Even in the District, survival is still a real issue for manyreal estate firms, especially the ones that are over-leveraged. Thebottom lineanswer to these woes--leaving aside the governmentprograms that areemerging to help the industry--is job growth.Unfortunately, fewpanelists said they expected to see strong growthin the next 12months. "[This year]will be better in the second halfand growth will start in 2011," predicted Brendan Owen, chiefleasing officer forVornado/Charles E. Smith. "By 2012 we will seerobust growth."

In other ways the DC area is feeling the recessionary pinch.Forexample, while the federal government has been aggressivelyexpanding,it has also been a savvy tenant, negotiating tough dealswithlandlords, according to Joe Stettinius, president of CassidyTurley. "Theyhave gotten some very aggressive terms," he said,including 10-yearoptions on some leases. "They are really takingadvantage of the factthat it is a tenant's market."

DC area landlords are also dealing with tenants that havebecomehyper-conscious of the image they project to their owncustomers. Inshort, they don't want to be perceived as profligate."Clients looking for space are saying that they don't wantanything'garish' or that may give the perception of being toosplashy," saidPetch Gibbons, executive director at CushmanWakefield. "I have hadclients say to me 'I don't want to make astatement with our realestate.'"