Boston Properties has sold a 254,000-square-foot office tower in Washington, D.C.'s Dupont Circle neighborhood to Jemal Equities for $92.3 million, marking another exit by the Boston-based REIT from aging office stock in the nation's capital.
The building at 1330 Connecticut Avenue NW changed hands as Boston Properties continues to trim its D.C. portfolio. Burke & Herbert Bank & Trust financed the deal with a $72.5 million loan, covering roughly 78 percent of the purchase price. The transaction reflects the ongoing challenges facing Class B and Class C office buildings in major metros as tenants demand newer, amenity-rich spaces.
Jemal Equities, led by developer Joel Jemal, has been active across D.C.'s commercial real estate landscape. The firm typically targets value-add opportunities in established corridors, and Dupont Circle represents a dense, transit-accessible location near George Washington University and the metro system. The neighborhood has struggled through the pandemic and post-pandemic office downturn, with vacancy rates exceeding historical averages.
For Boston Properties, the sale reduces exposure to a segment of the market that has proven difficult to lease and reposition. The REIT has shed multiple D.C. properties over the past three years as it focuses on premium assets in core markets. Boston Properties owns flagship buildings in New York, San Francisco, and Boston, where Class A office space commands higher rents and attracts corporate tenants with stronger credit ratings. Properties on Connecticut Avenue in Dupont Circle, while well-located, compete in a more commoditized market where landlords face tenant flight and downward rent pressure.
The $92.3 million valuation translates to roughly $363 per square foot, a metric that suggests the property commanded a discount to newer buildings in the district. Premium office towers in D.C.'s downtown core or near the waterfront typically trade above $500 per square foot, indicating Jemal's acquisition came at a significant basis discount.
Jemal Equities now faces the challenge of stabilizing 1330 Connecticut Avenue amid a shifting tenant landscape. Potential strategies include converting space to multifamily housing, which has proven successful in other secondary office markets, or targeting smaller tenants and nonprofits willing to accept slightly older finishes in exchange for lower occupancy costs. The building's size and location near metro access make it adaptable to mixed-use redevelopment.
For D.C.'s office market, the transaction underscores the widening bifurcation between trophy assets that attract institutional capital and standard office buildings that trade at cyclical lows. Landlords holding Class B properties face pressure to either invest in major renovations or consider conversion strategies. Boston Properties' decision to exit reflects a realistic assessment that older office stock in secondary submarkets will not command premium returns in the near term.
The financing from Burke & Herbert Bank, a regional lender with deep D.C. market knowledge, suggests confidence in Jemal's ability to execute a turnaround plan. Debt at 78 percent LTV leaves room for additional capital investment if repositioning is required.