East End Leads New Growth

Law firms, associations, government agencies and the companies who do business with them continued to sign the biggest office leases in the District during the second quarter. But they did little to change the city's vacancy rate of 8.4 percent because so many new buildings came on the market.

About 2.5 million square feet of office space, much of it in the District's growing East End near the Washington Convention Center, is expected to open this year. That's up almost 40 percent from last year. "It took a number of years for projects in the East End to get going, and they all came on line at the same time," said Margarita Foster, vice president and director of research at Cassidy & Pinkard, a major brokerage firm.

Buildings like the 500,000-square-foot renovated Woodward & Lothrop building at 1025 F Street NW, which was finished this year, is only 24-percent leased; and 900 7th Street NW, a 350,000 square foot building that big Washington developer Akridge Real Estate Services finished in the second quarter, is only 40-percent leased, said CoStar Group Inc., a Bethesda research company.

The biggest user of office space for the first half of the year continued to be the federal government. It signed five of the top 10 leases in the second quarter. The biggest deals included 129,000 square feet for the Coast Guard in Southwest; 55,000 square feet for NASA in the city's Central Business District; 48,400 square feet for the FBI in the East End; and 47,800 square feet for the Department of Justice on Capitol Hill.

Brokers said deals like White & Case LLP, a law firm which took 117,100 square feet at One Metro Center in the city's East End, show that there is a demand for top-of-the-line office space. "The trophy stuff keeps going up and getting pre-leased," said Brendan R. Owen, a senior vice president at CB Richard Ellis.

-- Dana Hedgpeth