WASHINGTON, DC-The signs are barely there, but they do exist: DC's commercial real estate market may be exiting its funk, Jones Lang LaSalle Managing Director Joe Brennan tells GlobeSt.com. "It feels like things are slowly starting to change. The definitive point will be when we get a federal budget, but right now we are starting to see signs of agreement on austerity and we are starting to see Capitol Hill advocate taking advantage of DC's down market by writing longer leases."

Those trends, Brennan says, started to emerge in the last quarter. One example he points to is the US Fish and Wildlife Service's 183,000 square foot relocation to Falls Church, VA. Its move to Vornado Realty Trust's Seven Skyline Place office building is expected to save the federal government more than $3.8 million over its 15-year term. "That was a big, long-term lease that set a benchmark for low rent for a government tenant," Brennan says.

The next big sign will be the lease the National Labor Relations Board signs. That deal is close if it hasn't already been inked, but not yet announced, which is what Brennan believes is the case. "I am guessing it will be a new low, but will also set the bottom."

His best guess is that on a net effective basis the NLRB lease will come in at the mid $30s per square foot, including the coupon rate and free rent.

This cost-saving mood is going to characterize the next phase of federal leasing, JLL says in its newly-released annual Federal Perspective report.

The square footage allotted to each government employee has fallen from 280 square feet per person to about 125 square feet per person. GSA's headquarters building is a prime example: currently 4,400 people work in the same amount of space that used to house 2,500.

JLL finds that:

• Overall leasing activity representing extensions and renewals is now 82%;

• There was a 1.86% drop in metro DC GSA-leased office inventory in 2013;

• There was a 12.5% decline in metro DC net effective rents from peak levels—a number that depressingly compares to the 11% rise in US net effective rents since 2010.

The good news is that having a federal tenant is still considered gold in the capital markets. In 2013, GSA-leased buildings have sold at a rate that nearly doubles the average price per square foot for building sales nationwide. Not surprisingly, the Washington, DC region has captured more than 40% of the $3.3 billion in average annual sales volume for GSA-leased office buildings since 2006.