CoStar to make $60M in sale of D.C. headquarters
Thursday, February 3, 2011; 9:16 PM
The real estate data firm CoStar Group said Thursday it will sell its headquarters building in downtown Washington for $101 million - a $60 million profit for the company, which has owned the building for about a year.
The buyer, GLL Real Estate Partners of Germany, will lease the building back to CoStar, said CoStar's chief executive, Andrew Florance. The deal completes the most profitable flip of Washington commercial real estate from the recession to date.
"We nailed the bottom and are getting out while we go into the recovery," Florance said, adding that he expected the deal to close later this month.
Commercial real estate markets were in turmoil when CoStar bought 1331 L St. NW on Feb. 5, 2010. Values had plummeted, and thousands of buyers quickly found themselves facing more debt than their buildings were worth.
One of those buyers, the Mortgage Bankers Association, had purchased the 168,000-square-foot L Street building for an estimated $90 million in 2008. MBA occupied a portion of the property, but when the leasing markets dried up, it sold to CoStar for $41.25 million and moved to rental space on Rhode Island Avenue NW.
Now, fully leased office buildings in strong markets such as Washington and New York are fetching top dollar, Florance said. "Basically what we did was buy a building with a critical leasing problem and moved it to a building without a critical leasing problem."
CoStar specializes in providing data and analysis of commercial real estate. "I think that having 1,000 researchers and technicians probably helped a little bit in timing the market," Florance said.