PRP Pays $323M For Market Square, D.C.'s Largest Sale In 18 Months
A massive office complex on Pennsylvania Avenue traded hands Thursday for the highest sale price D.C. has seen since the summer of 2022.
D.C.-based PRP Real Estate Investment Management purchased Market Square, a 696K SF property surrounding the Navy Memorial, for $323M, documents posted to the D.C. Recorder of Deeds show.
A partnership of Blackstone and Pimco-owned Columbia Property Trust sold the twin buildings at 701 and 801 Pennsylvania Ave. NW. Bisnow first reported in December that PRP was in talks to purchase the property.
PRP President and CEO Paul Dougherty told Bisnow in an email Thursday that PRP acquired it in partnership with an affiliate of Morning Calm Management.
“We are implementing a great plan for this asset that will include a remerchandising of the retail component featuring a world-class restaurant, [complementary] retailers, with the goal of raising the bar on the tenant experience," Dougherty wrote. "Market Square is an irreplaceable property with a [marquee] tenant roster on the greatest street in the world.”
The new owners obtained a $247.5M loan from Pacific Life Insurance Co., according to deed records. Eastdil Secured brokered the sale.
The $323M sale price is roughly equal to the amount remaining on the previous owners' loan, according to Commercial Observer, which first reported the sale.
Blackstone declined a request to comment on the loan amount, and Columbia Property Trust didn't respond to a request for comment by the time of publication.
Market Square broke a record for its price per square foot when the complex was last sold in 2011 for $613M, or about $905 per SF.
This week's deal pencils out to about $464 per SF.
“We began writing this property down more than 4 years ago, wrote it off last year and have now exited the investment,” a Blackstone spokesperson told Bisnow in an email.
The spokesperson said situations like Market Square are “rare instances” in its nearly $600B, 12,000-asset portfolio.
“We aim to invest in sectors with strong fundamentals propelled by macro demand trends, which is why half of the real estate we own is in sectors like logistics, student housing and data centers that are experiencing strong year over year market rent growth, and why less than 2% of our owned portfolio is traditional U.S. office,” the spokesperson said.
D.C. office sales have been few and far between in the last few years, especially of this size. Kaiser Permanente's acquisition of Station Place III for $197.8M in November was the most expensive sale of 2023.
The last sale larger than this Market Square deal came in August 2022, when Boston Properties sold 601 Massachusetts Ave. NW to Japanese investor Mori Trust Co. for $531M.
Office investment volume in D.C. last year was down 124% compared to the previous 10-year average, per Avison Young’s office market report.
Market Square sits on a stretch of Pennsylvania Avenue that is primed to undergo an overhaul. The National Capital Planning Commission has been undergoing a decade-long process to transform the 1.2 miles between the White House and the U.S. Capitol, largely consisting of federal office buildings, into a dynamic, multimodal stretch with a variety of uses.
NCPC announced Thursday it selected consultant firm HR&A Advisors to create an implementation and governance strategy. The commission hopes to have a draft of the plan for the corridor for review by 2026.
