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Two Washington development groups, Quadrangle Development Corp. and Potomac Investment Properties, started work recently on the 170,000-sf building at 1875 K St. NW. Although it was a speculative groundbreaking, negotiations are well under way with three law firms, according to real estate sources.

Willkie Farr & Gallagher seems poised to be the anchor tenant with a multi-floor deal, possibly four floors. Milbank Tweed Hadley & McCloy is apparently looking to take two floors, and Fresh Fields is discussing a 35,000-sf lease.

The owners are asking about $36 per sf triple net, which approximates the $50 per sf full-service rents that top space is claiming in the local office market nowadays. “For tenants looking for good space, there are very few options this year,” says Mary Petersen, head of research for Cassidy & Pinkard.

The District’s vacancy rate for class A space fell to 2.8% six months into 2000, according to Delta Associates.The designer is Hartman-Cox Architects. Also involved are Engineering Design Group and KCE. Clark Construction is the general contractor. The project lender is Guaranty Federal Bank.

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