After Losing Anchor, $15M Renovation, 1201 Penn Leasing From The Ground Up
It has a Pennsylvania Avenue address, a 13-story light-filled atrium, column-free floor plates and a rooftop terrace looking down America's main street, but as of 2015, the Class-A office building at 1201 Pennsylvania Ave. was missing one thing: tenants.
Now, roughly three years after anchor tenant Covington & Burling moved out, the building has begun to gain leasing momentum with three deals this year that bring the 445K SF property to about half full.
In the last month, lobbying-focused law firm Williams & Jensen and advocacy group Financial Services Institute have signed on for a combined 35K SF, occupying the building's seventh floor.
Those deals come after FiscalNote in June signed on to occupy 38K SF on the sixth floor of the building. The tech company grew from its previous 21K SF at One Thomas Circle, while the two most recent tenants stayed about the same size. The three companies will move into their new spaces next year. Previously, Duke University leased the fifth floor and Hudson Institute took the fourth floor.
JLL's leasing team of Doug Mueller, Nathan Beach, Evan Behr, Kristen Mathis, Mac Hall and Thomas Myers represent the landlord, New York-based Sentinel Real Estate Corp.
Sentinel is completing the finishing touches on its $15M repositioning of the property. The makeover comes after its longtime anchor, law firm Covington & Burling, vacated in 2014 to move into CityCenterDC. While the firm moved out in December 2014, it was still paying rent until the expiration of its lease about a year ago, Mueller said.
The new leases in the building have closed for between $60 and $70 per SF, Mueller said. That represents a typical Class-A rent, but is below the $80/SF average for Pennsylvania Avenue, which ranks as D.C.'s most-expensive office corridor, according to JLL.
Even with the new string of deals, the building still has 212K SF of vacancy. Mueller said he bets his team can fill that up in the next 12 months.
While the leasing has progressed with single-floor tenants signing from the ground up, he said five large potential tenants, at least 50K SF to 100K SF, are looking at taking the building's top floors.
He could not name the companies, but said they include two law firms, two associations and one corporation. Mueller said the building was one of the finalists for Yelp, which ultimately signed on for 52K SF at Terrell Place to open a new D.C. office.
This year's deals brought the building to 50% leased, and Mueller said he is happy with the pace of leasing activity, but he hopes to escalate it early next year by closing deals with some of the larger companies.
"The market is dictating the pace more than anything," Mueller said. "The pace has been good, but the timing of large deals is further out. That's the new norm in D.C."
The one piece of the renovation still under construction is the building's rooftop terrace. The roof offers views of the Capitol, the Old Post Office building and the Washington Monument. Given its size, Mueller is offering to set aside some portions of the rooftop as private for potential large tenants.
The completed renovations include a newly refurbished, two-story lobby looking up at its 13-story atrium, which brings light in and allows tenants to have interior-facing windows.
The building's retail tenants include Del Frisco's Grille, which has an entrance from the office lobby, Elephant & Castle, Pret A Manger and CVS.
The owner also added amenities such as a 5K SF fitness center, a 200-seat conference center and a new HVAC system. The large conference facility, which divides into three rooms, was necessary to attract large tenants who hold big corporate events, Mueller said.
“The floor plate lends itself to a lot of different tenants," Mueller said. "Law firms like it because it has three sides of glass. Associations and tech like it because it's column free. For lobbying, it has the location. It really plays in a lot of fields. I've gotten differing interest.”
