CoStar Pays $339M For New Headquarters Building
Commercial real estate data giant CoStar spent one-third of a billion dollars on the high-rise office building that it will soon call home.
After Virginia Gov. Glenn Youngkin Tuesday evening announced CoStar's acquisition of and relocation to the Central Place office tower in Arlington, Virginia, without disclosing a sale price, Bisnow has learned the property traded for $339M.
The sale was split into two separate transactions, according to details posted Wednesday to CoStar's own commercial property database. It paid $325M for the building and $14.2M for the land underneath it.
JBG Smith developed the 31-story, 552K SF office tower in 2018. It owned the building in a 50-50 partnership with PGIM Real Estate, a venture that leased three parcels of the underlying land from a private owner, according to the CoStar database.
The building's sale price pencils out to $588 per SF, and the deal had a cap rate of 8.12%, according to CoStar's database.
CoStar, which has a $33B market cap, plans to occupy 150K SF of the tower at 1201 Wilson Blvd., which was 97.8% leased at the time of the sale, according to CoStar's database. It didn't say which floors CoStar would occupy.
The building is anchored by Gartner, which last year put its 318K SF space on the market for sublease, the Washington Business Journal reported. The tower features flexible workspaces on its top six floors, with Convene having the top two and WeWork occupying the next four, according to a JBG Smith marketing brochure.
CoStar is moving its headquarters out of downtown D.C., where it had spent the last 14 years at 1331 L St. NW.
CEO Andy Florance, in a statement Tuesday, called the acquisition "financially strategic," but the firm didn't respond to a request for comment on the price tag. PGIM didn't respond to requests for comment, and JBG declined to comment.
The deal still hadn't been reflected in public records as of Wednesday afternoon.
Virginia provided CoStar with economic incentives as part of the deal, Youngkin announced. The governor said he approved a $3.5M Virginia Economic Development Incentive Grant and $1.25M from the Commonwealth's Opportunity Fund.
CoStar plans to invest $20M in its headquarters space and bring 650 employees there, 500 of whom would relocate from D.C., starting later this year.
The acquisition comes days after another major spend from CoStar, the longtime leader in the commercial property data space that now also owns listing sites for rental and for-sale residences. The company bought four Super Bowl commercials for its Homes.com and Apartments.com platforms, with appearances from celebrities Jeff Goldblum, Dan Levy, Heidi Gardner and Lil Wayne.
The ads kicked off a $1B marketing blitz from CoStar, Inman reported, with Florance describing it as "the biggest marketing campaign ever run by any real estate organization in the entire world."
The company brought in $625M in revenue and $91M in net income during the third quarter of last year and is scheduled to report its fourth-quarter earnings Feb. 20.
