The Goddard Investment Group has paid $93 million for 500 D St. SW, marking the Atlanta-based firm's first D.C. acquisition and a bet that the District's office market is on the mend.
An affiliate of Goddard bought the 348,000-square-foot building known as National Square for about $267 per square foot in a deal recorded Monday. The seller was an affiliate of the AFL-CIO Building Investment Trust. The building, which delivered in November 2015, was developed for the trust by Trammell Crow Co.
Atlanta's Goddard Investment Group has acquired National Square in Southwest D.C. for $93 million.
Goddard, which acquired the building as part of an investment fund it launched in 2014, focuses on value-added investments across the U.S. It has acquired or managed roughly 2 million square feet of commercial real estate since its founding in 2000 in cities including Atlanta, Dallas and Houston. It had been looking to add D.C. to that list for a while but couldn't find the right deal until now, Goddard Principal Mack Freudenstein said.
Its portfolio includes Fountain Place, a 60-story building in downtown Dallas estimated to have been one of the biggest deals in that city in 2014. Goddard aims for high-quality office buildings that are no more than half-leased in institutional markets like D.C., and in this case, National Square awaits its first leasing deal since it delivered about a year ago.
"It's completely empty, but it's quality construction, and that's what attracted us to it," Freudenstein said. Goddard has retained Lincoln Property Co. to manage the property, which was marketed for sale by Holliday Fenoglio Fowler LP.
While D.C.'s office market has struggled to resume pre-recession levels, Freudenstein said the last few quarters have ended with positive absorption. What's more, the federal government's executive and legislative branches are now of a single party, which should also bode well for office demand. Goddard principal Russell Read added that the firm tends to be pretty conservative as investors and that, even if leasing doesn't rebound soon, the LEED Gold building by Sixth and D streets should be well received by the market.
The Building Investment Trust acquired the site, known then as 400 Sixth St. SW, for nearly $42 million in 2012 with PNC Bank as its investment adviser. Working with Trammell Crow, it razed what had been a five-story building on the property and retained Gensler to design a new 12-story building.