The National Food Processors Association has started work on a 12-story headquarters building at 14th Street and New York Avenue NW.

The association purchased the 18,460-square-foot site at a public auction in October, 1980, for $9.785 million, or $530 per square foot. The association concluded negotiations with the Northwestern Mutual Life Insurance Co. last summer to form a partnership for construction of the building.

The project, which is expected to be completed in late 1983, is estimated to cost $32.5 million.

The association, formerly the National Canners Association, first established its headquarters in the District in 1913 at 1739 H St. NW. In 1950, the organization moved to a larger facility, which it still occupies, at 1133 20th St. NW.

The association plans to occupy the second and third floors of the New York Avenue building, which will have a total of 163,000 square feet of office rental space, 25,000 square feet of store rental space and 64,000 square feet of garage space.

The developer of the site is the John Akridge Co.; the architect is Weihe, Black, Jeffries, Strassman and Dove; the building engineer is Goodwin H. Taylor Ltd.; the space planner and architectural consultant is Environmental Planning and Research Inc., and the engineer is Girard Engineering. Financing is being provided by Citicorp Real Estate Inc. and American Security and Trust.

Developments in real estate in the Washington area:

* An office building at 1828 Jefferson Place NW was sold recently for $1.2 million by 1828 Jefferson Limited Partnership to Malicor NV.

* Washoe & Co. recently sold a property at 1109-15 14th St. NW to 1111 Associates for $2.1 million.

* The Tenley Medical Office Building complex was recently purchased for $3.8 million by Tenley Associates, a limited partnership organized by Gerald M. Wade, president of Wade Investment Co. The property is located at Rockville Pike and West Edmonston Drive in Rockville. It includes a 50,500-square-foot medical office building and a 5,200-square-foot bank office.

* A 10,000-square-foot office building at 3535 University Blvd. in north Kensington was recently purchased by Alvin Steinberg, president of Capitol Builders of Bethesda. The building will be leased to the Montgomery County Teachers Federal Credit Union.

* Nordlinger Associates has leased 960 square feet of space in the Bender Building at 1120 Connecticut Ave. NW.

* Also in the Bender Building, the Nestle Coordination Center for Nutrition has leased 3,658 square feet of space and the law firm of Isham, Lincoln & Beele has acquired 6,600 square feet.

* Group W Satellite Communications, a division of Westinghouse Broadcasting, has leased the first and second floors of a building at 1111 18th St. NW. The value of the lease is over $5.5 million.

* Also in the Barr Building, the International Association of Ice Cream Manufacturers Inc. has leased 8,000 square feet.

* The American Association for the Advancement of Science has leased 13,257 square feet of space in the American Medical Association Building at 1101 Vermont Ave. NW.

* The law firm of Canan, Burns & O'Toole has leased 12,500 square feet at 1521 16th St. NW.

Rolls Royce Inc. has leased 4,631 square feet at 1201 Pennslyvania Ave. NW.

* The Genex Corp. has leased 10,470 square feet in the Beltway View Office Building at 6110 Executive Blvd. in Rockville.

* International Shipping Co. has leased 2,282 square feet at 5550 Friendship Blvd. in Chevy Chase.

* The General Services Administration has renewed its lease of 78,110 square feet of space in the Architect Building, 1400 Wilson Blvd. in Arlington.