The partnership behind the massive development closed on the financing with Goldman Sachs. Work on the second phase of the 3.2 million-square-foot project began in March.
By Laura Calugar (as appearing in Commercial Property Executive)
The joint venture between PN Hoffman and Madison Marquette—Hoffman-Madison Waterfront—along with partner PSP Investments, has closed on an $847 million loan for The Wharf in Washington, D.C. Eastdil Secured brokered the record-breaking financing, which reportedly is the largest private construction loan in the city’s history.
Goldman Sachs and syndicate members Starwood Capital Group, Mack Real Estate Group and Pentagon Federal Credit Union led the non-recourse transaction, which comes shortly after the co-developers landed $800 million for the refinancing of The Wharf’s first phase. The loan, also brokered by Eastdil Secured, in June, came from a Wells Fargo-led syndicate that included Morgan Stanley and Blackstone.
Located along the Washington Channel of the Potomac River, The Wharf is a $2.5 billion and more than 3.2 million-square-foot waterfront neighborhood. The project’s first phase was delivered in 2017 and encompasses 2 million square feet of office, hotels, shops, restaurants and residential space, as well as marinas, parks, piers and docks.
At the end of the first quarter of this year, phase two of The Wharf kicked off. Plans call for a roughly 1.3 million-square-foot, mixed-use development with office, residential, hotel and retail space. The waterfront segment includes 223 boat slips at The Wharf Marina. Designed by 13 architects and designers from around the world, this final phase of the project is expected to be delivered in 2022.
STRONG TENANT APPEAL
Law firm Williams & Connolly has already signed a 15-year lease at The Wharf’s second phase. The company is slated to occupy nearly 300,000 square feet, making it the anchor tenant of the upcoming office tower. Other companies have also preleased space, according to Madison Marquette Founder & Chairman Amer Hammour.
Another law firm, Michael Best & Friedrich LLP, has already moved in at The Wharf’s first 11-story trophy building. The company occupies approximately 30,000 square feet after combining two local operations on the fourth floor of 1000 Main Ave. Fish & Richardson PC, also a law firm, occupies 60,000 square feet at the new office building.
The Washington, D.C., office market is in the midst of a development boom, according to a recent Yardi Matrix report. Some 2.7 million square feet was added to the market in the first half of 2019, exceeding last year’s total completions. An additional 3.4 million square feet is anticipated to come online before the end of this year, with trophy office space remaining in high demand.