- The Washington Times - Friday, April 18, 2003

In one of the better bargains seen in real estate circles this year, Lexin Capital bought three buildings on New Hampshire Avenue in Takoma Park, paying about $45 per square foot for a complex it plans to convert into a center for health-oriented groups.
The New York-based company paid $6.6 million for the 145,000-square-foot complex, which is currently 90 percent leased by numerous tenants including a Bank of America branch and the Visiting Nurses Association. It was previously owned by Clark Construction Group.
The per-square-foot price of the buildings is about one-fourth the average price of office buildings sold in suburban Maryland in 2002, said the commercial real estate firm Cassidy and Pinkard.
Lexin Capital founder and President Metin Negrin said that with about 150 tenants, the buildings came cheap because they require a heavy amount of work to run.
"They are very intensive to manage," Mr. Negrin said in an interview. "But for us as an entrepreneurial company, we don't mind the work."
Mr. Negrin said he hopes to cut the number of tenants in half, and said he will pump more than $2 million into upgrading the buildings to attract larger tenants who will sign longer leases. The company's ultimate goal, Mr. Negrin said, is to attract tenants that will serve nearby health care institutions, like Veterans Hospital.
"We think it makes a lot of sense," he said. "We've got the Visiting Nurse Association and we've talked to two doctors already."
The purchase marks Lexin's first foray into office investment anywhere. It previously bought residential properties in Florida and an industrial building in North Carolina. Before founding Lexin, Mr. Negrin spent seven years with Athena Group, where he helped manage nearly $2 million square feet of office space.
Slow in the suburbs
First-quarter office market reports are starting to trickle in, and it appears that for every bit of good news from the first three months of the year, there is some not-so-good news to temper it.
There is still a lot of excitement about the potential for office space to be filled because of an expansion of defense and homeland security operations in Washington, real estate analysts report. But the war in Iraq, terrorism fears and other distractions in the region caused many companies to postpone decisions about real estate.
In suburban Maryland, people were thrilled with the addition of the 600,000-square-foot Discovery Communications headquarters in Silver Spring, which is expected to spark an economic revitalization in the downtown area. But other activity in Silver Spring was slow, and several companies vacated space for headquarters elsewhere in the region.
Looking ahead, Washington is expected to remain one of the best office markets in the nation. Suburban Maryland is unlikely to see a big spike in its office vacancy rate this year, analysts said, but because of a lack of tenants the vacancy rate probably will not fall too much either.
"The lack of speculative construction in suburban Maryland will prevent vacancy rates from increasing dramatically," Grubb and Ellis reported in its first-quarter office market report. "Lack of demand, however, will keep vacancy in the 12.5 percent range in the foreseeable future."
In other news
The D.C. Office of Planning will hold the first public workshop on the future of the St. Elizabeths hospital site in Southeast on April 26. The workshop will be from 10 a.m. to 1 p.m. at the Chapel at St. Elizabeths, located at 2700 Martin Luther King Jr. Ave. SE.
Property Lines runs Fridays. Tim Lemke can be reached at [email protected] or 202/636-4836.

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