The DC region is at a tipping point, says Rob Hartley, directorof Research in CBRE's Washington, DC office. "We have hadphenomenal growth in the last few years, which everyone knew wasnot sustainable," he tells GlobeSt.com. The supply entering themarket now is a result of developers waiting until late in thecycle to begin building new product due to high constructioncosts.

Now, of course, development will begin to decline as deliveriescontinue to hit the market. "By the end of 2010, 11 million sf willdeliver here," Hartley says. "Next quarter when we run thesenumbers looking out three years there will be much less in thepipeline."

The big question, of course, is what these shifting dynamicswill do to vacancy rates. The fourth quarter 2006 vacancy rate was6.6%. Now it is at 7.5%. This time next year, the speculation goes,it will have breached the 8% barrier, a psychological milestone ofsorts. Another unknown is the federal government, which has notbeen as active in the leasing market lately. A few exceptions existof course--the US Immigration and Customs Enforcement signed a91,196 sf lease at 500 12th St., NW in the East End, CBREreports.