Gallup's DC headquarters available

Real Estate Alert, April 28, 2004

A development group is offering an unusual office complex in Washington that serves as Gallup Organization's headquarters.

The 113,000-square-foot property, at 901 F Street NW, consists of an eight-story building completed in 2000 and a historic structure--the former Old Masonic Temple--that was restored in 1999 for use as office and conference space. The buildings are connected by a six-story atrium.

The complex, which is 91% occupied, could fetch $50 million, or $440/sf. At that price, the buyer's initial annual yield would be 7.25%. CB Richard Ellis has the listing.

The property is owned by developer Karchem Properties and its equity partners: Northridge Capital, Infrastructure Capital, Clark Real Estate Advisors and KDK Associates. The group bought the Old Masonic Temple in 1997 for $3 million and spent $36 million on its restoration and the development of the adjacent building.

The four-story Old Masonic Temple, built in 1869, is listed on the National Register of Historic Places. It was vacant since 1979, following the departure of Julius Lansburgh Furniture Store.

In its renovation, the Karchem group restored a 5,000-sf ballroom that was once used for inaugurations and is now used by Gallup for conferences. The building includes a restaurant that is part of 12,000 sf of restaurant space overall in the complex.

The average rent in the complex is $42/sf, while asking rents range up to $55/sf. Gallup is leasing 61,000 sf through 2015. Other tenants include Fannie Mae and energy company Mirant. There is a three-level underground garage.

The buildings, at Ninth Street, are located in the 31 million-sf East End market, which had a 93% occupancy level at yearend. However, some 2.5 million sf of space is under construction in the market.