"This is a trend that will continue through 2002, Marcus & Millichap's DC regional manager Gary Lucas. "Negative absorption and a glut of sublease space have been the big stories in 2001 and into this year in other markets, but the local office market has been shielded by the diversity of its employment base and the strengths of its government sector." A Grubb & Ellis study concludes there was an 11.7% vacancy rate of all District office properties for the first quarter of 2002, only a 1.2% increase from the fourth quarter of 2001.

The Marcus & Millichap report indicates what will spur continued success is an increase in government employment, specifically post-September 11 induced security positions, which will yield 0.9 percent growth this year. Also, property values are expected to increase as both domestic and international investors continue to take interest in the District's high-performing office portfolio.