CoStar Group inked a deal with a longtime tenant of its new Arlington HQ, which leased 13 of the building’s 31 floors. The tenant agreed to downsize to two floors, giving CoStar enough space for the 500 employees moving to the new HQ.
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CoStar Group is crossing its t’s and dotting its i’s as it prepares to move into its Arlington, Virginia, HQ at the beginning of 2025.
The portal purchased a 552,000-square-foot office tower in downtown Arlington in February. However, research and consulting firm Gartner occupied 13 of the building’s 31 floors — complicating CoStar’s plans to move its 500 current employees and hire 150 new employees to occupy the new building.
However, Gartner agreed on Friday to cede 11 of its 13 floors at 1201 Wilson Boulevard. The firm paid a $48 million early termination fee and signed a new eight-year lease for the 11th and 12th floors.
Andy Florance | Credit: CoStar Group
“We’ve always intended for 1201 Wilson to become CoStar Group’s headquarters, but this agreement makes it possible for us to complete that process even faster and to better accommodate our continued rapid growth and expansion,” CoStar Group CEO Andy Florance said in a prepared statement.“I’m delighted we’ll be able to more fully tap into the building’s extensive amenities and location in business-friendly Virginia ahead of schedule and can’t wait to welcome employees, customers and other constituents early next year.”
CoStar’s current headquarters are on L Street NW in Washington, D.C. The company purchased the D.C. property for $41.25 million in 2011 and sold it for $101 million in 2019. The sale terms included a leaseback agreement that ends next year.
CoStar’s new headquarters is in a prime location and comes with several major financial benefits. The Associated Press reported in February that Virginia Gov. Glenn Youngkin offered CoStar $4.75 million in economic incentives as the company is expected to create 150 new jobs. AP also said CoStar inked a $14 million deal with Arlington County to purchase the public observation deck atop the new HQ. The funds will be used to renovate a park in Rosslyn.
“As states compete for business and jobs, the Commonwealth’s diverse, world-class talent, exceptional quality of life and stable business climate continues to stand out,” Gov. Youngkin said in a public statement. “We are proud that CoStar has chosen Virginia as its home.”
CoStar’s HQ project comes three years after the expansion of its Richmond campus. The $460 million project included the addition of two buildings — a 26-story LEED-certified office tower and a six-story multipurpose building. The new buildings would enable the company to expand its workforce in the area from 1,500 to 3,500 employees.
The company began construction in November 2022 with a target completion date of 2025. Richmond BizSense and WTVR 6 reported on the project’s progress in June, noting construction teams had placed elevator shafts for both buildings.
The move to Arlington and the Richmond campus expansion is expected to grow CoStar’s employee count by 25 percent from 6,400 to 8,000.