Jemal Real Estate Strategies, JLS Capital and DivcoWest Form Venture to Convert DC Office Building to Apartments With $40M Madison Realty Capital Loan

Jemal Real Estate Strategies, JLS Capital and DivcoWest have formed a joint venture to convert 1255 23rd Street NW, a 342,000-square-foot office building in Washington, D.C.'s West End, into approximately 323 apartments, the firms announced Oct. 7. Madison Realty Capital provided a $40 million loan to support the property's acquisition and predevelopment.

The project will include up to three dozen affordable units. DivcoWest, the current owner of the property, will retain an equity interest alongside Jemal Real Estate Strategies Inc. (JRES).

Property and Planned Conversion

Built in 1982, 1255 23rd Street NW is an eight-story office building with 257 covered parking spaces. It sits between Georgetown, George Washington University and Dupont Circle and is a few blocks from the Foggy Bottom-GW University Metro station, which serves the Blue, Orange and Silver lines. Approximately 22,000 square feet of ground-floor retail will remain in place.

The planned residential program of about 323 apartments includes up to 36 affordable units, or roughly 11% of the total. FILLAT+ Architecture is the project architect, and CBG Building Company is the general contractor. The firms said additional project details will be announced as plans advance.

Madison Realty Capital Loan and Joint Venture Structure

Madison Realty Capital provided the $40 million loan to support both the acquisition and predevelopment phases. Based on the disclosed figures, the loan equates to roughly $117 per existing building square foot, or about $124,000 per planned apartment. Those are loan-to-area and loan-to-unit comparisons, not purchase-price or development-cost metrics.

Jemal Real Estate Strategies is the sponsor, with DivcoWest as co-sponsor and JLS Capital participating in the venture. JRES is a private investment platform founded by Norman Jemal, Senior Managing Principal at Douglas Development, to pursue opportunistic real estate and structured investment opportunities. Since launching in late 2025, JRES has sponsored the conversion of an office and mixed-use building in Syracuse, N.Y., and a 20-story office tower in Richmond, Va., creating nearly 350 residential units. It is also repositioning and leasing an office building in Arlington, Va.

DivcoWest, a DivCore Capital company, is a vertically integrated real estate firm investing in many asset classes across the U.S., primarily in innovation markets.

Statements From the Sponsors and Lender

"This partnership reflects our confidence in Washington, DC, and our conviction in the importance of giving existing buildings a second life," said Norman Jemal, Senior Managing Principal of Jemal Real Estate Strategies. "Adaptive reuse will play an increasingly important role in the future of Washington's neighborhoods. Despite being an office building, 1255 23rd Street NW has the geometry and bones for a stunning residential building, a use that aligns the building with the future needs of the community. We're excited to pair our experience in complex urban redevelopment with DivcoWest's deep expertise to truly serve the community and contribute to the city's long-term vitality."

Nico Papageorge, Managing Director at DivcoWest, said: "Office-to-residential conversion offers a real opportunity to address the need for housing in our cities. By bringing together our teams' capabilities, we will create both affordable and market-rate apartments at 1255 23rd Street NW and position the property for the long term."

Samir Tejpaul, Head of Investments at Madison Realty Capital, said: "1255 23rd Street NW presents a compelling opportunity to bring new life to a well-located property in Washington's West End. The property combines a building configuration that lends itself to residential use with direct access to major employers, transit, and surrounding neighborhoods. With Jemal Real Estate Strategies and DivcoWest leading the project, our financing will help deliver much-needed housing in a market with limited opportunities for residential development."

Washington Office Market Context

The conversion comes as Washington's office market remains bifurcated. Overall vacancy is roughly 22%, while top-tier trophy space is below 10%. Cresa reported 229,543 square feet of positive net absorption in the second quarter of 2026, with overall vacancy at 21.9%. CBRE reported third-quarter absorption of 360,154 square feet and a 40-basis-point decline in vacancy, and placed trophy vacancy at 8.3%. Savills reported availability below 10% for trophy properties, with continued rent growth at the top of the market.

Redevelopment and office-to-residential conversions are contributing to improved Washington office-market conditions by reducing available inventory. The sponsors' stated rationale centers on adaptive reuse of the existing structure in a neighborhood with limited housing supply, particularly affordable units, and with access to employment centers, transit and retail.

The project would expand JRES's conversion activity from regional markets such as Syracuse and Richmond into a central Washington submarket. Feasibility for conversions of this type typically depends on factors such as floor-plate depth, building-code requirements, affordable-housing obligations and construction costs, among others.