E-commerce Giant Pays $148.5 Million for Residence Inn by Marriott
Amazon has acquired the Residence Inn by Marriott in Arlington, Virginia, with plans to demolish the hotel and incorporate the site into the second phase of its headquarters campus.
The e-commerce giant, through its subsidiary Acorn Development, finalized a $148.5 million deal with Blackstone Group to acquire the 16-story hotel at 550 Army Navy Drive in Pentagon City, according to public records. The hotel sits near the Pentagon City Metro station and was reportedly closed at the time of sale.
The acquisition gives Amazon control of an additional 1.5-acre site that can be rolled into PenPlace, a large development site just north of Metropolitan Park that will house the second phase of what the company is calling its second headquarters, or HQ2. JBG Smith, Amazon's development partner in Northern Virginia, said in its second quarter earnings call it also has a deal in place to sell 10 acres in PenPlace to Amazon for about $149.9 million. At full build-out, the PenPlace site could accommodate more than 2 million square feet of development.
A spokesperson for Amazon confirmed the Residence Inn purchase and told CoStar News in an email the company plans to present its design for PenPlace in 2021.
With the acquisition, Amazon is gearing up for its next phase of development after breaking ground earlier this year on a pair of 22-story office towers at Met Park that make up the first phase of HQ2. Along with JBG Smith, Amazon is turning a 6.2-acre stretch of Met Park from vacant warehouses and surface parking into a mixed-use development to include offices and nearly 70,000 square feet of space for shops, restaurants, a day care center, outdoor terraces and underground parking.
The acquisition also comes as Amazon continues to grow its headcount in Northern Virginia. In June, the company said it surpassed 1,000 employees at its Arlington headquarters with plans to accelerate hiring over the next few years as it looks to bring on more than 37,000 employees overall, including 12,000 by 2025. Amazon is in line to receive a substantial government incentive package if it creates 25,000 jobs.
The PenPlace site has been lined up for development since 2013 when Vornado/Charles E. Smith, the predecessor company to JBG Smith, received county approval to redevelop the lot into nearly 2 million square feet of office, ground-floor retail, a hotel and apartments. The site is bounded by Army Navy Drive, South Fern Street, South Eads and 12th streets and represents the largest undeveloped tract in the county.
For Blackstone, the sale of the Residence Inn by Marriott netted the private equity giant $50 million just one year after acquiring the 299-room hotel for $99.1 million. Blackstone bought the property from Host Hotels & Resorts in a $150 million deal last July that also included the 337-room Courtyard by Marriott Chicago Downtown/River North. Blackstone still owns the Chicago hotel, according to CoStar information.
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Original Article: https://www.costar.com/article/1140128544