There are a number of factors working in the DC market's favor.For starters, supply and demand fundamentals are aligned to provide healthy returns to investors for the foreseeable future, said Philip Thomas, managing director and regional director of Tishman Speyer. "We are coming off of a record year for net absorption." The CBD and East End have absorbed some 1.6 million sf, which is balanced against some 800,000 sf of uncommitted deliverables, he noted. "The core of the city is in a great position for significant rent growth, as well as the nearby submarkets."

Congressional gridlock as well will prove to be good for the local market. Plus the government will continue to be a key tenant, Lee noted. Indeed, the day's events was kicked off by David Winstead, commissioner of Public Buildings for US General Services Administration, who reported that the government is in the market to occupy 5.6 million sf of new and renewed space this year. "GSA's consumption of office space is still growing," he said. The federal government's [space needs] will continue to provide stability to the city and surrounding areas."

Other votes of confidence came from Mitchell Schear, president of Vornado/Charles E. Smith, who said that investment sales activity here has been "staggering." The pace of investments may slow somewhat, he added, but the high per-square-foot sales prices are unlikely to drop. Future construction costs are also likely to stabilize, according to Patrick Marr, EVP of CB Richard Ellis, which should buttress the drop in speculative building. He pointed to a 5% to 10% drop in concrete futures as one indicator that construction costs are set to slow.