WASHINGTON, DC-The timing is almost perfect: close to three weeks before the Association of Foreign Investors in Real Estate is set to release its annual report on foreign investment in the US real estate sector, news is emerging that Rockefeller Group closed on its bid to purchase 1100 First St., NE from Tishman Speyer, on behalf of Mitsubishi, for $180 million. When the area’s real estate community scours the report for clues as to how this important investor group will behave come January 3—the date the report is scheduled to be released—it will have this example to which is can refer.

It is a nice bit of symbolism, agrees AFIRE CEO James A. Fetgatter—unfortunately it is anyone’s guess how accurate it will be for 2012. As usual foreign investors look eager to invest in gateway cities of the US, especially as Europe will clearly be floundering for a while. Yet, “there are a number of factors that could make foreign investors go in the other direction as well, especially in a city like Washington, DC,” he tells GlobeSt.com.

Traditionally, the District has been a lure for overseas investors, attracted by its stable government presence. In 2012, that story will surely be different, and it is unclear exactly how nervous foreign investors are about the city’s prospects. “The budget deficit and the measures to cut the size of the government definitely have people worried,” Fetgatter says. “Whether they are worried enough to stay away in droves I can’t tell you.”

On the other hand, he says, investors from abroad could view next year as a rare opportunity to pick up Washington real estate: “This year they have had a difficult time finding the right property at the right price. Now it is safe to say Washington is fully priced and there is a certain feeling there is not as many bidders out there as there were.” Bottom line, he admits that he doesn’t “know how it will all shake out.”

Indeed, local firms are equally as befuddled and just as nervous, if not more, about federal cutbacks.

This is an issue that First Potomac Realty CEO Doug Donatelli is watching carefully, he tells NAREIT in a video interview posted to its website. “There are a lot of concerns and headwinds in Washington related to the perception of some future downsizing by the federal government and the fact that the federal government has not really been an active tenant in the market this year,” he says. “From an investor standpoint, there’s a tremendous amount of concern.” He is hopeful than an uptick in the private sector can at least in part balance out any pullback by the feds.

Rand Griffin, CEO of Corporate Office Properties Trust, is counting on defense contractors following BRAC’s path to make up some of the difference, according to comments he made during the REIT’s earnings call in October.

“Contractors who need to move to be proximate to the new government locations and who have existing, affirmed contracts are in some cases now looking for space,” he said. “COPT currently is in various stages of discussions for about 400,000 square feet of new leases with defense contractors at multiple locations.”

Indeed, 2012 may be the year of the BRAC investor—as opposed to the foreign institutional investor. Another recent investment in the area is equally as telling as Rockefeller Group’s $180 million purchase of 1100 First St., NE: Houston-based Weingarten Realty Investors recently entered into a joint venture partnership to develop Hilltop Village Center, a 370,000-square foot, Wegmans-anchored, mixed-use project in Fairfax County, VA. It is the REIT’s first investment in the area, and it was driven in part due to the nearby Ft. Belvoir.