A Miami real estate firm bought a recently renovated office building in Washington, D.C., for about half of what it sold for six years ago as pricing for this type of property resets because of reduced demand across the country.
An affiliate of Azora Exan bought the seven-story building at 1666 Connecticut Ave. NW from an affiliate of ASB Real Estate Investments, a division of Bethesda, Maryland-based group ASB Capital Management, for $15.75 million, according to public records and CoStar data. The building contains 78,399 square feet of space that is 28.9% vacant, more than twice the rate for Class B buildings in the market, according to CoStar.
The price paid for the 1666 Connecticut building in Washington's DuPont Circle neighborhood is about 52% of the $30.5 million the property sold for in 2019. Neither Azora Exan nor ASB immediately responded to emailed requests for comment.
Office buildings in major cities across the country, especially older properties, have sold for well below their previous prices as investors help reset pricing in the sector while trying to rebound from the effects of the pandemic. In Boston, a 36-story tower was acquired in March for less than half of the nearly $900 million price tag it transacted for in 2006, while in Denver, a pair of offices sold earlier in April for about 10% of what the portfolio went for in 2018.
In Washington, several properties have traded for well below what their owners paid for them. In March, 1401 H St. NW sold for just over $118 million, slightly more than half of what it was bought for nearly 20 years before. The month prior, a four-property office portfolio near Dulles International Airport in Virginia, totaling nearly 350,000 square feet, sold for less than half of what it went for almost a decade ago.
Those transactions occurred as D.C. office sales demand struggles. Total investment volume slowed to 730 sales totaling $3.4 billion over the past 12 months, according to a CoStar Market Analytics report. The 10-year average annual sales volume for the market is 800 transactions with a total value of $6.5 billion.
"Transacting office deals remains hard due to challenging financing and an uncertain economic outlook," CoStar said in the report. "For the most part, institutional investors have been out of the market, and user-buyers, family offices, investors, and private individuals have been making the most purchases."
Built in 1962 and renovated in 2021, the 1666 Connecticut building's top two floors are occupied by economic development partnership Appalachian Regional Commission, and the street-level space is occupied by Italian restaurant Sette Osteria, CoStar data shows.
Azora Exan also owns other properties in the District including 500 N. Capitol St. NW, 900 G St. NW, 1399 New York Ave. NW and 1701 Rhode Island Ave. NW.
For the record
Listing brokers per CoStar data included JLL’s Jim Meisel, Kevin Byrd, Andrew Weir and David Baker as well as Matt Nicholson, who recently left JLL to join Lincoln Property Co.