The Inter-American Development Bank signed a 20-year lease this week for one of Washington's biggest and most spectacularly vacant office buildings, 1300 New York Ave. NW.
The lease gives the bank an option to buy the 750,000-square-foot building for an undisclosed amount during the first five years of the lease, according to Sanford K. Ain, an attorney for the owners, ASC Inc. If the IADB does not buy the building during the option period, it will have the right to make the first offer if the owner decides to sell it later, he said.
Spokesmen for the bank and ASC would not divulge the amount of rent or other figures. But industry sources said the rent was thought to be $28 a square foot including utilities, taxes, insurance and maintenance, and the purchase price during the option period about $145 million.
Other sources said that calculations made recently in order to compare the IADB lease-purchase plan with an amount discussed by the General Services Administration, which had hoped to buy the building for use by the Justice Department, put the "present value" of the purchase price plus a five-year lease at $130 million.
GSA had reportedly been talking in terms of $130 million also, but its plan would have required the owner to make $10 million in tenant improvements.
The IADB will have to pay for finishing the interior of the giant building, and will begin paying rent Jan. 1, according to Ain. This is notable because the office space market in Washington has been very soft, and landlords often have offered periods of free rent and to pay for interior finishing work as inducements for tenants.
The IADB is a multinational lender that funds development projects in the Western Hemisphere.
ASC is a wholly owned subsidiary of the Bank of Nova Scotia, which provided the $132 million construction loan for the structure, at the southeast corner of 13th Street and New York Avenue. The bank took over the building last spring from its troubled builder, Daon Development Corp. of Vancouver. The bank, said to be paying $1.5 million in interest per month, has been trying to sell the building since.
The interior work on the building is expected to take about a year, a spokesman said. He would not give a figure on the cost, but sources placed it at about $10 million.
The IADB's 1,400 Washington employes now occupy a total of 500,000 square feet in three buildings. The bank owns 808 17th St. NW, leases a building at 801 17th St. NW and subleases about four floors at 1725 I St. NW. It plans to vacate all of these locations.