That was then. Now the Washington, DC area has racked up enoughofficetrades for brokers and investors to understand the postrecessiontrajectory here. The latest deal: AEW's purchase of ThreeBallstonPlaza for $121.25 million, as reported in the WashingtonBusinessJournal, is just yet another data point.

For core transactions in the DC area there has been a 125 basispointreduction in the past 15 months, says Bill Prutting Jr. ofCBRE.Buildings that would have traded at an 8.25 cap last summerarenow trading at a 7 cap. "That yield compression is due tothreefactors," he tells "A continued dearth ofqualityofferings, the ability to quantify key underwritingassumptions suchas rental rates and absorption rates and a moreacutely definedreturn requirement on the part of investors. Investorsnow have agood handle on what they are prepared to pay and deals thatdon'tmatch their criteria they are quick to dismiss."

Prutting points to last summer's trade of the Hartfordbuilding at 3101 Wilson Blvd. in Rosslyn toillustrate hispoint. It traded for $350 per square foot and a 8.5%cap rate. Thenin October, 4501 N. Fairfax--almost across the streetfrom ThreeBallston--traded at an 8.1% cap rate, posting a 40 basispointcompression, he continues. "Now we are pricing at a 7% cap rate forThree Ballston, at $394 per square foot."

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Erika Morphy

Erika Morphy has been writing about commercial real estate at for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.