"It's not suffering, to the contrary, over 1.9 million sf has been leased since September 11," Tom Leachman told GlobeSt.com. Leachman is a senior managing director for Insignia/ESG, based in Northern Virginia. That nearly 2 million sf is office space leased in the Arlington market. And many of those leases have been by the federal government. While some of those leases, like FDIC taking about 200,000 sf, or FEMA taking 90,000 sf were leases that may have been in the works, a big chunk of the new leases are the Department of Defense trying to find space for displaced Pentagon employees. Leachman and Transwestern vice president Peter Berk said DOD has gone right to Crystal City, the office market adjacent to both the Pentagon and National Airport.

They said DOD has picked up over 850,000 sf of space in 2521 and 2531 Jefferson Davis Hwy here. According to published reports, Illinois-based Equity Office Properties Trust in 1998 acquired the two buildings--James K. Polk and Zachary Taylor--The office REIT paid $158 million for the 90 percent stake in the properties that it did not already own. The twin, 12-story buildings have 902,371 sf of space, of which the Naval Sea Systems Command occupied 857,900 sf until July of this year. NAVSEA has moved to the Navy Yard in Washington, but Berk said the lease ran through at least fall of next year, and GSA has added two years to the lease.

A spokeswoman for GSA declined to comment, and officials from neither DOD nor Equity Office were immediately available for comment.