Three large leases for more than $30 a square foot have been negotiated at Washington Square, an office and commercial complex under construction at Connecticut and L streets NW, commercial real estate specialists report.
The three leases were arranged in September and October and were the first to go over $30 in the District, said Stephen Goldstein, vice president of Julien J. Studley Inc. Commercial rents in other parts of the city will follow, he predicted.
The rent level was not unexpected, however, and some local real estate experts say that in fact the building probably could have commanded a higher price a year ago when office space in the District was not as abundant as now.
When the Washington Square development was announced, it was expected that leasing rates would set records at about $35 a square foot, with occupancy scheduled for September 1982.
The three negotiated leases--with a law firm, an oil company and a consulting firm--would account for around one-third of all the office space in the $100 million building, according to real estate industry sources.
Office rents in the District have risen rapidly in recent years, but some experts have predicted rates would level off because of a glut of office space. The average was $27.53 for new space and $23.03 for old space in the July-to-August period, Julien J. Studley Inc. reported in September.
"The business community had just said, 'no, no, no,' " to going to $30, said company spokeswoman Susan Yecies. "There was a lot of resistence to going over the $30 barrier."
"This [negotiated $30 rent] makes a statement in this market," Goldstein said. "People are not going to be moving to the suburbs as an alternative. This is a good indication that [the District] is a prime location, and people are going to be willing to pay for it."
Others say Washington Square is the prime office building location in the city, and as such will set the pace on rents, but that rates generally still are likely to recede to a more stable level.
Washington Square, scheduled for completion in about a year, will contain 600,000 square feet of office space. The developers are Ted Lerner, who developed the Tysons Corner and White Flint shopping centers, and the Abramson family, veteran Washington developers.
Arent Fox Kintner Plotkin & Kahn, a law firm, has agreed to pay more than $30 a square foot for more than 100,000 square feet of space, sources said. The other two firms are reported to be a consulting firm and an oil company, which have made commitments to lease between 20,000 and 50,000 square feet each.
The leases also reportedly contain escalator clauses based on costs and a percentage of the consumer price index.