The 1,75,000 sq ft tower at 1101 Vermont Avenue was sold for $16 million
As workplace trends continue to shift in the post-pandemic landscape, the office real estate sector in the United States has been hard hit. Due to the ongoing shift towards remote and hybrid work models, vacancy rates of office buildings in the country are rising and leasing activity falling. Washington DC, the capital city of the US, has been among the hardest hit office markets in the country. Even New York City is seeing massive distress and destruction in value for prime commercial real estate office buildings. As a result, office spaces which have become obsolete are now being sold at massive discounts.
In a post on X, a real estate entrepreneur shared that an office building in Washington DC was sold at a 75 per cent discount. The 1,75,000 sq ft tower at 1101 Vermont Avenue was sold for $16 million, he said, adding that the building was last sold for $60 million in 2006. Surprisingly, the building's assessed value in 2018 was $72 million in 2018.
''Another Washington DC office building has just sold at a massive ~75% discount to what it last sold for The 175k sq ft tower at 1101 Vermont Ave sold for $16M. The building last sold for $60M in 2006 The assessment value in 2018 was $72M in 2018,'' he wrote while sharing a picture of the building.
See the post here:
Kotak Mutual Fund's Managing Director Nilesh Shah reacted to the post and said this Washington DC building goes for Rs 7,589 per square foot, 73 per cent lower than the last traded price 18 years back.
''I did this calculation twice to confirm the number. Commercial real estate in the US is truly in deflation/fire sale. Who bears all these losses?'' he added.
Recently, an office tower in New York's upmarket Manhattan was also sold at a 70 per cent discount, leaving many shocked. Industrialist Uday Kotak also expressed surprise over the massive rate cut for the Manhattan property. "Wow, That's less than half the rate at Mumbai's BKC," he wrote.
According to a report, the average U.S. office listing rate stood at $37.83, falling 1.2% year-over-year