BXP Lands Major Lease To Build New Downtown D.C. Office Building
Zero new office developments began construction in D.C. last year, but just one week into 2025, a new ground-up project is moving forward.
BXP signed a 150K SF lease with a law firm that is allowing the office REIT to kick off the demolition and redevelopment of a 1990s-era Metro Center building into a 320K SF trophy office, BXP announced Tuesday.
McDermott Will & Emery signed the lease for the top five floors of the project at 725 12th St. NW, according to a BXP news release, which says the REIT is negotiating with another tenant for the majority of the remaining space.
BXP purchased the building for $34M from Hines in the final days of 2024. It plans to deliver the new building in late 2028.
“We are pleased to complete this creative deal, which underscores BXP’s uniquely competitive position in the property and financial markets,” BXP co-Head of the D.C. Region Pete Otteni said in the release.
CBRE’s Lou Christopher, Jordan Brainard, Rob Copito and Clay Hammerstein represented McDermott Will & Emery in the lease, and JLL’s Evan Behr represented BXP.
“McDermott Will & Emery made it clear from the outset that they only wanted the best for their firm – trophy from top to bottom: location, design, building features and developer,” Behr said in a statement.
Since 2012, the law firm has occupied 500 North Capitol St. NW on Capitol Hill, a building in which BXP owns a 30% stake.
The 300K SF downtown property BXP plans to demolish was previously slated for a live-work conversion from Madison Marquette and Highland Square Holdings, which were under contract in 2023 to acquire the property but abandoned the plans at the end of that year.
A new, ground-up office project is a rarity in a D.C. market that has seen vacancy ticking up for years, reaching record highs quarter after quarter, and office buildings routinely being foreclosed on or sold at steep discounts.
D.C. only has one office project under construction: Stonebridge and Rockefeller Group’s 398K SF redevelopment of the former WMATA headquarters across from Capital One Arena.
That project broke ground in June 2023 after also landing a big prelease with a law firm: Crowell & Moring is taking 199K SF at the property. That deal represented a reduction from the firm’s 280K SF office at 1001 Pennsylvania Ave. NW. The project at 600 Fifth St. NW is slated to deliver in 2026.
D.C.’s office market recorded positive net absorption last quarter for the first time in 10 months, according to CBRE, and last year saw the most leasing activity since 2021. The positive momentum contributed to a market where the vacancy rate leveled out, ticking down from 22.7% during Q3 to 22.5% during Q4. Trophy vacancy stood at 15.3%.
UPDATE, JAN. 7, 12:20 P.M. ET: This story has been updated with a statement from JLL's Evan Behr.
