D.C. Health Department Leases 150,000 SF at Premier Office Complex

June 3, 2010
By Barbra Murray, Contributing Editor

The Washington D.C. Department of Health (DOH) has just signed a headquarters lease for 150,000 square feet at Union Square, a 610,000-square-foot, Class A office complex in the city’s burgeoning NoMa district.

The lease transaction paves the way for DOH’s consolidation of a handful of area offices. The agency, which has occupied space at Union Square since 1999, will be able to bring all operations under one roof, thereby creating a new, singular headquarters. DOH will make its home at 899 North Capitol St., N.E.–formerly 825 Capitol St., N.E.–under a 10-year lease agreement with property owner CIM Group Inc. CIM acquired Union Square and an adjacent entitled land parcel that will eventually sprout a new 260,000-square-foot structure from JP Morgan Investment Management in 2007 for $262 million.

The property, sited within close proximity to Union Station’s Metro and Amtrak rail lines, is comprised of two nine-story structures that were originally developed in 1969 and 1973, and underwent a comprehensive renovation in 1999. Linked by a central plaza, the complex is currently being upgraded at the hands of CIM. Upon completion of the renovation process, the complex will offer such amenities as enhanced security features, a new fitness facility, and, if all goes as planned, LEED-EB Silver certification.

While Metropolitan Washington, DC, continued to hold a spot on the list of the nation’s leading office markets during the economic downturn, neither local government nor federal government office demands managed to completely shield the area from the fallout. The average total office vacancy rate in Metropolitan D.C., reached 15.3 percent during the last quarter of 2009, and increased slightly to 15.7 percent in the first quarter of 2010, according to reports by real estate services firm Grubb & Ellis Inc. However, as is the case with many major metropolitan markets as the economy shows signs of a turnaround, stabilization is on the horizon. The first three months of this year brought positive absorption and, for the first time in several quarters, an increase in the overall asking rental rate.