Value-Add Office Portfolio for Sale Near Washington, D.C.

Wednesday, April 10, 2019

Holliday Fenoglio Fowler LP (HFF), as exclusive representative, is marketing a two-building, 327,453-square-foot, Class A office complex for sale in Rockville, Maryland. The portfolio, located at 6120 and 6130 Executive Boulevard and known as Executive Plaza, is currently 68% leased to eight tenants with 9.3 years of weighted average remaining lease term.

Over $14.7 million has been invested in the properties to deliver a best-in-class, on-site amenity package, including a state-of-the-art fitness center with towel service, bike room, an on-site cybercafé and a 4,281-square-foot conference center capable of seating up to 250 people. The renovations also included full main lobby upgrades, new elevator lobbies and corridors on all floors and a complete modernization of the HVAC systems. These upgrades have generated significant leasing demand at the properties, resulting in more than 210,000 square feet (68% of total RBA) of net absorption since May 2016.

The portfolio’s existing tenancy is anchored by Abt Associates Inc. (Abt), who leases the entirety of 6130 Executive Boulevard (155,939 square feet, which is 48% of total portfolio RBA) through June 2028. At the time of tenant lease execution, it was the largest private sector lease signed in Montgomery County in more than a decade. Abt is a global research and consulting firm with over 3,000 employees in 11 offices around the world. Abt’s tenancy both provides stable in-place cash flow while the portfolio’s remaining vacancy is leased, and it demonstrates the ongoing trend of tenants migrating from the more expensive Bethesda area to competitively priced, highly amenitized Metrorail proximate assets such as Executive Plaza. 

Office Property for Sale Investment Highlights

  • Outstanding Multimodal Accessibility and Amenities:  Executive Plaza is prominently located just off of Rockville Pike within the North Bethesda submarket. Excellent multimodal accessibility is provided by the White Flint Red Line Metrorail Station, and it is within close proximity to major commuter thoroughfares, including Interstates 270 and 495, Rockville Pike and Old Georgetown Road. Nearby major amenity concentrations include Pike & Rose (0.6 miles), North Bethesda Market (1.1 miles) and Montrose Crossing Shopping Center (1.0 mile). The portfolio is also less than a 10-minute Metrorail ride from downtown Bethesda, one of the premier suburban live-work-play environments in the United States.
  • Proximity to Pike & Rose:  Pike & Rose, which is a short walk from the properties, is a transformational mixed-use development by Federal Realty Investment Trust that will feature more than three million square feet at full build-out. The project includes approximately 470,000 square feet of retail space encompassing more than 20 restaurants, 25 stores, a Sport & Health gym, a Pinstripes bowling alley and an iPic movie theatre. In addition to these diverse retail offerings, more than 860 residential units and a 177-room Canopy by Hilton Hotel have been delivered. Accordingly, Executive Plaza’s immediate proximity to this exciting mixed-use destination will serve to drive demand and rental rate appreciation in the near term. 
  • Increasing Rents in Bethesda and Downtown Washington, D.C. Fueling Tenant Migration to Class A North Bethesda Assets with Red Line Accessibility:  In 2018, Class A office properties within one mile of the White Flint Metrorail Station experienced more than 295,000 square feet of positive net absorption (23% of total inventory), demonstrating a pronounced increase in tenant demand for high quality office space with Red Line Metrorail access that is priced at a discount to Bethesda and downtown Washington, D.C. Currently, Class A market rents in Bethesda and Washington, D.C.’s central business district are 40 and 90% higher than in the North Bethesda submarket, respectively, making this highly amenitized and accessible location a compelling value proposition for tenants.
  • Ideal Value-Add Investment Opportunity:   Executive Plaza’s unmatched on-site amenities make it one of the highest-quality office assets with Red Line Metrorail access north of Bethesda, and it is therefore ideally positioned to capture the ongoing demand from tenants seeking a discount to Bethesda and downtown Washington, D.C. Accordingly, investors are ideally positioned to achieve compelling risk-adjusted returns by leasing the existing vacancy at accelerating rental rates, while also benefiting from its significant in-place cash flow and 9.3 years of weighted average remaining term from its eight existing tenants.  

For more information on this commercial real estate listing or any other office properties for sale in the Washington, D.C. area, please contact Jim Meisel, Andrew Weir, Matt Nicolson or Dave Baker in HFF’s Washington, D.C. office.  To view HFF’s current real estate investment listings, please click here to be directed to HFF’s property search page.

Photos:  Nick Waring

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