Which Asset Classes Present The Greatest Value In D.C. CRE? Cohn Property Group Weighs In
Commercial real estate in Washington, D.C., continues to see shifting dynamics across asset classes.
There is a massive effort to overhaul obsolete office space in the city, with conversions and repositioning projects hitting record rates. D.C. retail showed strong performance throughout 2024, and the region’s multifamily sector is expected to continue to be one of the top-performing markets in the country.
With that being said, D.C. CRE isn’t picture perfect. Investors are still approaching the market with a sense of caution, particularly when it comes to office space.
Office tenant demand, albeit rising, is still almost 30% below prepandemic levels. Meanwhile, vacancy rates are resting at nearly 20% — showing little signs of improvement in the near future. This has forced developers and investors to get creative.
Identifying opportunities in the market that can provide ideal returns is no easy feat. That’s why as D.C. CRE continues to take a new shape, the need to partner with a brokerage firm that understands the nuances of the market has become even more prevalent, said Mychael Cohn, founder and CEO of Cohn Property Group, a DMV-focused real estate firm based in Bethesda, Maryland.
“Distress in the office market is reshaping the commercial real estate landscape in the DMV,” Cohn said. “It presents the greatest opportunity for the real estate sector in regard to return metrics and value-add proposition. We're seeing the office sector, in our current environment, being able to achieve the greatest returns.”
Despite shaky capital markets, CPG managed to close $89M worth of property in 2024 — with its largest transaction being an undisclosed office asset in Northern Virginia. Its journey in the office repositioning space began with the sale of 4405 East West Highway in Bethesda, Maryland, a 57K SF office building that is slated to be redeveloped into a 10-story residential tower. The building sold for $21.5M in March 2022, and CPG exclusively represented the seller in this transaction.
“We have significant activity in the D.C. marketplace representing major players like Thor Equities, Polinger Companies, Allen & Rocks and Pinkard Group,” he said. “With more than $215M currently under contract right now, we are extremely active, even with capital markets and rising construction costs still posing a huge challenge.”
Other notable office deals CPG closed in 2024 include 4401 Fair Lakes Court in Fairfax, Virginia, a 56K SF office that sold for $4M, and 201 E. Baltimore Street in Baltimore, Maryland, a 169K SF office building that sold for $11.1M in 2022 — now being converted to multifamily.
Though CPG is seeing the most activity in the office sector due to an abundance of distressed assets, the firm’s experience stretches beyond office transactions, Cohn said. Investment and land sales, along with properties such as industrial, retail and multifamily, are central components of CPG’s brokerage capabilities.
In 2024, CPG represented the buyer in the acquisition of a nine-unit Dollar General portfolio for more than $10M. It was also able to sell a high-profile site in Manassas, Virginia, to the Northern Virginia Electrical Cooperative. These deals materialized through CPG’s expertise in investment sales and land sales, Cohn said.
“I've seen brokerages that understand the investment sales world and the land sales world separately, but given our backgrounds and expertise, we happen to understand both,” Cohn said. “We’re able to bridge the gap and cross those boundary lines to position ourselves to not only see the value of the property today but the future value of these properties when they grow up.”
As D.C. CRE moves further into 2025, hot sectors piquing investor interest are covered land plays for residential development as well as industrial outdoor storage, Cohn said.
The firm is seeing heightened engagement with these properties because of a diminishing supply of heavy industrial-zoned land and a lack of supply in the residential for-sale world throughout the DMV, Cohn said. CPG has a handful of deals under contract in these spaces, where some former clients are retaining its services to take advantage of the premium pricing.
“The shortage of industrial and residential-zoned land is driving demand for existing industrial properties that have limited structures on them and permit outdoor storage — as well as zoned and entitled land planned as for-sale residential development,” Cohn said. “We’re looking forward to closing more deals in these active spaces in the near future.”
With millions of dollars worth of deals in the works, Cohn said that 2025 will be a big year for CPG not only because of its transaction volume, but also because of the addition of two new team members, Josh Simon, principal, and Maggie Morris, director of marketing.
“Josh is a long-time childhood friend of mine,” he said. “We talked about partnering up for years. He brings about 18-plus years of experience and over $750M of sales transactions, including land sales, redevelopment, conversions and investment sales.”
Simon will work alongside Cohn to continue growing the firm's presence in the institutional and private ownership space. Maggie Morris supports the team by crafting all marketing material. Both team members have been valuable additions to the team, he said.
“We have a lot of things happening at CPG,” Cohn said. “We have a ton of activity going on, especially in the office repositioning world. Land and investment sales are a huge part of our business, and we really excel at blending our expertise of the two together to extract the most value for our clients.”
This article was produced in collaboration between Studio B and CPG. Bisnow news staff was not involved in the production of this content.
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