In Washington D.C., a fully-leased office building sold for over $1,000 per SF. Even for the nation’s capital, this is a sizable sum. And one of the biggest surprises is that the building is leased to WeWork, a company which creates coworking spaces and virtual offices. This is a price threshold that few D.C. buildings have topped. And the ones that have sold for over $1,000 per SF didn’t have significant coworking components.
The 1701 Rhode Island Ave. NW coworking office building sold for $105.7 M to a group affiliated with Exan Capital of Miami. The overall selling price of the building was $119 M. Commercial real estate firm Akridge credited an additional $13.3 M to Exan so WeWork could build out the space. As a result, the sale price of this building translates to $1,016 per SF, one of D.C.’s most expensive office building sales ever. Before the deal closed, WeWork had already leased the entire property. WeWork plans to deliver the building in February 2020.
The Expanding D.C. Coworking Market
Currently, WeWork continues to expand in Washington D.C. At the moment, the coworking provider has signed several deals over 100K square feet in the past few months. In April and May, it signed two 100,000 SF properties, one each month. more, a recent deal will allow the company to expand a 1775 Tysons Blvd office building designed for coworking.
Going Against Leasing Trends
What’s more, the building boasts a prominent location. Specifically, it’s at the intersection of Rhode Island Avenue and 17th Street NW. What’s more, the property is only about half-mile from the Dupont Circle and Farragut North Metro stations. Also, with it’s a landscaped entry plaza, two-story lobby, and floor-to-ceiling glass and copper facade, the building itself is unique and impressive. Also, the property has exceptional amenities like a fitness center and a terrace on the roof.
In general, investors have been hesitant to sink their cash into properties which have coworking providers and virtual offices as major tenants.
In addition to the high price tag, the sale of 1701 Rhode Island Ave. NW goes against a prevailing trend. In general, investors have been hesitant to sink their cash into properties which have coworking providers and virtual offices as major tenants. In fact, a recent study shows that buildings with coworking spaces in over 40% of the footprint tend to have less favorable cap rates than other comparable properties with less coworking space. Overall, lenders tend to be uncomfortable when coworking takes up more than 25% of a building’s footprint.
However, other factors may have played a role in the building’s high sale price. For example, the property’s size, location, and amenities may have driven up the price. Yet regardless of the factors involved, it is a property with a heavy coworking footprint that commanded a hefty sale price.
CXRE’s Coworking Services
If you’re looking for an experienced firm to manage or develop your Houston coworking spaces or coworking office building, then CXRE can assist you. Without a doubt, CXRE’s team of property management professionals have years of experience. What’s more, we can manage your virtual offices and Houston coworking spaces. Specifically, CXRE manages spaces for a variety of clients: innovation labs, corporate technology hubs, forward-thinking business suite operators, and even sub-leased floors.
Our innovative approach to managing Houston coworking spaces and communities lets owners maximize their investments.
Furthermore, we use customized Citrix-based systems to manage a host of amenities. Without a doubt, we can handle everything – conference rooms, kitchens, phone booths, coffee bars, data pipes, and furniture assets. When you pair our coworking office management services with our telecommuting platform, you’ll see accelerated utilization rates for your investments.
Contact us today learn how we can develop or manage your coworking office space.