Exxon Mobil is trying to sell its 117-acre campus in Merrifield as it plans to decamp to Houston, but ideally the oil giant would find companies interested in leasing the property first.
The reason is that whatever price the empty campus would fetch after Exxon Mobil relocates would probably be well below what the company could get for it if it can find companies to sign long-term leases there first.
As Darian A. LeBlanc, senior vice president at Cassidy Turley, explained, fully leased Washington-area office buildings in prime locations often attract a much wider audience of buyers. So while Exxon explores selling the property, it is also looking for companies and government agencies interested in leasing it. LeBlanc is part of a team at Cassidy Turley handling the sale for Exxon.
“The building, the facility, is being actively marketed to a broad array of potential users for lease, as well for sale. And that would include corporate users, institutional users and government users,” LeBlanc said.
The buy and/or lease approach is largely a response to the disparate effect the recession has had on the value of buildings versus rental rates. While leases are harder to come by, particularly given the 18.7 percent vacancy rate in Northern Virginia, buildings that are occupied are still landing enormous prices from pension funds, insurance companies and international funds looking for stable long-term investments.
Foreign investors, for instance, have snapped up more than $2 billion in Washington real estate this year, but most of the deals are for already completed office buildings downtown, such as the Evening Star Building on Pennsylvania Avenue, 1200 19th St. NW near Farragut Square and Washington Harbour in Georgetown.
CoStar chief executive Andrew Florance cashed in on this “financial disconnect” when he agreed to sell CoStar’s L street headquarters in D.C. and remain in the building as a tenant. The building sold for $101 million to GLL Real Estate Partners of Germany, almost $60 million more than CoStar had purchased it for a year earlier
To break into that category for the Exxon campus, Cassidy Turley will have to find tenants first and then a buyer. “It would make the site and the buildings that much more valuable,” LeBlanc said.
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