Marx Realty Picks Up DC’s Herald Building for $41M
Ares Commercial Real Estate provided financing in the deal
Marx Realty has acquired The Herald Building, a 114,000-square-foot historic office building in Washington, D.C., for $41 million according to the New York-based firm.
The sellers were a joint venture of the American Association of Colleges for Teachers Education, the American Association of State Colleges and Universities, the Council for Advancement and Support of Education and the National Association of State Universities and Land Grant Colleges.
“This is a historic building and has a real heritage to it — we just fell in love with the building,” Craig Deitelzweig, Marx Realty’s president and CEO, told Commercial Observer. “We think it’s perfect for what Marx does and this will be the only building in all of D.C. that’s truly hospitality-infused throughout.”
Located at 1307 New York Avenue NW, the building was originally constructed in 1923 and once served as home to the Washington Herald Examiner’s offices and printing presses, thanks to its 19-foot ceilings on the ground floor.
Marx Realty plans to invest $41 million in the property, adding its signature hospitality-infused aesthetic into the building.
“The Herald Building is such an exceptional building both in its incredibly high ceiling heights and in its important history, and we couldn’t be more excited about our plans to transform the space into a contemporary destination for discerning tenants and bring the first hotel-like sensory experience to the D.C. office sector,” Deitelzweig said.
The space in the building was leased back to the associations, and at the beginning of 2021, Marx will get the entire building back. Construction on renovations starts in October with completion scheduled for the spring of 2021.
Among the changes will be the addition of a library, café, outdoor seating and 40-seat board room on the ground floor, offering the sophistication of a luxury hotel. Marx is also planning an updated entry portal with an intimate foyer that opens to an expansive lobby and lounge space. A doorman will welcome guests into the building.
There will also be an 8,800-square-foot lounge and a fitness center that features boxing and private workout rooms.
With the acquisition, Marx now has four D.C. buildings in its portfolio and five properties in Northern Virginia. Deitelzweig believes D.C. is the perfect place to invest in right now.
“In terms of jobs likely to be most resistant to a recession, those jobs are in D.C.,” he said. “This particular area we feel is the best part to be in. It hovers over the CBD and has great access to parks and restaurants and we just feel it’s ideal.”
Parker Lange, Vernon Knarr and Ben Plaisted from Savills teamed with CBRE (CBRE)’s Tom Cleaver, Dan Grimes and Manny Fitzgerald to represent the sellers on the deal. Marx’s Paul DiCarlo and Jack Kraus handled things for the buyer. JLL will handle leasing for the property.
Marx Realty also landed a $45 million loan from Ares Commercial Real Estate for the acquisition. CBRE’s James Millon, Tom Traynor and P.J. Finley negotiated the debt. Ares’ Bryan Donohoe and Joseph Ryu led the deal on behalf of the lender.
“We’re already getting incredible interest in the building,” Deitelzweig said.
With additional reporting by Cathy Cunningham