OfficeClosedacquisition

Dulles Station East I

Herndon, VA·Mar 2, 2026, 4:40 PM

Deal Size

$80.0M

Cap Rate

Est. 9.00%

$/SF

$428

Size

187K SF

Occupancy

—

Market SignalNeutral (weak/10)

The acquisition of Dulles Station East I at a 9.00% cap rate presents a compelling opportunity given the property's strategic location near the Dulles Toll Road and a planned Metro station. However, the lack of disclosed occupancy and WALT raises concerns about immediate cash flow stability. In comparison to other recent transactions in the area, the cap rate appears attractive, but the absence of tenant information necessitates a cautious approach until further details are available regarding occupancy and tenant quality.

Buyer Strategy

KBS Realty Advisors typically focuses on core-plus and value-add investments, indicating a strategy to enhance property value through active management and potential repositioning. Their existing portfolio in the D.C. area suggests a commitment to this market.

Market Signal

This acquisition reflects a continued interest in suburban office properties, particularly those with strong location fundamentals. The pricing at a 9.00% cap rate may indicate a cautious sentiment in the market, particularly regarding occupancy risks post-COVID.

Parties

BuyerKBS Realty Advisors →

Location Analysis

Primary Market

Major employers in the area include Northrop Grumman, Verizon, and Boeing, with a concentration in technology and defense sectors.

Herndon, VA, is part of the greater Washington D.C. metropolitan area, which has seen consistent population growth and high income levels. The region's median household income is significantly above the national average, indicating strong economic fundamentals that support demand for office space.

The competitive set includes several high-quality office properties in the Dulles Corridor, with recent transactions reflecting cap rates between 7.50% and 8.50%. Notable nearby assets include the Dulles Station mixed-use development, which enhances the area's appeal.

The supply pipeline in the Dulles Corridor remains limited, with only a few projects under construction. This scarcity of new office developments may support rental growth in the short to medium term.

Cap Rate Context

The 9.00% cap rate for Dulles Station East I is above the average market cap rate for office properties in the D.C. metro area, which typically ranges from 7.50% to 8.50%. This higher cap rate suggests a risk premium associated with the property, potentially due to the undisclosed occupancy and tenant information.

Rent Growth

Given the strong demand for office space in the Dulles Corridor and limited supply, rents are expected to grow moderately over the next few years. Recent market trends indicate a rental growth rate of approximately 3-5% annually.

Tenant Assessment

Rollover Risk

Without occupancy data, the rollover risk remains unclear. If significant portions of the lease roll off in the near term, it could expose the property to vacancy risk.

Risk Factors

Undisclosed occupancy and tenant quality

High

Conduct thorough due diligence to obtain tenant information and occupancy rates. Engage with local leasing brokers to assess market demand and tenant interest in the property.

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

Dallas-Fort Worth · Office · acquisition

$233.3M

Dulles Station East I

Dallas-Fort Worth · Office · acquisition

$95.8M9.00% cap