Awards of Excellence 2019
1701 Rhode Island Avenue NW

1701 Rhode Island Avenue NW
Award of Excellence
Best Real Estate Transaction Sale or Recapitalization Over $25 Million

Executive Summary

The sale of 1701 Rhode Island represents the culmination of a successful business plan that spans each stage of the development cycle. The ownership team acquired the building by creatively approaching the building’s zoning to maximize its footprint, and then transformed a dated brick structure into a contemporary building with award-winning design. The building delivered fully leased and sold within months for one of the highest prices per square foot in DC. More importantly, the sale will have a future impact on the investment sales mar-ket, because it overcame the perceived risk of buildings with a high percentage of co-working sector exposure and proves the increasing popularity of office locations in lower density, mixed-use neighborhoods.

The first step in the successful redevelopment of 1701 Rhode Island was ownership’s acquisition of the former YMCA. The owner won a competition to purchase the property by delivering more square footage than any of its competitors had estimated. To achieve this, they devised a strategyto maintain the rights to the old build-ing's density, yet allow office use.The development team gained these zoning rights by converting the gym to an office through a renovation, rather than a ground up development. Within just three months of purchasing the property, the owner secured approvals from DC’s Board of Zoning Adjustment and Historic Preservation Review Board.

Through design and construction innovation, ownership transformed the building from a brick monolith into one of the city’s most distinct office buildings. The original structure included a swimming pool, squash courts, locker rooms, and a three-story gym. Ownership completely replaced of all of the building facades and inte-grated steel columns and beams into the original concrete. The building’s design includes a distinct copper frame against its floor-to-ceiling windows, each copper shingle handmade and ‘pre-aged’ by an artist in Italy. 1701 Rhode Island also includes a multi-tiered park along Rhode Island Avenue and Seventeenth Streets with canted, weathered steel planters, granite pavers, and wood and metal benches and chairs. These unique de-sign features create a stunning experience and differentiate 1701 Rhode Island from all the glass-box offices across the city. The American Institute of Architects Northern Virginia Chapter honored the building with an Award of Merit in Commercial Architecture and the building earned LEED Platinum Core & Shell certification.

1701 Rhode Island delivered fully leased and was sold within months for a near-record value. Ownership leased all 103,905 square feet of 1701 Rhode Island to a market leader in the co-working sector. The full-building, 16-year lease of a trophy office building to a co-working provider was unprecedented in the local region. This location will serve as the flagship operation for the co-working tenant. The ownership team successfully sold the building for $119 million, which equates to $1,145 per square foot. This represents one of the top five prices per square foot for an office building ever achieved in Washington, DC.

The sale of 1701 Rhode Island has significant market implications given the previously held perceptions re-garding office building with high co-working tenancy exposure as well as trophy buildings located at the edge of lower density. Industry analysts have generally considered it risky to invest in buildings more than 30 to 40 percent leased to a co-working provider because of the precipitous expansion of the industry. However, the sale of 1701 Rhode Island at a near-record price proves that an office building fully leased to a co-working provider can overcome this perceived risk. 1701 Rhode Island is also located several blocks outside of the tra-ditional downtown commercial core. The value demonstrated through the building's sale indicates that office workers, particularly those 25 to 45 years old, value mixed-use locations near residential neighborhoods, new restaurants, and shopping. In overcoming market perceptions of co-working buildings and illustrating the val-ue of mixed-use locations, the 1701 Rhode Island sale not only capped off a successful redevelopment, but will also affect how capital markets professionals value similar buildings both locally and nationally.


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