According to Homa, in the past 12 months the District lost 417,000 square feet of occupancy; during that same time period the trophy market gained 603,000 square feet. He attributes it to a flight to quality, driven by tenant demand for more efficient floor plans, LEED/energy-saving designs and transit-oriented locations--all at prices heavily discounted from 24 months ago.

"Transaction volume in this segment of the market is spiking, as tenants are regaining confidence in their long-term business outlooks and quality options are dwindling," Homa says. Furthermore, vacancy rates are beginning to ease off of all-time highs following the delivery of eight trophy buildings in 2009."

The same trends are stabilizing certain submarkets, including the Rosslyn Ballston corridor, the 1-270 corridor and Alexandria. "Again, more efficient floor plates in new construction is driving demand--tenants are able to occupy the same amount of space but get more bang for their buck," Homa says.

By the end of the year he predicts that core DC and Chevy Chase, MD will have stabilized. Markets with a longer road to recovery include the Toll Road, Route 28 South, Tysons Corner, Bethesda-Rock Spring and Silver Spring.