Post Brothers Buys DC Office Asset, Plans Conversion

The new owner is set to create 300 residential units.

2100 M St. NW.

2100 M St. NW. Image courtesy of Yardi Matrix

Post Brothers has acquired 2100 M St. NW, a 300,000-square-foot office building in Washington, D.C.’s West End neighborhood, for $66.8 million. The new owner plans to either demolish the current structure or to convert the office building into a 300-unit multifamily community.

The former owner, Network Realty Partners, picked up the asset back in 2019 for $92.5 million, according to Yardi Matrix information. The sale was subject to a $120.5 million acquisition and development loan, provided by AllianceBernstein, the same source reveals.

READ ALSO: Can Conversions Help Fix the Multifamily Supply Gap?

The estimated construction cost for the project is $300 million. Built in 1969 and situated three blocks south of Dupont Circle, the office building was vacant at the time of the sale. It previously housed the Urban Institute’s headquarters for almost half a century until the organization relocated to a different property in 2017.

Last year, Post Brothers also purchased the Universal Buildings near Dupont Circle from JBG Properties for a total of $203 million. The company invested $400 million to transform 700,000 square feet of office space into approximately 600 multifamily units.

Office-to-multifamily conversions target smaller, older properties, yielding limited sector effects

Based on the latest research by CBRE, the conversion of office spaces into multifamily units will primarily be restricted to smaller, older office properties due to factors such as construction costs and regulations related to residential construction. The market conditions that favor such projects include significant multifamily demand or government incentives, specifically aimed at promoting historic restoration efforts, the same source shows.

While there has been a lot of talk about office-to-multifamily conversions, these have been infrequent over the past two decades and accounting for only about 1 percent of total multifamily deliveries, CBRE reveals.

You May Also Like