(Mark Your Calendars. The 11th Annual RealShare Washington, DC convenes at the Ritz Carlton, June 1. Click here for more information.)

WASHINGTON, DC-Core office assets that now trade in the $800-per-square-foot price range in the DC market. Underwriting is especially aggressive and could easily miss targets if the economy were to suddenly worsen. More leverage used in deals.

The signs are growing that the DC office and multifamily markets are not only robust but also possibly frothy, at least in the opinion of more than a few in the community. Others say the price activity is more a reflection of DC assets’ meeting investors’ insatiable need for security and reliable income streams.

The flags will be flying for both schools of thought at the 11th annual RealShare Washington, DC networking conference, being held June 1 at the Ritz-Carlton Hotel during its third panel session, The Outlook for Investment Sales in the District.

Count Kevin Smith, director of mortgage banking at Centerline Capital Group, among those in the DC-is-getting-frothy-camp. “That’s certainly the case for multifamily, and it’s becoming the case for core office, as well,” he tells GlobeSt.com. “What’s enabled froth in the multifamily space has been the low cost and high availability of capital from the GSEs as well as the availability of equity,” he says, pointing to deals that are trading in the 5-cap or even sub-5-cap range at “significant price per units that are much higher than what we’ve seen in a very long time and underwritten to aggressive assumptions.”

He calls the underwriting “priced to perfection” and says it is questionable whether or not those pro formas will hold. If the economy were to worsen, if rates moved unexpectedly or—in the worst-case scenario—the GSEs were to be shut down or dramatically scaled back, a lot of deals would find themselves in trouble. “If the agencies were to go away, it would have a significant impact on the future pricing of multifamily, dramatically decreasing the value of the assets, because the cost of capital would go up significantly,” he says.

CBRE SVP Bill Prutting, also on the panel, doesn’t think prices are becoming too frothy. A better way to describe what’s happening, he tells GlobeSt.com, is that “buildings are matching up more effectively with investors’ interest.

“Those investors that lack DC office in their portfolios and for their separate-account clients are more aggressively seeking to fill those holes,” he says—a dynamic that applies specifically to downtown DC.

Another factor, he says, is that new buyers, especially foreign ones, are entering or re-entering the market and they’re using more leverage to get deals done—a strategy all but verboten after the crash. “We expect to see overseas investors continue to frequent the marketplace,” he says. “Those countries leading the charge are in Asia, the Middle East and select European ones,” primarily Germany, he says.