Considering that the building is empty, its sale demonstratesthe relative strength of the office market, says Kornick. It alsodemonstrates the ideal position companies with a cash store--suchas First Potomac--are in as they seek out the best opportunitiesinacquiring buildings below replacement costs, as the company didwith Three Flint Hill.

Lockheed Martin occupied the building for more than 20 yearsbefore its lease expired in November 2009. The defense contractorhas since consolidated operations into other locations. Toreposition the property, First Potomac plans to renovate all eightstories and the penthouse and then pursue LEED certification. Itplans to spend an additional $5 million, or approximately $30 persquare foot, on the renovations.

First Potomac financed the acquisition with a combination ofavailablecash and a draw on its unsecured revolving creditfacility. Atstabilization the property is expected to generate a10% to 12%unleveraged return on invested capital.