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.

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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 GlobeSt.com. "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."

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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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