the 10-story property comes in at less than one-third of its assessed value last year of $132 million, according to PropertyShark.

WC Smith did not respond to the publication’s request for comment about the sale, which was first reported by the Washington Business Journal. That outlet described the deal as a short sale, meaning it was for less than the amount owed to the lender.

New York Life Insurance reportedly lent the landlord $117.8 million in 2017, replaced two years later by a loan for a similar amount from Truist Financial. There have been no outward indicators of distress.

The property is 85 percent leased to nearly two dozen tenants, according to marketing materials. The developer previously expressed a plan to stay at the building on a long-term lease.

Onward, based in Minnesota, has been marching into D.C. Ten months ago, the firm acquired a 12-story office building for $54 million, barely half of its last appraised value of $103.4 million, according to PropertyShark.

As for WC Smith, the landlord secured a $106.3 million, 10-year, interest-only Fannie Mae loan over the summer for Agora, a 334-unit luxury multifamily property in the nation’s capital.

Last year, WC Smith settled with the D.C. Attorney General over allegations of using rent-setting software to coordinate with other landlords, resulting in over $1 million in penalties and a ban on using such software based on private data.

There were 1.9 million square feet of leases signed in D.C.’s office market in the fourth quarter, according to a report from Savills. For the year, there were 7.2 million square feet of deals signed, roughly in line with the activity from last year.

— Holden Walter-Warner