Q2 2012 District of Columbia, District of Columbia Office Property Sales Analysis

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Q2 2012 District of Columbia, District of Columbia Office Property Sales Analysis

Metro Volume and Pricing


Single property office investment sales continued right along in the second quarter of 2012, Reis reports. There were nine deals for a transaction volume of $635 million at a mean price of $525 psf. The largest monetary sale of the quarter took place in May, when Shorenstein Partners LLC sold the 248,500-square-foot Hamilton Square property for $198 million ($797 psf.) In April, the 171,200-square-foot 733 10th Street NW sold for $140 million, or $818 psf. The seller was Skanska USA Commercial Development Inc.; the buyer was Jamestown Properties.

Top Submarkets


The East End again leads all submarkets in square footage and dollar value sold over the past twelve months at 1.6 million square feet and $1 billion. The $656 psf average price for the East End was also the highest. The Downtown submarket was second in volume at 1.4 million square feet sold for a transaction volume of $644 million.

Cap Rate Comparisons and Forecasts


The mean cap rate for second quarter sales was 5.8%, up 20 basis points from the prior quarter and up 40 basis points over 12 months. The rate is down 60 basis points since year-end 2011. The 12-month rolling cap rate finished the quarter at 6.1%, down 20 basis points from the prior quarter but up 30 from the year-end rate. The 12-month rolling cap rate for the South Atlantic region was 7.7%; for the U.S. as a whole the rate was 7.5%. Washington, D.C. cap rates have generally run below the U.S. and South Atlantic averages. Looking forward, Reis expects the 12 month rolling cap rate to remain close to 6.0% through 2014.