Amazon.com Inc. (NASDAQ: AMZN) has acquired the roughly 11 vacant acres in Pentagon City that will soon be developed as PenPlace, the massive second phase of HQ2.
The $198 million deal with JBG Smith (NYSE: JBGS), as expected, follows Arlington County’s late April approval of PenPlace, a nearly 3.3 million-square-foot project slated to include three traditional office buildings, a spiral Helix tower, three retail pavilions, a central park and an underground parking garage. The site is bounded by Army Navy Drive, 12th Street South and South Fern and Eads streets.
Combined with the sale of 1900 N St. NW in the District, JBG Smith announced Monday it had cleared $344 million, advancing its “capital recycling strategy.” It used the anticipated PenPlace revenue to facilitate a like-kind exchange for The Batley, a 432-unit apartment building near Union Market in a deal that closed last year.
“As we saw with the sale of Metropolitan Park to Amazon in 2020, finalizing this deal allows us to move forward with our partners, realize Amazon’s vision and complete its second home here in the region,” JBG Smith CEO Matt Kelly said in a release.
JBG Smith closed on its sale of Metropolitan Park, the first phase of HQ2, to Amazon in January 2020 for $154.95 million.
The Bethesda REIT serves as Amazon’s development manager for both Met Park, scheduled to open in 2023, and PenPlace. Construction on the latter is expected to start sometime this year, with its opening planned for 2026.
Met Park and PenPlace will contain at least 25,000 workers by 2030, Amazon has said, incentivized by $550 million in cash grants promised by Virginia. The company could earn another $220 million if it hires a total of 37,850 employees at HQ2 by 2035. At last check, roughly 5,000 people were employed at HQ2.