$600M Mixed-Use Wraps Phase 1 in DC

The first phase of Northeast Heights opened on June 5. Image courtesy of Arctaris Impact Investors LLC

Arctaris Impact Investors LLC has completed a six-story, 281,000-square-foot Class A office development in Washington, D.C. The Qualified Opportunity Zone project officially opened on June 5.

The District’s Department of General Services preleased the entire office portion of the building for 20 years, to serve as its new headquarters. The property also features 15,000 square feet of retail space.

The building represents the first phase of a $600 million, multi-stage revitalization project in Wards 7 and 8. Upon completion, the full Northeast Heights development is anticipated to deliver 241,000 square feet of office space, a 70,000-square-foot grocery store, 130,000 square feet of retail space and 1,355 apartments.

Arctaris is partnering on the Northeast Heights development with Asland Capital Partners and the Urban Investment Group within Goldman Sachs Asset Management, among others.

Situated at 3924 Minnesota Ave. NE on a 1.5-acre lot, the office building landed $152 million in construction financing in May 2021, provided by J.P. Morgan. Additionally, the property is subject to a 99-year unsubordinated net ground lease held by the Cedar Realty Trust, according to CommercialEdge. It is now the first office space east of the Anacostia River leased by a city agency.

Overall, the Washington, D.C. office market has cooled off in the first quarter of this year, according to a recent market update. Since the beginning of 2023, no new office projects have entered the city’s pipeline. Vacancy rates have been on an upward trend since the start of this year, with companies signing smaller deals and downsizing their footprints in the area.