OfficeClosedacquisition

Dulles Station East I

Herndon, VA·Mar 6, 2026, 1:00 PM

Deal Size

$95.8M

Cap Rate

Est. 6.65%

$/SF

$512

Size

187K SF

Occupancy

—

Market SignalNeutral (weak/10)

The deal for Dulles Station East I at a cap rate of 6.65% is competitive within the context of the Washington D.C. office market, particularly given its location near a planned Metro station, which enhances its long-term value. However, the lack of disclosed occupancy and WALT raises concerns about immediate cash flow stability. While KBS Realty Advisors has a strong presence in the area, further due diligence on tenant quality and market conditions is necessary before proceeding with the investment.

Buyer Strategy

KBS Realty Advisors is known for its core-plus investment strategy, focusing on properties with stable cash flows and potential for value enhancement. This acquisition aligns with their portfolio strategy of expanding their presence in the D.C. area, which is a key market for their investment thesis.

Market Signal

This deal indicates a continued interest in suburban office properties, particularly those with transit-oriented development potential. The pricing reflects a cautious optimism in the market, suggesting that institutional investors are willing to engage despite uncertainties in occupancy and tenant stability.

Parties

BuyerKBS Realty Advisors →

Location Analysis

Primary Market

Technology sector (e.g., AOL, Verizon), Government contractors, and Defense firms

Herndon, VA, is part of the greater Washington D.C. metropolitan area, which has seen consistent population growth and high median household incomes. The area's proximity to technology and government sectors attracts a skilled workforce, contributing to a stable demand for office space.

The submarket includes several comparable properties, with a focus on mixed-use developments like Dulles Station. Recent transactions in the area indicate a competitive pricing environment, with similar office spaces trading at cap rates between 6.5% and 7.0%.

The supply pipeline appears moderate, with limited new office developments planned in the immediate vicinity. However, the potential for new projects could impact future occupancy rates and rental growth.

Cap Rate Context

The cap rate of 6.65% is slightly above the average cap rates for suburban office properties in the D.C. area, which typically range from 6.0% to 6.5%. This spread suggests a higher perceived risk, possibly due to the lack of disclosed occupancy and WALT, indicating a need for careful assessment of tenant stability.

Value-Add

There may be value-add opportunities through lease-up strategies or potential renovations, especially if current occupancy is below market averages. The lack of disclosed occupancy suggests that there may be tenants to attract or existing leases to renegotiate.

Tenant Assessment

Rollover Risk

The lack of disclosed occupancy raises concerns about rollover risk, as near-term lease expirations could lead to increased vacancy if not managed effectively.

Risk Factors

Undisclosed occupancy and tenant quality

High

Conduct thorough due diligence to ascertain current occupancy levels and tenant profiles. Engage with the seller to obtain detailed lease information and assess the financial health of existing tenants.

Executive Signals

“KBS Realty Advisors is always in the market to buy and sell.”

Walter Foster·KBS Realty Advisors·bullish

“The site's proximity to a planned Metro station, combined with the design and high parking ratio, give the property a competitive edge.”

Stephen Evans·KBS Realty Advisors·bullish

Market Comparables

Dulles Station East I

Washington D.C. Metro · Office · acquisition

$233.3M

DC office property

Washington DC · Office · acquisition

$101.0M6.65% cap