WASHINGTON, DC-For a brief period this year--that time when spring is heading into the summer--it appeared as though the fine run tenants enjoyed in the DC area office market was ending and the pendulum was swinging back in the landlord’s favor. Unfortunately, if you blinked you missed it. That pendulum has slammed back to the tenants’ camp, Studley’s EVP David Lipson and research director Christian Volney, tell GlobeSt.com.

“People were thinking that rents would rise as construction increased and the economy improved,” Lipson says. “All of that, however, is tied to the economy, and we know what happened there.” What sealed landlords’ fates, though, was the growing fiscal crisis, which has caused federal agencies to scale back in their space requirements. “In 2008, the DC area’s commercial real estate market didn’t miss much of a beat on a macro level because GSA was able to pick up the slack.” Landlords won’t see a return to favorable market conditions, Lipson says, until the economy shows strong signs of improvement and/or the federal government becomes flush.

Concessions are beginning to rise again, he continues, in terms of allowances and free rent. “They are also taking other forms, such as increased flexibility and expansion rights. For instance, they are asking for, and receiving, the right to give back a floor in year 6 of a ten-year lease. That can be much more valuable to a tenant than an extra $20 per square foot in TI.”

Of course, some sub-areas will fare better than others, says Volney, noting that Metro Center is about to see a major swing in vacancy that will be very hard to recover from given current market demand. However, he says that even in highly sought after areas some buildings, if they recently traded, may find themselves in trouble.

“Buildings that have recently traded at top-of-market pricing may find it difficult to compete for tenants in terms of rental rates--yield assumptions will be high at new buildings,” Volney says. “The rents they’ll be pressured to charge tenants will not be in line with demonstrated market rates.”