- The Washington Times - Thursday, August 28, 2003

Silver Spring’s office vacancy rate dropped dramatically this week, after several vacant buildings were sold and taken off the market.

In a move that is expected to boost redevelopment efforts in Silver Spring, LHL Realty sold its entire portfolio in the town, including four buildings at Eastern Avenue and 13th Street, to Gramax Associates LP, which plans to convert the buildings into affordable housing units. The buildings total 429,320 square feet.

Grubb and Ellis, which keeps statistics on office vacancy rates, reported that the sale cuts the rate in Silver Spring from 15 percent to 10 percent.

The LHL buildings had been sitting vacant for about a decade, with the owner expressing no need or desire to sell them. Gramax Associates showed interest in buying the properties after it put the buildings under contract and began converting them to housing units. Alan Zuckerman, a broker with Vanguard Realty, convinced LHL that it was a good time to sell.

“I’d been looking at these buildings for some time,” said Mr. Zuckerman, lead broker on the sale. “I knew it was more valuable because of the area as residential. They would not make sense as offices.”

Mr. Zuckerman declined to reveal a sale price for the buildings.

In addition to cutting Silver Spring’s office vacancy rate, the sale of the buildings gives the town a boost at a time when it is redeveloping. Though Montgomery County was not actively involved in the sale, it has been involved in creating the affordable housing units, which are expected to be a key residential component to redevelopment efforts near downtown.

Silver Spring has already gotten a boost this year with the opening of the Silver Theatre and the headquarters of Discovery Communications.

D.C. in Top 10

The District is the eighth-best market in which to sell office buildings, according to a national survey by commercial real estate firm Sperry Van Ness. Based on figures such as total investment yield, price per unit and employment growth, Sperry Van Ness said the District was a relatively unattractive place to buy office space. It advised that anyone owning a building here would gain by selling now and buying similar space in either Philadelphia or New Jersey.

The study pokes a hole in the conventional wisdom about the District, which has been perceived as one of the better places to buy office space because of its stable base of government-oriented tenants. But Sperry Van Ness said the investment yield from office space in the District is 9 percent, which trails other large cities including Dallas, Philadelphia, Baltimore, Las Vegas and Tampa, Fla.

Real estate analysts in the District were more positive about the city, pointing to its 3.9 percent office vacancy rate — one of the lowest in the nation — and record-setting pace of deals. The D.C. office of real estate services firm Spaulding and Slye Colliers said there will be more sales of office buildings in the District in 2003 than any other year on record, and demand for office space is rising.

In other news

• District developer CarrAmerica took over management of a 300,000-square-foot office complex in Dallas called the Lincoln at Legacy. The complex brings Carr-America’s portfolio in Dallas to 17 buildings.

• Cushman and Wakefield announced that it negotiated lease renewals for two nonprofit groups in the District. The Brady Center renewed its lease for 14,800 square feet at 1225 I St. NW and the American Hospital Association renewed a lease for 40,000 square feet at 325 Seventh St. NW.

Property Lines runs Friday. Tim Lemke can be reached at [email protected] or 202/636-4836.

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