The deal no doubt was a relief to both tenant and landlord, given the environment right now. While the city's core CBD and East End are faring better than most submarkets, vacancies are clearly rising in DC, Scott Homa, research manager at JLL, tells GlobeSt.com. Currently they are at 8%, which is lower than the national average of 15% but still high for the District, he says. "At some point in 2009 we are going to hit the double digits."

But while ICI probably could have gotten a better deal in NoMa or Southwest, it no doubt considered the money it would save from a move and a build out in new space, Homa says. Also, it is likely ICI reaped some savings in its renewals. Rents in the CBD and East End are down by 3% to 5% since mid year 2008, Homa says, and concession packages have been rising. Meanwhile TIs are up 30% across the board. "The majority of deals we are seeing now--68%--feature some level of free rent. A year ago that number was 30%."

Despite these growing accommodations by building owners, there has been a dearth of deals in the submarket. In January, the DC Bar, Lazard Freres & Co. and the Information Technology Industry Council leased space in 1101 K St., NW, a ten-story, 310,000-square-foot building owned by JBG Cos, for a total of 70,325 square feet. Two retailers leased space in two buildings in the submarket for an aggregate 32,000-square-feet, also in January.

There is also an expectation that activity will pick up, at least for office space. The East End is poised to receive a boost from the stimulus, according to a recent report by Cassidy & Pinkard Colliers. In general, it said, the greater Washington area will benefit the most from the American Recovery and Reinvestment Act of 2009; specifically, the East End is likely to be impacted by the $23.5 billion or 10% of the total allocations for projects related to the environment, commerce, and engineering.