Up in the Air

"Everything is harder," said David Webb, a senior managing director at Cassidy & Pinkard Colliers who helped put together the deal. "Everybody is extremely cautious and over conservative. You really don't know who will be there when it's time to close the loan."

Developer Douglas Jemal said he would normally have bought and sold 30 buildings and properties by this time in a year, but has only moved a handful. In the past three months, he's done none.

"This is worse than in the late 1980s and 1990s," he said, recalling fire-sale prices after the savings and loan crisis. "Real estate was depressed then, but banking institutions didn't stop lending. Now you can't get money even for a good deal."

He's been trying to move forward on his plans to redo the old Wonder Bread factory near the Shaw-Howard University Metro stop in the District but cannot get financing from his usual lenders, which include Wachovia, Wells Fargo and PNC.

In Rosslyn, Bethesda-based JBG had planned to start construction on an office tower without signed leases from tenants. But the project is delayed because of financing troubles.

Lacy said he hasn't done a really big deal with German investors since April, when he sold an office building at 2099 Pennsylvania Avenue NW for $864 a foot, which at the time was one of the highest rates in the city.

"We've kicked a lot of tires, but nobody's acquiring anything," he said. "The music's stopped. Lending's slowed to a trickle."

"People are moving to the sidelines to wait and see what happens," said Matt Klein, president at Akridge, a longtime D.C. development firm that has participated in large-scale projects like Gallery Place. "There's a concern factor of not wanting to be a buyer when there's downward movement in the market. There's a saying that 'No one wants to catch the falling knife.' "

Staff researcher Julie Tate contributed to this report.