GSA leasing accounts for one-third of the entire private office space occupancy in the Washington, DC area, Pharr says, so the Pentagon's decision could well have wider implications.

"DC is a built environment---if these requirements for federal buildings or federal occupancy are strictly applied, the 82-foot requirement won't be achievable in much of the city," says Pharr. "The result will be that GSA, on behalf of its federal clients, will be looking elsewhere for compliant buildings."

Pharr says the real estate industry has been working with GSA on its security concerns. Meanwhile, he says, the government procurement agency has signaled "that it recognized that federal agencies belong in the nation's capital." For instance, GSA has been applying the standards on a case-by-case basis, acknowledging that some government operations require more security than others.

But with the Pentagon---or rather, the Department of Defense---making a rigid interpretation of the standards, an element of uncertainty has been introduced in the local real estate market, Pharr says. The landmark Ronald Regan International Trade Building, located on Pennsylvania Avenue across the street from the US Commerce Department, for instance, is not compliant with these standards, even though it is a federally owned office building that is privately managed. "Can the federal government continue to use this building? According to the Pentagon, it can't," points out Pharr.

GSA, on the other hand, has not adopted such rigid positions. "They offer the opportunity to have a dialogue with them and developers and city planners are able to craft compromises," says Pharr. Sooner or later, he says, the two disparate interpretations are going to have to be resolved to provide certainty to the both the local real estate operators and their federal tenants.