Entire Office Building At City Ridge Development Put Up For Sublease

As Fannie Mae looks to exit the downtown headquarters lease it signed a decade ago, the anchor tenant at the redevelopment of its former home is also keen on moving out of its space. 

International Baccalaureate signed a 100K SF lease in 2019 for 3950 Wisconsin Ave. NW, which Roadside Development redeveloped for the global nonprofit. IB has retained Avison Young to market that entire space for sublease, according to a leasing flyer obtained by Bisnow. 

The historic, brick building that formerly housed Fannie Mae was renovated as part of Roadside’s $730M redevelopment of the 10-acre campus, branded City Ridge.

Roadside Development founding principal Richard Lake, speaking to Bisnow Monday afternoon, said he wasn’t aware that IB had listed the entire building for sublease, but he had earlier discussions with the nonprofit about subleasing part of its space due to remote work changing its real estate needs. 

“I’m not surprised, to be honest. It doesn’t upset me that they’re out trying to figure out their real estate,” he said. “They have a long-term lease. It’s a pretty sizable financial obligation. I’m not surprised, but if you look at the marketplace right now, everyone’s trying to figure out, ‘What does tomorrow look like?’”

Spokespeople for IB didn’t respond to requests for comment. Avison Young’s Brian Martin, one of the brokers on the listing, declined to comment. 

City Ridge totals 687 multifamily units, 167K SF of office and 155K SF of retail, anchored by D.C.'s first Wegmans grocery store. Located on Upper Northwest’s busy Wisconsin Avenue thoroughfare, the project’s closest Metro station is about three-quarters of a mile away in Tenleytown. 

In the developer’s 2019 release announcing IB as the project’s anchor office tenant, Lake said it would “play a leading role in this transformational development.”

The nonprofit relocated from 7501 Wisconsin Ave. in Bethesda. It held a grand opening ceremony for its office in May and called it a new North American headquarters. IB Director General Olli-Pekka Heinonen said in a release in May that the move “reflects our commitment to growth.”

Just eight months after that ceremony, the organization could exit the entire space if it finds a subtenant.

The first page of the marketing flyer says it is presented by International Baccalaureate and touts it as a “full-building opportunity” and “not your average sublease.” The flyer lists the full 41K SF first floor as a fully built-out space, and it lists the 39K SF second floor and 22K SF third floor as shell space. 

Because the tenant is still required to pay rent until it finds a subtenant, Lake said the space hitting the market doesn’t negatively impact Roadside’s finances for the project. He said his main interest is in increasing daytime activity at the development, and he hopes IB can find a subtenant that brings more employees into the office.

“It’s been a good relationship with the tenant, but they are caught with this remote work scenario where they’re not getting as many people in as we would like,” Lake said. 

The remainder of City Ridge’s office space has been leased. In 2022, fast-casual chain Cava Group signed a deal to lease the top floor of 14 Ridge Square, one of the project’s new buildings. Coworking operator Industrious also signed on in 2022 for 41K SF in that building. The developer has also signed a series of big-name retail tenants in addition to Wegmans: fitness club Equinox, Tatte Bakery & Cafe, King Street Oyster Bar, Taco Bamba, Kinder Care and Bank of America. 

While the anchor office tenant still owes its rent, the nonprofit’s desire to give back 100K SF is another worrying sign for D.C.’s historically weak office market.

Earlier this month, Bisnow first reported that Fannie Mae’s 720K SF headquarters at Midtown Center was back on the market for lease, as the tenant plans to exercise its early termination clause to vacate the space by 2029. 

The D.C. market had 3.3M SF available on the sublease market as of year-end, according to Savills, roughly the same level as one year before. The overall availability rate in the market reached a new high of 22.4% at year-end, up 60 basis points from the prior year.