Sales  ·  office

D.C.’s Biggest Office Sale of 2024 So Far: PRP Closes On Market Square for $323M

Two-building complex on Pennsylvania Avenue last sold in 2015 at a $595M value


PRP Real Estate Investment has acquired the Market Square office complex in the heart of Washington, D.C., for $323 million, or roughly the loan amount on the property, Commercial Observer has learned. 

The two-building property on Pennsylvania Avenue, between the White House and Capitol Hill, is home to the government affairs offices of more than 30 Fortune 500 companies, including Visa, Pepsi, Cigna, Prudential and UnitedHealthcare

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“That’s a tenant base that’s immune from a downturn. They have to be downtown, they have to be near the White House and the Capitol,” said Paul Dougherty, president and CEO of PRP. “If this was about a building on K Street, it would be a different deal.”

The office portion of the 690,000-square-foot property at 701 and 801 Pennsylvania Avenue NW was 84 percent leased at the time of the sale, with a seven-year weighted average lease term, per Dougherty.

The seller was a partnership between Blackstone (BX) and the PIMCO-owned Columbia Property Trust. In 2011, Columbia Property Trust purchased the asset for $611 million, or $905 per square foot, which was a D.C. record at the time. Four years later, in 2015, Blackstone purchased a 49 percent stake at a $595 million valuation. 

Blackstone and PIMCO cleared the existing $325 million loan on the property from Pacific Life Insurance Company, according to property records, which then provided $247.5 million in new debt to the buyer. PRP completed the acquisition in partnership with Morning Calm Office Finance, an affiliate of Morning Calm Management

“We began writing this property down more than four years ago, wrote it off last year and have now exited the investment,” a spokesperson for Blackstone told Commercial Observer. “These are rare instances in our nearly $600 billion portfolio comprising more than 12,000 assets, and we’re incredibly proud of our performance, which speaks for itself.”

The disposition is part of the company’s larger strategy and focus on other asset types, per Blackstone. “We aim to invest in sectors with strong fundamentals propelled by macro demand trends, which is why half of the real estate we own is in sectors like logistics, student housing and data centers that are experiencing strong year-over-year market rent growth, and why less than 2 percent of our owned portfolio is traditional U.S. office.”

On the other end of it, Dougherty sees opportunity. “We feel that buying [an asset] like this is a once-in-a-lifetime opportunity,” he said.

The D.C. office market is languishing in the post-COVID era along with the rest of the nation, with office values plunging and occupancy rates at all-time lows. D.C. is especially vulnerable because of its high concentration of offices in the central business district, and because of its reliance on federal tenants. But that doesn’t mean the fundamentals aren’t there.

“I think this is going to reset values,” said Dougherty. “This is the first example, it’s a trophy building, trophy bricks and mortar, marquee address, marquee location, great rent roll — and that stuff has not been trading. The stuff that’s been trading has been B and C crap.”

The deal is the largest D.C. office trade so far in 2024, and easily surpasses last year’s priciest deal, Kaiser Permanente’s $198 million acquisition of Station Place III.

PRP plans to reposition the 40,000-square-foot retail portion of the site, which has been largely vacant since COVID, as well as upgrade the two lobbies and lease up the remainder of the space. And because of the basis the deal came in on, it gives the new owner the flexibility to do so. 

Paul Hastings real estate partner Sam Alavi acvised Morning Calm in the transaction, along with associates Lee Cumberland and Jessica Marfut.

Chava Gourarie can be reached at