Another Big D.C. Office Building Heads to a Foreclosure Auction

It has been a busy year for the foreclosure auction department in Washington, D.C.

Another big office building in Downtown D.C. is set for a foreclosure auction after the owner defaulted on the financing. This time, a substitute trustee — appointed last week by lenders Goldman Sachs (GS), Deutsche Bank (DB) and Citi Real Estate Funding — filed a foreclosure notice for the 580,000-square-foot property at 1800 M Street NW and the $302 million loan backing it, Bisnow reported. The auction is set for Dec. 20.

Columbia Property Trust and Allianz Real Estate paid $421 million to acquire the building about seven years ago, shortly after the previous owner completed a $33 million renovation. The $302 million in financing started out as $287 million originated in December 2021.

The office on M Street has suffered from the same underutilization as struggling older office properties around the nation, but particularly in D.C.,  following the pandemic. For example, a major tenant, law firm Zuckerman Spaeder, is set to ditch its space at the 1975-built office building for one nearby that was completed in 2020.

Office foreclosures have seemingly become commonplace in Washington. Earlier this year, lender J.P. Morgan Chase acquired the 12-story office building at 1850 M Street NW at a foreclosure auction. Last month, lender Blackstone Mortgage Trust was the sole bidder at the foreclosure auction for the offices at the District’s L’Enfant Plaza.

Earlier this year, Columbia Property Trust sold its stake in the two-building Market Square on Pennsylvania Avenue for $323 million after paying $611 million in 2011. 

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.