Washington was among the 20 cities that attracted the majority of investments by real estate investment trusts in 1997, according to a recent study by broker CB Commercial Real Estate Services Inc. and money manager Alliance Capital Management.
REITs brought in $47 billion nationally, an increase from $26.3 billion in 1996, and bought a record $18 billion in commercial properties in the last quarter, according to the study released last week.
Taking advantage of low borrowing rates and rising rent and occupancy rates, the investment trusts topped their previous record of $11.3 billion, set in the third quarter, the study concluded.
Vornado Realty Trust's agreement last week to buy the Washington Design and Office Centers in the southwest portion of the city, as part of the sale of $625 million in Kennedy family estate holdings, reflects REITs' continuing interest in Washington in 1998.
D'Arcy Gallagher, managing senior vice president and director of downtown D.C. office leasing for the brokerage firm Carey Winston/Barrueta, said the two Washington acquisitions by the Saddle Brook, N.J., REIT show a further vote of confidence in the city.
"It's a good sign that a REIT wants to have [the buildings] in its portfolio," Mr. Gallagher said. "That means Vornado considers those buildings very stable and therefore would make good investment-grade properties."
He added that Vornado could have traded the properties separately and not added them to its portfolio. "REITs are concerned about the value of their stocks," he said. "It's a pretty positive message."
REITs, publicly held companies that buy, sell and develop real estate, were a major factor in Smith's growth.
Vornado won't say what it will do with the buildings, which extend along D Street SW, from Third to Fourth streets. Officials said Merchandise Mart Properties Inc. of Chicago will continue to manage the buildings, which contain 4,000,000 square feet each.
The Washington Design Center, which was renovated from a warehouse in 1983, houses 65 wholesale showrooms. The top floor of the eight-story building has alternated between design and office space, depending on the demand. …