The real estate industry continues to be dominated by small firms, ac- cording to the National Association of Realtors.

Despite predictions that the industry would be run by a small number of large real estate companies, the association's survey of 1,100 offices nationwide found that nearly 84 percent of the respondents had just one office.

Nearly half the firms said they employ five or fewer sales associates, marking a decline from the 55 percent reported during the association's 1979 study. This may signal a slow but apparent trend towards larger real estate firms, observed the association, the nation's largest real estate trade organization.

Many small real estate offices have expanded through the use of computers. Nearly a third of the 1,100 offices reported having some computer capability, such as the Multiple Listing Service (MLS), used by about 25 percent of the firms, the study showed.

Developments in real estate in the Washington area:

* In Baltimore, the president of a major commercial and industrial real estate firm has warned that the city's office market cannot stand the pressure of several new speculative office buildings opening at one time. Phillip Iglehart of W.C. Pinkard and Co. said the almost 100 percent occupancy rate currently being maintained needs to be continued over the next several years and that it is more important than ever for the city to control development of office space. Speculative office buildings are those built for the general market rather than for a specific user.

* The Canadian government has announced that it will build a new embassy on Pennsylvania Avenue NW, across from the East Wing of the National Gallery.

* Advanced Technology Inc. recently moved its information technology and strategic programs divisions to the Cascades Center in Reston. The firm now occupies 101,000 square feet at the center, and it will eventually lease all three buildings planned for the office park. It also plans to hire 600 additional employes by 1985 to staff the new headquarters buildings.

* Several new buyers have purchased space in the recently-completed condominium office project at Foxhall Road and MacArthur Boulevard NW. They are Kurth & Co., a consulting firm, which purchased 1,869 square feet; Marshall Associates Investments, 2,040 square feet, and the Professional Associates of the Psychiatric Institute, 3,091 square feet.

* The American Institute of Architects Service Corp. has purchased 61,000 square feet of space in the Crystal City area. The purchase price was $1.5 million.

* Wang Laboratories has leased 12,000 square feet of space in the Air Rights Plaza III building at 7315 Wisconsin Ave. in Bethesda. The offices will be used by Wang's Federal Systems Division.

* Anaconda-Ericsson Information Systems has acquired 6,120 square feet of space in the Washington Business Park in Lanham.

* Construction began recently on a nine-story building at 1255 23rd St. NW. The structure will have 278,340 square feet of office space and 30,000 square feet of retail space, in addition to parking, hotel and condominium space.