(Read more on the debt and equitymarkets.)

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TYSONS CORNER, VA-What a difference a year makes. This time lastyear at the RealShare Northern Virginia event, both panelists andattendees were enthusiastic about both the submarket and nationalmarket. That, clearly, has changed--but both panelists as well asmany of the 300 or so attendees at Tuesday's conference areoptimistic that Northern Virginia's strengths will see thesubmarket through what is largely expected to be a rocky fewquarters.

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For starters, said Mark Levy, VP and market officer forProLogis, the subprime crisis has been overblown in the media. Thelending situation is bad, he acknowledged--but not to the pervasiveextent that it has been portrayed. "I am more concerned about theperception of the situation than its reality," he said during thekeynote panel discussion.

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"People don't know what to believe," Herb Mansinne, managingdirector of Jones Lang LaSalle, also a panelist, said. "I think alot of us are getting psychological whiplash following events."

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Still, though, even if the national economy slips intorecession, Mansinne noted that Northern Virginia may very well stayin the black. "When the country was last in recession in 2002,Northern Virginia was not."

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There are some obvious and not-so-obvious reasons for this.Government spending falls in the former camp, Levy said. At facevalue this is good for the region; however, as the panelistdiscussed next year's presidential elections it became clear manyexpected that no matter which party wins the White House andCongress, fiscal restraint will be at the forefront of any spendingplans. Homeland security and the Department of Defense, though,will be an exception, which will benefit Northern Virginia. Also,Mansinne explained, Northern Virginia has become more diversifiedwithin the categories of government spending, so it won't feel abudget crunch too much in any one sector.

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Other reasons less obvious but equally as important to NorthernVirginia's real estate market's health: the growing interest on thepart of foreign based investors in its assets. To be sure, theentire US real estate market is one sale now for buyers from Europeand Asia, said Jim Lee, president and CEO of Opus East, thanks tothe dollar. Indeed, the day before the conference, Prudential Real EstateInvestors revealed that it had acquired Boston Properties'office portfolio in Loudoun County on behalf of investors inMunich-based TMW Pramerica Weltfonds. Northern Virginia, though,with its proximity to the DC market, will have special allure formany investors not interested in familiarizing themselves withsecond or third tier markets. "Foreign investors tend to gravitatetowards trophy, urban assets," Doug Fleit, CEO of America's CapitalPartners Mid Atlantic said.

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