The owners of the Galliher lumberyard, a Washington fixture for more than five decades, have exchanged their two acres of land on the high-priced Georgetown waterfront for a 17-acre site in Springfield and 70 percent ownership of new office building near Dupont Circle.

The land swap, worth an estimated $9.5 million, was more than two years in the making and is a graphic example of the skyrocketing value of the few remaining large parcels of land in prime Washington locations.

Rammel Crow Co. Of Dallas, one of the largest real estate development firms in the country, bought the lumber company, located on the north side of K Street between 29th and Thomas Jefferson streets, and plans to replace it with an eight-story office building.

In return, the Gallihers will get a new home for their company near the Capital Beltway and I-395 in Springfield with access to a railroad line needed to bring in the lumber from mills on the West Coast and in Canada interest in eight-story office building at 1920 N St. NW. Trammel Crow formerly owned both properties.

Trammel Crow immediately mortgaged its new Georgetown acquisition for $14.7 million. "We think Georgetown is a great area," said marketing director Phil Norwood. "It's very tough to get good commercial development sites," in Georgetown.

The exit of the lumber company means " the last of the industries that came to the waterfront at the turn of the century," will now close, said John Lane, the attorney for the third generation of Gillihers, who run the 60-year-old wholesale lumber firm.

"We just couldn't operate there anymore with the loss of [the Chessie System] railroad, the skyrocketing taxes and the cramped conditions . . . [We are] surrounded by office buildings," he said.

City planning director James O. Gibson said the sale was "simply the continuation of the placement of the Georgetown Waterfront into a developable state" since a 1977 court ruling that upheld rezoning of the one-time heavily industrial area into one that would permit a lucrative mixture of high-rise offices, condominiums, restaurants and shops.

The lumberyard is one of the last structures to be overtaken by the four-year-old building boom that is beginning to transform the waterfront from a backwater of old warehouses, abandoned mills and parking lots into a maze of new glass and brick office building and condominiums selling for more than $300,000 each.

The Western Development Corp. has proposed a $154 million complex of office buildings, condominiums, shops and a small marina where an old cement plant now stands just across the street from the Galliher site.

The proposal has drawn considerable criticism from several Georgetown citizen groups, which would prefer a park on the site. The plan now is awaiting final approval by the city's historic preservation officer, who is charged with determining if the plan is compatible with the officially recognized historic character of the area.

Trammel Crow's proposal also must undergo public hearings before the Fine Arts Commission and possibly the historic preservation officer.

The Gallihers asked for the land swap instead of cash because "it's a tax-free exchange," Norwood said. If the Gallihers had sold their property for cash they would have to pay "an awful lot in taxes. . . Instead of paying capital gains they put off paying taxes until they sell these other properties," Norwood said. The arrangement was approved by the. U.S. Internal Revenue Service, Norwood said.

Trammel Crow paid $103 per square foot for the lumberyard, a low price compared to office building prices in downtown, which are running between $410 to $620 a square foot, according to several real estate experts familiar with land prices in Georgetown.

Land prices in Georgetown are not as high, several appraisers said, and are calculated in a slightly different fashion. By those measures, the experts said, Trammel Crow appeared to have obtained land for about half the going rate in Georgetown -- specifiaclly, about $30 per square foot of potential office space compared to a going rate of about $40- to $50-per- square-foot, according to several sources.

Yesterday the city's historic preservation officer, Carol Thompson, concluded a week of hearings on compatibility of the Western Development plan.

Several city officals including D.C. Del. Walter E. Fauntroy supported the project. A trio of city council members -- David D. Clarke (D-Ward 1), Betty Ann Kane (D-At Large) and John A. Wilson (D-Ward 2) -- and a variety of Georgetown citizens groups opposed to it, saying the proposed buildings were too big, too bulky, too tall and would separate the rest of Georgetown from the Potomac River.

Architect Arthur Cotton Moore, who designed the buildings, testified yesterday that they were smaller than others in Georgetown, borrowed many details from Georgetown projects citizens had praised, and did not block the view of the river. Thompson said she would issue a ruling Sept. 11.