Amazon Buys Northern Virginia Hotel for HQ2 Phase Two

Residence Inn by Marriott in Pentagon City, Va. Image via Google Street View

Even before the first phase of its 4 million-square-foot HQ2 development in Northern Virginia is complete, Amazon is moving ahead with plans for the second phase and now controls all the land at the Pentagon City, Va., site to make that happen. Acorn Development LLC, an Amazon subsidiary, acquired the Residence Inn by Marriott, a 299-key hotel situated on a 1.5-acre lot in PenPlace, for $148.5 million from a Blackstone Group affiliate, according to public records. 

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Blackstone had purchased the hotel at 550 Army Navy Drive in August 2019 from Host Hotels & Resorts for $99.1 million. The site was the only property within the 11.6-acre PenPlace that Amazon did not control. The e-commerce giant had originally planned to work around the hotel, according to the Washington Business Journal, which first reported the transaction, but it will now be able to demolish the hotel and create a more cohesive plan for the site.

JBG Smith Properties, Amazon’s development partner, owns most of PenPlace but will sell the site to Amazon once Arlington County, Va., officials approve of the plans for phase two of HQ2. That likely won’t happen any time soon as Amazon is not expected to file plans for the PenPlace portion of its HQ2 until 2021 and the project is not expected to reach completion until at least 2025. 

The 2.1 million-square-foot first phase of what’s being called National Landing is already under construction in Metropolitan Park. In December, Amazon received approval to build two 22-story office towers at the Metropolitan Park site in Pentagon City, the largest office buildings to be constructed in the submarket in decades.

National Landing will be an interconnected walkable neighborhood that will encompass parts of the Crystal City and Pentagon City neighborhoods in Arlington County and Potomac Yard in Alexandria, Va. The development has placed the Washington, D.C., metro area on the top 5 markets for office construction activity across the U.S., according to recent data from Yardi Matrix.

HQ2 History

After a fierce nationwide competition, Amazon chose Northern Virginia in November 2018 for its second U.S. headquarters, with plans to deliver about 25,000 jobs at the National Landing development by 2030.

The e-commerce giant selected JBG Smith as the project’s developer, leasing agent and property manager. A leading owner and developer of high-quality, mixed-use properties in the Washington, D.C., market, JBG Smith owns 6.2 million square feet of office space, more than 2,800 multifamily units and controls nearly 7 million square feet of additional opportunities in National Landing, excluding land already purchased by Amazon. The company is constructing Central District Retail, a 109,000-square-foot entertainment and shopping destination that will be the retail center of National Landing.