The Foundry emerged from a run of high-priced deals to close out the year in Washington, D.C., as the largest single, nonportfolio apartment sale of 2021 in a market that has bounced back from the pandemic.
The Takeaway: New York-based Timberline Real Estate Ventures and South Korea's IGIS Asset Management paid $262 million for The Foundry, a former federal office building and longtime home of the Department of Defense. It was redeveloped in 2020 by the sellers, Perseus Realty, ELV Associates and Four Points, into a 16-story apartment building. The property, located near Amazon's second headquarters campus and Virginia Tech's $1 billion Innovation Campus at 2470 Mandeville Lane, includes 25,562 square feet of retail. The deal came out to nearly $504,000 per unit.
Why it Matters: Developed within the Hoffman Town Center about two blocks north of the Eisenhower Avenue Metro station and near more than 650,000 square feet of walkable retail space, the 520-unit Foundry exemplified how an obsolete office building in the right location can be repurposed to capitalize on the need for more housing, an approach that was validated when The Foundry experienced one of the fastest lease-up paces in the D.C. region.
Zoom In: Designed by Cooper Carry and constructed by Balfour Beatty, The Foundry's innovative building design earned it several accolades, including the 2021 ENR Mid-Atlantic Best Projects Award of Merit in Renovation/Restoration and the 2020 NAIOP North Virginia Award for Best Building in the adaptive reuse category. The property includes studio to three-bedroom apartments and features a three-story gym, spin and yoga studios, a rooftop pool and terrace and an indoor dog park.
What They’re Saying: The Foundry deal highlights the draw of international capital to Washington, D.C., as well as the the growth narrative associated with Amazon's second headquarters, said Will Harvey, senior director of investment sales at Walker & Dunlop, who represented the seller with Jamie Butler and Chris Doerr. The D.C. market has historically been popular with overseas investors because of its relative stability as the seat of the federal government and its high concentration of Fortune 500 employers, while the rollout of Amazon's HQ2 in Northern Virginia has spurred a flurry of multifamily development and sales activity in the region.
The outsize sale price is indicative of the "rarity of a true mixed-use, metro-served, new construction opportunity inside the beltway," Harvey said. The property offers luxury apartments in a path of growth with direct connectivity to HQ2 and Virginia Tech's Innovation Campus via the Eisenhower Avenue Metro station, with the available retail space creating the opportunity for future place-making that can add to the vibrancy at the Hoffman Town Center.
CoStar's Impact Awards highlight the commercial real estate transactions and projects that have transformed their markets over the past year. The winners are chosen by independent panels of industry professionals who work in the markets they judge. A list of judges can be found here and the criteria for selecting winners can be found here.