OfficeClosedacquisition

Dulles Station East I

Herndon, VA·Mar 6, 2026, 4:41 PM

Deal Size

$115.0M

Cap Rate

Est. 9.00%

$/SF

$615

Size

187K SF

Occupancy

—

Market SignalNeutral (weak/10)

The acquisition of Dulles Station East I at a 9.00% cap rate suggests a strong yield relative to the current market conditions; however, the lack of disclosed occupancy and WALT raises concerns about the stability of cash flows. The property's location near a planned Metro station provides potential upside, but without tenant information, it's difficult to fully assess risk. Comparatively, similar suburban office properties have seen cap rates in the 7-8% range, indicating a potential risk premium associated with this deal.

Buyer Strategy

KBS Realty Advisors appears to be pursuing a core-plus strategy, looking to acquire properties with potential for value enhancement through leasing and operational improvements. Their existing portfolio in the D.C. area suggests a strong local market knowledge and commitment to the region.

Market Signal

This acquisition signals continued institutional interest in suburban office assets, particularly those near transit hubs. The pricing at a 9.00% cap rate suggests a cautious approach to risk in the current economic climate, reflecting broader market sentiment towards suburban office properties post-COVID.

Parties

BuyerKBS Realty Advisors →

Location Analysis

Primary Market

Technology companiesGovernment contractorsTelecommunications firms

Herndon, VA, is part of the D.C. metropolitan area, which has experienced steady population growth and high income levels. The area benefits from a highly educated workforce, with a median household income significantly above the national average, supporting demand for office space.

The competitive set includes several modern office buildings in the Dulles corridor, with properties such as Dulles Station West and other mixed-use developments nearby. Recent transactions indicate a strong demand for quality office space in this submarket.

The supply pipeline appears limited, with few new office developments planned in the immediate vicinity. This could mitigate oversupply risks, but specific projects under construction were not mentioned in the sources.

Cap Rate Context

The 9.00% cap rate is above the average for suburban office properties, which typically range from 7-8%. This spread indicates a higher perceived risk, possibly due to the undisclosed occupancy and WALT, which could affect the stability of cash flows. Recent comparable transactions have shown cap rates tightening, suggesting this deal may be priced at a discount to market.

Rent Growth

Given the strong demand in the D.C. metro area and the proximity to a planned Metro station, rent growth is expected to be moderate, with potential for increases as the area develops further. Recent trends indicate a slight uptick in asking rents in the region.

Tenant Assessment

Rollover Risk

The lack of tenant information raises concerns about rollover risk, particularly if significant portions of the space are vacant or have short-term leases.

Risk Factors

Undisclosed occupancy and WALT

High

Conduct thorough due diligence to ascertain tenant profiles and lease terms. Engage with the seller to obtain detailed occupancy reports and lease agreements prior to closing.

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