An office building one block off campus will become a new apartment complex next year.
The building, located at 22nd Street and Virginia Avenue NW and currently occupied by the State Department, was purchased for $34 million earlier this month by the investment company Insight Property Group. The building will be converted into more than 150 multifamily units, varying in size from studios to two-bedrooms and will also feature a fitness center, developers said.
Maury Stern, a partner for Insight Property Group, said the company purchased the building because of the “scarce supply” of properties in the area that are not owned by the University. He added that there is an increased demand for apartments in the area because of its close proximity to the University, a Metro station and other top employers.
“Given the scarcity of privately owned buildings coupled with the implicit demand from GW and the surrounding government and quasi-governmental employers, it is a rare find that likely won’t be replicated anytime soon,” Stern said in an email.
He added that Insight Property Group was also interested in the building because of its lobby, which was built in the 1940s and will be restored to its original condition during renovation. He said construction will start in the fall and will be completed at the end of 2020.
“The building will be unique in its smaller size, level of finishes and restored lobby that will set it apart from the competition,” he said.
Rent prices have not been determined yet, but Stern said the building’s location will make it competitive with other apartment buildings in the area.
“The location, not right on Metro, but very close and also next to the major governmental employers and I-66, will draw from a more distinct population than the competitors that are farther north, in the middle of the campus,” Stern said.
The property is owned by the ground lease company Safety, Income and Growth, Inc., which is also known as SAFE.
Jason Fooks, the vice president of investor relations and marketing at the real estate investment company iStar, SAFE’s largest shareholder, said the two companies worked with Insight Property Group to provide both the ground lease and the financing for the sale.
The ground lease is a 99-year arrangement allowing the tenant, Insight Property Group, to use the land owned by SAFE.
“What we did that was particularly unique was iStar and SAFE partnered together to provide a one-stop capital solution,” Fooks said.
The State Department has occupied the property since 1998, and its lease ends Sept. 30, the Washington Business Journal reported.
“The Department has occupied the building for a number of years, but the expiration of the General Services Administration lease will have no impact on DOS operations,” a State Department spokesperson said in an email.
Lia DeGroot contributed reporting.