Investor Targeting D.C. Tenants Insulated From 'DOGE Noise' With $10M Office Revamp

The mass cuts to federal agency footprints and contractor spending may make it seem like a risky time to put money into empty D.C. office space, but one investor is betting millions that there is enough demand out there — at least for certain buildings. 

Taicoon Property Partners last year paid $26.7M to acquire the office building at 1899 L St. NW, and it has begun renovations that are expected to cost close to $10M more. 

The 152K SF building has 53K SF available to lease. The owner has tapped Newmark Vice Chairman Doug Mueller, who joined the firm last month after leaving JLL in December, to lead the effort to fill that vacancy. 

Taicoon also retained Mueller to lease its other recently acquired property, a Rosslyn office building it plans to redevelop into residential, offering tenants the opportunity to take space in the 85K SF building for up to three years.

The two acquisitions are just the start for Taicoon, Mueller said.

"For my client, he views this as the buying opportunity of a lifetime," Mueller said of Taicoon co-founder and CEO Hai Chien Wang. "He's going to buy additional assets, so this is a buyer that will be very active in this market."

Wang spent 15 years with Sentinel Real Estate before co-founding Taicoon Property Partners, which was incorporated in 2020 and made its first acquisition in 2023. 

Taicoon Managing Director Suzanne Pyles, who joined the firm last year from Stream Realty Partners and had spent 29 years with Stoladi Property Group, said in a statement that the company's investment strategy is "deploying significant capital" to buy buildings at a low cost and upgrade them. 

"Our reinvestment in 1899 L reflects this approach — a long-term commitment to a well-located property in a strengthening market, where forward-thinking investors are positioning for future demand," she said. 

The company's optimistic outlook on future D.C. office demand comes despite the sharp cuts to federal spending coming from the Trump administration and Elon Musk's Department of Government Efficiency.

DOGE is moving to terminate a series of federal office leases, many of which had upcoming expirations. But Mueller said the buildings the government leases are part of a lower segment that doesn't directly compete with commercial buildings that lease to the private sector. 

"A lot of that product that is going to flood back to market doesn’t worry me," he said. "I’m a private sector leasing broker. I don’t think the private sector looks at those buildings as acceptable locations or buildings."

He does have concerns about the impact of the federal government cutting contracts with private firms. He estimated around 1.5M SF of D.C. office leases are with U.S. Agency for International Development contractors. And he said some media organizations that lease private sector space receive money from the U.S. Agency for Global Media, which backed out of a full-building lease this weekend as the administration downsizes the agency. 

And he expects there will be a "private sector tail" from the administration's cuts to the Department of Education. 

"And whatever the next DOGE shoe to drop is, there will undoubtedly be an impact as well," he said. "I can't sugarcoat that. There will be a private sector impact." 

But for buildings like 1899 L St. NW, he sees enough demand from other office sectors that don't rely on federal money. 

"We've already seen accounting firms, small law firms, associations, government affairs offices," he said. "That's a part of the market that has largely been insulated from the DOGE noise. There is this vibrant sector of the marketplace that continues to thrive."

He said those tenants want buildings with modern amenities, so the beneficiaries will be either new buildings or older buildings in which the owner can invest in upgrades.

In today's market for older buildings, the owners able to do that are the ones like Taicoon that bought properties at a discount. The firm's $26.7M acquisition of 1899 L St. NW was well below the $43.7M that previous owner BlackRock paid for it in 2004. 

"This is one of those buildings that, given their basis, the previous owner couldn't transact on it and couldn't do deals that were accretive to the value of the building," Mueller said. 

But by coming in at a lower basis and making investments, Mueller said the new owner can bring tenants into the building and increase its value. Its ongoing renovations to 1899 L include base-building upgrades, facade improvements, an amenity center and the introduction of several prebuilt spec suites. 

Mueller said this will likely be one of many such situations in the D.C. office market. 

"There are a segment of buildings that just cannot transact right now," he said. "There are a tremendous number of buildings that have to go through either a basis reset or a conversion, all of which will be healthy for our market.

"That's what we're heading toward: You're going to remove inventory from the market, which will flood the market with demand to other buildings that can transact. To me, this is the great reset of D.C. real estate."

CORRECTION, MARCH 18, 6:20 P.M. ET: A previous version of this story misstated Newmark Vice Chairman Doug Mueller's title. This story has been updated.