USC Pays $49M for Washington, DC, Office Asset

USC Capital Campus. Image by Alan Karchmer, courtesy of the University of Southern California

The University of Southern California is officially establishing an East Coast anchor in Washington, D.C. The Los Angeles-based educational institution has acquired a 60,000-square-foot boutique office property from Stream Realty Partners, with plans to open the USC Capital Campus there next month. The Class A building at 1771 N St. NW traded for $49.4 million, public records show.

USC scoured the local office market before committing to 1771 N St. “We were engaged in the search for at least four months,” Christopher J. Toomey, vice president & executive director of USC Facilities Planning and Management, told Commercial Property Executive. Located in the Dupont Circle neighborhood, the property didn’t start as a premier office destination; the current building is a product of Stream’s reimagination project.

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Stream had acquired 1771 N St., originally developed in 1968, from the National Association of Broadcasters in 2018, in a $36.1 million transaction that allowed the association to stay put until it relocated to a new address. In 2021, Stream delivered the reinvented office tower, having converted it from a Class B asset to a top-of-the-line office building at a cost of approximately $23 million, according to the Washington, D.C., Economic Partnership’s 2021/2022 development report.

HOK led the unmistakable transformation of 1771 N. St., starting with a striking, curved glass curtain wall on one façade of the seven-story building. Current features include a penthouse amenity space, event venues and a rooftop terrace. The university also plans to add classrooms, study areas, a theater, a conference room and a bookstore.

Additionally, the property, like so many other buildings in D.C., is a model of efficiency designed to meet LEED Gold certification standards. Floor-to-ceiling glass panels allow for natural light, and enhanced indoor air quality strategies and highly efficient HVAC systems serve as a foundation for the property’s focus on health and well-being.

Ray of light

USC’s acquisition belies the current state of the Greater Washington office market, which continues to struggle in the post-pandemic climate. The total office vacancy rate in the metro climbed to 18.9 percent in the fourth quarter of 2022, according to a report by JLL. And while the city recorded negative net absorption of approximately 1 million square feet in 2022, the trophy office segment achieved healthy absorption levels and is expected to continue to do so.

In a prepared statement, Washington, D.C., Mayor Muriel Bowser said the USC Capital Campus will be catalytic for the northern end of the city’s Central Business District. Bowser added that new campus fits into D.C.’s Comeback Plan that focuses on the strong presence of ‘Feds, Eds and Meds’ in the district.