Award of Merit
Best Real Estate Transaction: Sale or Re-capitalization - Over $25 million

Project Team

Boston Properties - (Owner + Developer)

Project Description

Boston Properties (“BXP”) sold 455,000 rentable square feet (“RSF”) of the approximately 632,000 RSF Capital Gallery complex to The Smithsonian Institution. BXP retained ownership of the remaining 177,000 RSF. The Smithsonian Institution was represented in the purchase by Newmark Knight Frank. Capital Gallery, located at 600 Maryland Avenue SW (“Building”), sits next to the L’Enfant Plaza Metro station, one block south of the National Mall in the Southwest submarket. The Building, a multi-tenant Class A office complex, comprised of an East and West Tower, was originally constructed in 1981. In 2006, BXP expanded the Building and added approximately 318,500 RSF to the complex, for a total of 632,000 RSF. At the time of sale, the building was 95% leased with the largest tenant being Smithsonian, occupying approximately 268,000 RSF through May 2021.

The ownership structure was quiet complex in that the Building was sub-divided into assessment and taxation lots (“A&T Lots”), with the Smithsonian owning 455,000 RSF of office space and BXP retained ownership of 177,000 square feet of the Building, which includes 157,000 square feet of office space, 20,000 square feet of retail and a 465-space parking garage.

In order to meet Smithsonian’s consolidation requirement and occupancy objective, BXP successfully relocated approximately 70,000 RSF of tenants from the Smithsonian A&T Lots and into the portion of the complex BXP continues to own.

BXP is pleased that The Smithsonian Institution will remain an occupant for the long-term, now as an owner and partner. This sales transaction was a win-win outcome where the seller worked with a long time tenant and a revered national institution of import to the culture and history of our country to most efficiently meet its critically important mission.