Fannie Mae To Vacate Its 700K SF D.C. Headquarters Early

Fannie Mae's headquarters was the largest private sector office lease in D.C. history when it was signed nearly a decade ago, and it kick-started a massive downtown development. But now the space is going back on the market. 

Carr Properties last week listed 720K SF at Midtown Center as available for lease, with most of the floors coming available in June 2029, according to a listing on the CoStar platform viewed by Bisnow. 

A Fannie Mae spokesperson confirmed the space is coming available in 2029.

“Like many other companies, we are continuing to embrace our flexible work environment by exploring office space options that support our workforce while being fiscally responsible,” the spokesperson said in a statement emailed to Bisnow. “Per our Charter, we will continue to maintain a presence in the Washington, D.C., metropolitan area.”  

A Carr Properties spokesperson said Fannie Mae notified the landlord it “will exercise its early out clause to vacate its leased premises at Midtown Center, effective May 2029.”

“Carr Properties continues to work collaboratively with Fannie Mae and is committed to a long-term relationship with them as a valued customer,” the spokesperson said. “As a preeminent trophy property in the heart of downtown Washington, DC, we’re confident that Midtown Center will again attract a notable flagship customer seeking an unparalleled experience with luxury level amenities and access to highly acclaimed restaurants, retail options and more.”  

The listing consists of 306K SF in the east tower and 414K SF in the west tower of the 7-year-old complex at 1100 15th St. NW, and nearly all of the space — 713K SF — is listed as a contiguous block. The towers are connected by three elevated walkways above a public courtyard with 44K SF of retail that has landed a series of high-profile restaurants. 

The June 2029 expiration comes nearly 15 years after Fannie Mae signed a 752K SF lease in early 2015 to anchor the development on the site of the former Washington Post headquarters. The deal was the largest private sector lease in D.C. history, if Fannie Mae's government-sponsored enterprise status is considered the private sector. Cushman & Wakefield represented Fannie Mae in that deal. 

The development team celebrated the groundbreaking of the $650M project in May 2016, and Fannie Mae moved into its new headquarters roughly two years later, shifting away from an Upper Northwest D.C. site that has since been redeveloped. 

The remaining 110K SF of Midtown Center’s office space was leased to WeWork in April 2019. That space is still listed as open on WeWork's website, despite the coworking firm going through Chapter 11 bankruptcy and closing a host of other spaces in D.C. and elsewhere. It struck a separate deal with Carr Properties to shrink its footprint by one floor at the landlord's Bethesda office tower, Bisnow first reported last week. 

Carr Properties sold a 49% stake in Midtown Center in February 2021 to a South Korean investor syndicate, a deal that valued the property at $980M. The property's tax assessment from the D.C. government has fallen over the last two years to $739M, property records show. 

It remains unclear what Fannie Mae's plans are for its D.C. headquarters office in 2029, but if it leaves the central business district or downsizes substantially, it could deal a major blow to the already-struggling downtown office market.

The city's overall office vacancy rate reached a record-high 21.2% at year-end, according to CBRE, but the gap between the top-end space and the older commodity buildings has widened. The trophy office segment, which includes Midtown Center, saw its vacancy rate fall to 11.5%, the lowest level in at least a decade.

This top-end tightening has left some large tenants such as law firms with few options for contiguous blocks of top-tier space, potentially creating some demand for Fannie's space. But filling more than 700K SF of offices would still likely be a tall task. 

UPDATE, JAN. 16, 6 P.M. ET: This story has been updated with a statement from a Fannie Mae spokesperson. 

UPDATE, JAN. 17, 10:30 A.M. ET: This story has been updated with a statement from a Carr Properties spokesperson.