BlackRock Lands Office Tenant in Downtown DC

October 30, 2024

Office Brokerage Mid-Atlantic NewsMoreWashington D.C.

Slated to relocate from a nearby property, the tenant signed a 15-year agreement.

Exterior shot of Franklin Tower, an office property in Washington, D.C. — Franklin Tower’s first three floors feature limestone, while its upper nine levels are finished in precast concrete. *Image courtesy of Transwestern Real Estate Services*

The Center for International Private Enterprise has inked a deal to occupy 20,375 square feet for 15 years at Franklin Tower, a 226,530-square-foot office property in downtown Washington, D.C. BlackRock owns the building, CommercialEdge data shows. Transwestern Real Estate Services and CBRE represented the tenant and landlord, respectively.

Dating back to 1967, Franklin Tower had served as the U.S. Drug Enforcement Administration’s headquarters until 1991. BlackRock paid $183.9 million for the tower in 2015, acquiring it from Shorenstein, the same source reveals.

Rising 12 stories, the office property features 19,500-square-foot floorplates. Amenities consist of a rooftop deck and bike racks, as well as a parking garage. A recent renovation effort added a new conference center, lounge, gym and first-floor retail featuring HSBC. The LEED-Gold certified building’s tenant roster includes Mastercard, Anheuser-Busch Cos. and Polsinelli PC, among others.

Carrying the address 1401 I St. NW, Franklin Tower is part of Washington’s central business district. Three of CIPE’s major partner organizations can be found within two blocks of the office tower, according to prepared remarks by Transwestern Executive Vice President Eric West.

Transwestern Executive Vice Presidents Ganon Rich and West represented CIPE in the leasing negotiations while CBRE Executive Vice President Mark Klub spearheaded the proceedings on behalf of BlackRock.

Relocating inside downtown D.C.

Founded by President Reagan in 1983, CIPE is an affiliate of the U.S. Chamber of Commerce. The institution works to support democracy and to strengthen the private sector through anti-corruption endeavors, entrepreneurship training and local business assistance, among others.

CIPE will relocate its headquarters to the Franklin Tower from 1211 Connecticut Ave. NW, a 129,298-square-foot office building located more than a mile away. The RMR Group owns the latter, according to CommercialEdge data.

The relocation allows CIPE to boost its organizational effectiveness by occupying one floor and reducing its annual office space expenditures by more than 30 percent, Rich said in prepared statements.

D.C. office vacancy rises as tenants downsize

For the first time in five consecutive quarters, new Washington, D.C., office leasing outpaced renewal activity at the end of September, according to a report by Cushman & Wakefield. During the third quarter, new office deals amounted to 1.2 million square feet, significantly above renewals which clocked in at 550,000 square feet.

D.C.’s overall office vacancy rate rose 20 basis points quarter-over-quarter as of September, climbing to 21.9 percent, Cushman & Wakefield reveals. However, a discrepancy between asset types is apparent with the prime office space in Class A buildings bearing 18.6 percent in vacancy, while Class B properties posted a 26.8 percent rate.

One notable occurrence is the influx of tenant downsizing—eight of the top 10 office leasing deals closed during the third quarter were contractions with the average tenant reducing its footprint by 81,672 square feet—the report mentions.

Fannie Mae’s new 340,000-square-foot lease at Carr Properties and IGIS Asset Management’s 867,000-square-foot Midtown Center is one such example. The government-sponsored enterprise currently occupies 713,500 square feet at the building and exercised an early-out clause to vacate the space by May 2029.