Demand Is Strong

In Arlington, the Rosslyn-Ballston corridor, which has added new offices, expensive condos and shops in the past few years, continued its high level of development in the first half of the year, brokers and developers said.

The vacancy rate for the Arlington-Alexandria area is 10.5 percent.

Arlington Gateway in Ballston, a 325,400-square-foot building under construction by Rockville-based developer JBG Cos., is 70-percent leased.

Larger companies still looking for space include Corporate Executive Board Co., a District-based provider of business research. It is considering Waterview, an office, retail and housing complex that JBG plans to build in Rosslyn. The American Trucking Association is looking for 150,000 square feet in Alexandria, said Martha Almquist, a senior vice president at Grubb & Ellis Co. And the Public Broadcasting Service, which is now in Alexandria, is seeking space. Charles E. Smith Commercial Realty said it is hoping to lure PBS to Crystal City, where Smith is the largest landlord and is losing one of its largest tenants, the U.S. Patent and Trademark Office, which is moving to Alexandria.

The demand for space is giving some developers and investors enough confidence to proceed with plans to build.

In Ballston, at the corner of Glebe Road and Wilson Boulevard, the National Rural Electric Cooperative Association is building a 230,000 square foot building next to its headquarters there, without a major tenant. "They feel bullish enough on the market that they're starting," Almquist said. George Mason University plans to build a 200,000-square-foot office building next to its law school at the Virginia Square Metro stop that it expects to fill with government contractors, said broker Spencer R. Stouffer of Trammell Crow Co.

The stability of the region's economy has attracted national investors that have cash and are willing to pay high prices for buildings. Potomac Tower, a 300,000-square-foot building in Rosslyn, has investment bank Friedman, Billings, Ramsey Group Inc. as its largest tenant. It is being offered for sale at $410 a square foot, Stouffer said. If it goes for that much, it is "reaching prices comparable to some of the best buildings in downtown D.C.," he said.

-- Dana Hedgpeth