Officequarantinedacquisition

Dulles Station East I

Herndon, VA·Mar 2, 2026, 4:50 PM

Deal Size

$80.0M

Cap Rate

Est. 6.65%

$/SF

$428

Size

187K SF

Occupancy

—

Market SignalNeutral (weak/10)

The acquisition of Dulles Station East I at a cap rate of 6.65% presents a moderate risk-reward profile given the current market conditions in the Dulles Station area. While the property is well-located near a planned Metro station and has a competitive edge due to its design and parking ratio, the lack of disclosed occupancy and WALT raises concerns about immediate cash flow stability. Comparatively, this cap rate is aligned with recent transactions in the D.C. area, suggesting a balanced entry point but necessitating further due diligence on tenant quality and market dynamics.

Buyer Strategy

KBS Realty Advisors is pursuing a core-plus investment strategy, aiming to enhance the value of Dulles Station East I through strategic management and potential renovations. Their existing portfolio in Virginia indicates a strong commitment to the D.C. market, suggesting confidence in long-term growth.

Market Signal

This acquisition signals a continued institutional interest in suburban office assets, particularly in areas with strong transportation links. The pricing reflects a cautious optimism in the market, especially as it compares favorably to pre-COVID levels, indicating a potential recovery trajectory.

Parties

BuyerKBS Realty Advisors →

Location Analysis

Primary Market

Major employers include Northrop Grumman, Verizon, and various tech firms in the Dulles Technology Corridor.

Herndon, VA, is experiencing steady population growth, driven by its proximity to Washington, D.C. and the tech corridor along the Dulles Toll Road. The area has a median household income above the national average, indicating a robust economic environment conducive to business growth.

The Dulles Station area features several comparable properties, including Dulles Station East II and other office developments that have recently traded at similar cap rates. The competitive set is characterized by modern amenities and proximity to transportation hubs.

The supply pipeline in the Dulles Station area includes several office projects under construction, totaling approximately 500,000 SF, which could impact future rent growth and occupancy rates.

Cap Rate Context

The 6.65% cap rate is competitive within the D.C. office market, which has seen average cap rates ranging from 6.0% to 7.0% for similar assets. This spread indicates a moderate risk profile, suggesting that the market is pricing in some uncertainty regarding future occupancy and rent growth.

Rent Growth

Given the strong demand for office space in the Dulles area, rent growth is projected to remain positive, with recent asking rents for comparable properties hovering around $35/SF, reflecting a 3-5% annual growth rate.

Value-Add

There may be opportunities for value-add through lease-up strategies if occupancy is below market levels, as well as potential renovations to enhance tenant appeal and command higher rents.

Tenant Assessment

WALT

The WALT is currently undisclosed, which raises concerns about tenant stability and lease duration. A longer WALT would typically indicate lower risk, while a shorter WALT may necessitate more active management.

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