Invesco Joins Marx Deal, Eyes More

March 30, 2021

Invesco Real Estate has bought a 70% stake in a Washington office building from Marx Realty – forming a partnership that’s on the prowl for more deals.

Invest last month quietly bought the majority interest in the 134,000-sf building at 1307 New York Avenue NW.  The ideal valued the property at $41.5 million, the same price Marx paid in April 2020 to buy it from an American Association of State Colleges and Universities partnership.  That deal was brokered by CBRE and Savills.  Marx and Invesco struck their agreement off-market.

The Dallas investment manager is working with Marx to identify office buildings the duo can buy in New York and Washington, Marx’s top markets.  The partnership has not set an acquisitions goal.

Marx had been planning $33 million of upgrades to the building on New York Avenue, as part of the firm’s strategy of bringing hotel-style amenities to office properties.  Invesco will help fund those improvements, which are scheduled for completion by July.

The building has been emptied of tenants.  The old leases averaged $20/sf, and Marx now expects rents around $70/sf.  The property, known as the Herald Building, was developed I 1923 as the Beaux Arts-style home of the Washington Times-Herald newspaper.

The joint venture will reposition the six-story building with an updated lobby and rotunda, as well as an amenities floor with a lounge, a cafe, an oversized boardroom and a fitness/wellness center.

“Investment in the office sector is now b being driven by definitive and distinctive points of difference in product,” said Marx president and CEO Craig Deitelzweig.  He said the firm aims for “top-to-bottom hospitality-infused ambience” to stand out forms he competition.

Marx was acquired in 2006 by Merchants’ National Properties, which now operates under the Marx brand.  Its portfolio includes 5 million sf around the country and across property types.

In addition to Manhattan and Washington, Marx also is looking to reposition offices in Atlanta to its hotel-style model.