Landlord To Renovate Office Building Across From Midtown Center As DHS Vacates

streamrealtyIN THE NEWS, WASHINGTON D.C.

S.C. Herman & Associates is planning to launch its third renovation of a Downtown D.C. office building that has lost a federal government tenant.

The landlord plans to renovate the 276K SF office building at 1125 15th St. NW as the Department of Homeland Security vacates as part of its larger consolidation plan. DHS has already vacated all but 65K SF of the building, and it is expected to depart the rest by year’s end.

Once it leaves, S.C. Herman plans to renovate, rebrand and re-lease the building to the private sector, an effort it has retained Stream Realty Partners to lead. It will rebrand the building as Midtown Square, a nod to the major development just completed across the street for Fannie Mae, Midtown Center.

“We love the moniker, it really creates an identification for the 15th and Vermont corridor north of K Street but south of Massachusetts Avenue,” Stream Realty Managing Director Matt Pacinelli said of the Midtown label. “It now defines a micro-market that previously lacked identification.”

S.C. Herman is also renovating the office building at 1441 L St. NW, a property the Bureau of Economic Analysis vacated and where it has now signed coworking provider Spaces. It is planning to renovate a building the Department of Justice is vacating at 600 E St. NW.

The 1125 15th St. NW renovation will be less extensive than the other two projects, Pacinelli said. It will redesign the common areas, add an outdoor terrace, a bicycle storage room, a 3K SF fitness center, a 2K SF meeting facility and new restrooms.

But the landlord aims to keep costs down so it can maintain the building’s status in the Class-B market, with rents in the upper $40/SF to low $50/SF range. Class-B office stock has shrunk as buildings have been redeveloped to Class-A and trophy-level projects. It maintains strong demand from value-conscious tenants, making it a more appealing segment for some landlords.

“The idea is a fully renovated building with large-block availability at a discount to similar projects elsewhere,” Pacinelli said. “There are very few available Class-B buildings with large-scale availability, particularly in the Central Business District and East End.”

By: Jon Banister
SOURCE: BISNOW