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Analysis of current office trends in class A and class B buildings in the Downtown Washington market indicates a surprising flattening in the growth rate of rents. Over the past several years rents in all classes of investment-grade office buildings rose approximately 3% to 4% per year. Recently, however, supply and demand for space have fallen into equilibrium as a result of the delivery of new space on the market and the general slowdown in economic activity.

While office rents are showing a flattening in the rate of appreciation, the actual rents achieved are at near peak level. The robust nature of achievable office rents is reflected in the continued advancement of office-building sale prices. Both A and B buildings continue to demand increasing prices.

These increases seem to reflect the narrowing of current investment choices in product and location.

David A. FussWilkes Artis, [email protected] Property Tax Counsel (APTC)

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