Flush REITs Ride the Boom

Carr said the company has only 1.6 million square feet in its portfolio that it is rolling over for new leases this year -- less than the roughly 2.5 million square feet in a typical year. That should help, analysts said, as rental rates are still soft. In the District, Carr has about 347,000 square feet of space rolling over.

In the housing sector, AvalonBay Communities Inc. -- which has 148 apartment complexes in 10 states and the District -- saw its best year in several years, as the rental market began to recover. For the year, its occupancy rate was 95.3 percent, up from 93 percent. One thing that helped boost the occupancy at its units in markets like the Washington area has been the conversion of some apartment buildings to for-sale condominium buildings. And for the first time since 2001, the company posted a growth in its funds from operations, which were up 2.4 percent for the year after several years of decline.

"You had job losses and a strong for-sale market in 2002 and 2003, and then in 2004 we started to see it stabilize," said Timothy J. Naughton, the company's president.

AvalonBay's 15 Washington area properties, which include a 200-unit apartment building near the MCI Center and other buildings in Columbia, Rockville and Bethesda. While they posted the strongest rental revenue growth of any of its markets nationwide, its properties in Northern California have lagged, Naughton said. Two projects totaling 1,000 units in Montgomery County were finished last year, and are nearly fully leased. The company expects to step up development of new projects in New York, Seattle and San Francisco.

In the retail sector, the performance of companies such as Mills Corp., which owns large shopping centers including Potomac Mills in Prince William County, and Federal Realty Investment Trust, which owns mostly locally based shopping centers that include Bethesda Row and Pentagon Row, has benefited from a "golden period," said David Fick, an analyst at Legg Mason Wood Walker Inc. in Baltimore. While office tenants are still able to shop for deals, rents for retail tenants are at market highs.

Donald C. Wood, president and chief executive of Federal Realty, said his company last year signed 1.8 million square feet of new and renewal space at its centers -- 12 percent more than what it did the year before. Rents for those spots were up 18 percent, he said. "As old leases roll over, we're able to get in many, many cases -- but not all -- significantly more rent," Wood said.

But shopping center landlords are cautious of how long the strong consumer confidence and spending will last.

"Consumer confidence is absolutely important," Wood said. But he cautioned, "we're just the landlord. Retailers don't have to be doing the best they've ever done. They have to be doing well enough to pay the rent."

Mills Corp., which has on average opened two to three of its mega-malls every year, according to analysts, is now expanding into Europe. It has several projects in the early development stages in Rome and Milan in Italy, Glasgow in Scotland and Valencia in Spain.

"They're expanding into Europe because eventually there will be a saturation in the U.S. market," Fick said. "European retail is very tired and they're looking for a new shopping experience."