In a deal that intersects with two current trends in the office sector—the active market in distressed properties and conversions to residential—JBG Smith has acquired Tysons Dulles Plaza, a three-building, approximately 500,000-square-foot office campus in Tysons, Va.
The seller of the 15-acre campus and the dollar amount for this transaction were not disclosed. However, information provided by CommercialEdge indicates that the seller was Rockpoint Group, of Boston, which had acquired the three buildings from KBS Realty Advisors in a June 2017 portfolio transaction worth $130 million. The current price of the three-building portfolio was 42.3 million.
JBG Smith announced that it plans to re-entitle and redevelop one of the three office buildings for residential use. The other two buildings reportedly will be “enhanced and modernized and remain in long-term operation for office tenants.”
READ ALSO: Office Conversions, Demolitions Outpace New Construction
A JBG Smith spokesperson was unable to provide additional information about the specifics of this plan.
Regarding distress, the company’s announcement referenced both the office sector’s issues caused by remote work and the D.C. region’s economic headwinds, while also noting the opportunities that distress creates to acquire office assets at attractive prices.
Tysons Dulles Plaza consists of three Class A office buildings:
• Plaza I, 1420 Spring Hill Road, completed 1986.
• Plaza II, 1430 Spring Hill Road, completed 1986.
• Plaza III, 1410 Spring Hill Road, completed 1989.
The property also features 1,553 parking spaces. It’s walkable to the Silver Line’s Spring Hill Metro station and adjacent to Route 267, the Dulles Toll Road.
JBG Smith stated that at Tysons Dulles Plaza they’ll be seeking to replicate their success with their development activities in National Landing, which have focused in part on shedding office space and expanding residential and retail space.
Varied buyers, varied goals
Just last month, Commercial Property Executive took a close look at the market for distressed office assets, especially who’s buying them and according to what strategies.
For example, private capital players, including private equity firms, family offices and high-net-worth individuals, have been active buyers of distressed offices, according to Lukas Krause, CEO of SVN International Corp.
These investors are looking to take advantage of price reductions from earlier valuations, especially in primary markets where downturns are typically followed by substantial recoveries. Depending on the type of entity, some are targeting turnaround and value creation, while others set their sights on long-term appreciation and consistent income streams.
