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WASHINGTON, DC-Two sources have told GlobeSt.com that the Treasury Department is taking at least 71,000 square feet in 1801 L St. CBRE is the broker for the building; it has declined to comment for this story.

The lease is illustrative of several trends in the DC office market right now, Scott HomaResearch Manager for Jones Lang LaSalle, tells GlobeSt.com. “The government has been the primary driver for activity here for at least the last six months. Also we are projecting even more growth by government agencies related to financial oversight–such as Treasury, the Securities and Exchange Commission and FDIC.” It is believed that Treasury is using the majority of the space for TARP and TALF and other related activities, he says–although some legacy functionality may overlap.

The Equal Employment Opportunity Commission used to occupy 1801 L until it moved to the NoMa submarket at 131 M St., SE. The government agency inked a 144,000-square-foot lease with San Francisco’s Bristol Group to occupy nearly three stories at One NoMA Station. Treasury has now backfilled most of that space at a very competitive rate, according to another source.

This person told GlobeSt.com that the terms of the deal are believed to be $39 per square foot, full service, at a 10-year term. There is also, according to this source, said to be a $20 per square foot tenant improvement allowance. These terms, if accurate, would be very aggressive for Washington CBD, which is averaging $49.63 per square foot.

The Treasury lease is part of a much-anticipated silver lining to the nation’s economic woes–at least for the DC area. There have been several back-of-the envelop estimates as to how much additional space the government will need to combat the severe economic and credit crisis. Delta CEO Greg Leisch, for example, has estimated that the DC area will see upward of 500,000 square feet of new office space demands by the government “as part of a first wave,” he tells GlobeSt.com. This year, he predicts that DC should absorb between three million square feet to four million square feet of office space. Without the federal support, that number would probably be between two million to three million square feet of absorption.

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