The race to snare big-user tenants is specifically noted in the8.9-million-sf, 31-building Southwest submarket and the12.6-million-sf, 66-building Capitol Hill corridor. In Southwestand Capitol Hill, "developers have built large buildings in recentyears, expecting to fill them with federal tenants," explains TonyaL. Ginter, research director at GVA Advantis. "Some of that spacehas remained largely vacant," including 500 12th St. SW, developedby JBG Cos. and 25 Massachusetts Ave. NW, developed by RepublicProperty, Ginter says.

"One of the reasons is that agencies dealing with defense andhomeland security are expanding, but mostly in Northern Virginia.That has left some vacancy in these markets, which are home toagencies such as NASA, the Department of Education and theDepartment of Agriculture," the researcher says. The Southwestsubmarket is also facing competition from Crystal City in NorthernVirginia. Crystal City is luring government tenants with lowerrents and new shopping centers and restaurants.

"Still, that is not stopping developers from putting 739,000 sfof space under construction in Southwest and another 225,000 sfunder renovation, with only 26.9% of it preleased," Ginter pointsout. Full service, class A asking rent in Southwest averages $48.41per sf; class B is at $42.05 per sf. Capitol Hill asking averagerent for class A space is $38.61 per sf; class B, $32.22 per sf.Northern Virginia average asking class A space is $29.74 per sf;class B, $25.62 per sf.