Officequarantinedacquisition

Dulles Station East I

Herndon, VA·Mar 6, 2026, 1:10 PM

Deal Size

$95.8M

Cap Rate

Est. 9.00%

$/SF

$512

Size

187K SF

Occupancy

—

Market SignalNeutral (weak/10)

The acquisition of Dulles Station East I at a 9.00% cap rate is attractive compared to the average cap rates in the D.C. metro area, which typically range from 6.50% to 8.50% for similar office assets. However, the lack of disclosed occupancy and WALT raises concerns about immediate cash flow stability. The property’s strategic location near a planned Metro station provides long-term upside potential, but current market conditions warrant a cautious approach until more information on tenant stability is available.

Buyer Strategy

KBS Realty Advisors appears to be pursuing a core-plus strategy, focusing on acquiring well-located assets with potential for value enhancement. Their existing portfolio in Virginia suggests a commitment to the D.C. market, leveraging local knowledge to drive returns.

Market Signal

This acquisition signals a continued interest in suburban office assets, particularly those near transit hubs, as companies adapt to hybrid work models. The pricing reflects a cautious optimism in the market, as institutional investors seek to capitalize on potential long-term growth despite current uncertainties.

Parties

BuyerKBS Realty Advisors →

Location Analysis

Primary Market

Major employers in the area include Booz Allen Hamilton, Northrop Grumman, and various tech startups concentrated in the Dulles Technology Corridor.

Herndon, VA, is experiencing steady population growth, driven by its proximity to Washington D.C. and a median household income above the national average. The D.C. metro area has seen an influx of professionals, particularly in tech and government sectors, contributing to a robust demand for office space.

The competitive set includes properties like the nearby Dulles Station West and other office buildings along the Dulles Toll Road, which are also vying for tenants due to their accessibility and amenities. Recent transactions in the area indicate a strong demand for quality office space.

The supply pipeline is relatively constrained, with limited new developments announced in the immediate vicinity. However, there are a few projects under construction, totaling approximately 200,000 SF, which could impact future occupancy rates.

Cap Rate Context

The 9.00% cap rate is above the market average for similar office properties in the D.C. area, suggesting a higher perceived risk or potential for value-add opportunities. Recent comparable transactions have shown cap rates between 6.50% and 8.50%, indicating that this asset may be undervalued if occupancy and tenant quality are strong.

Rent Growth

Given the strong demand in the D.C. metro area, rent growth is projected to be stable, with asking rents in the submarket averaging around $30/SF. Recent growth rates have been approximately 3-5% annually, driven by limited supply and increasing demand.

Tenant Assessment

Rollover Risk

The lack of disclosed occupancy and lease terms creates uncertainty regarding rollover risk. If significant portions of the space are leased to tenants with short-term leases, the risk of vacancy could be high.

Risk Factors

Uncertainty regarding current occupancy and tenant quality.

High

Conduct a thorough due diligence process to assess tenant leases, occupancy rates, and financial health of tenants before finalizing the acquisition.

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