WASHINGTON, DC-No, it isn't your imagination. The average sales price for transactions in the DC area has risen over the past six months, according to Transwestern, reaching $522 per square foot, up from $487 per square foot for deals that closed in all of 2012.

The rise is in part due to limited transaction volume, along with two high-priced deals in the East End: Nakash Holdings, which purchased 1400 New York Ave., NW for $109 million, or $634 per square foot, and Clarion Partners' purchase of 701 8th Street, NW for $98.5 million, or $735 per square foot.

In addition, core cap rates for District of Columbia assets, on a 12-month trailing basis, were 5.4% in March 2013, according to Real Capital Analytics. This is an increase of 8 basis-points in the past year, Transwestern notes. Transwestern isn't betting that cap rates will decline much this year, given the tepid nature of the economy. Instead, "most price increases will likely be earned from gradual property performance improvement."

Translation: the sharp rise in prices is over for the foreseeable future so if you want to squeeze out extra dollars from a sale, enhance the building.

That, of course, covers a lot of ground from sustainability measures such as LEED to standard renovations and enhancements. Another upside to renovations is that they go far in attracting and keeping tenants in what has been a lackluster leasing market.

As one example: last week First Potomac Realty Trust announced a $6.25 million renovation at 1211 Connecticut Ave, NW, an 8-story, Class B office building. The REIT also announced that Washington Sports Club has renewed 20,965 square feet for ten years.

The planned renovations include the building's entrance, lobby, common areas and mechanical systems. The property is currently 97% leased. Doug Mueller and Evan Behr of Jones Lang LaSalle represent First Potomac in marketing the building. Michael Zacharia of CBRE represented Washington Sports Clubs and Town Sports International in the transaction.

Instant Insights /

DC's Average Sales Price Rises

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