Georgetown building sale sets record

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A Georgetown building was recently sold with the most expensive known price tag — for a retail building, per square foot — in the city.

The two-story building at 1329 Wisconsin Ave. NW sold for $6.7 million, or $1,597 per square foot.

It's the city's most expensive building per square foot, according to available information from Real Capital Analytics, a New York commercial real estate research firm, and CoStar Group Inc., a Bethesda commercial real estate information firm.

The Georgetown sale price represents a more than 50 percent increase from the previous record, $1,034 per square foot for 2029-2031 P St. NW, according to Real Capital Analytics. That building was sold for $9.2 million in late 2004.

The 4,195-square-foot building in Georgetown is fully leased to Jones New York's Easy Spirit and Bandolino shoe stores, which will remain in the space at least through 2016.

The buyer, Sivan Properties of Manhasset, N.Y., said it purchased the building in the shopping mecca of Georgetown as a long-term investment.

"Georgetown is a unique, supply-constrained market catering to high-end retailers who are attracted to its affluent resident base, historic architecture, pedestrian-oriented environment and excellent transportation access," said Daniel Mermel, principal at Sivan.

Mr. Mermel said the company also bought the building for tax benefits.

The price was driven up by the Georgetown location, where buildings rarely go on sale, said Jim Kornick, a senior associate at Marcus & Millichap Real Estate Investment Services, the D.C. office that brokered the deal. When a Georgetown property does go on the market, it usually is pursued by multiple buyers. In this case, Mr. Kornick said, there were two serious bidders.

On top of that, the building is new. Rock Creek Property Group, a D.C. company, constructed the building last year as a replica of the early 20th-century building that once stood in the space and was destroyed in a fire.

"It's a brand-new building in the middle of the historic district. It's as rare as could be," Mr. Kornick said.

Georgetown is among the luxury retail stretches that are particularly in demand throughout the country, sending prices higher than ever.

Rising luxury retail sales are "driving a tremendous amount of competition from luxury retailers to occupy prime sites," said Dan Fasulo, managing director of Real Capital Analytics. Investors are buying buildings in hot retail areas with the confidence that they can rent them at high rates.

"There are many investors who view properties like this as irreplaceable assets," Mr. Fasulo said. "While the numbers might not make perfect economic sense right now, when applying a much longer term [view] to the investment, it's certainly an attractive place" to put capital.

This is Sivan's only property in the District. The company also owns property in New York, Connecticut and South Carolina.