An unwanted jewel in the crown of Washington office buildings rises at the corner of 14th and I streets NW.

Four blocks from the White House, atop its own Metro stop, the dramatic 12-story design by leading Washington architect Arthur Cotton Moore was developed by a team of the city's most successful real estate investors.

But save for a sandwich shop on the first floor, the $18 million building stands empty, a monument to the unbounded--and as it turned out, unwarranted--optimism about Washington's commercial real estate market.

"When we started construction in September 1981, the market was hot. It looked like a wave that wasn't going to stop," said Fernando Barrueta, a real estate broker and a partner in the I Street building.

Instead, office vacancy rates have climbed to historic highs in Washington and most other major cities because of the recession and, some say, overzealous developers.

In 1981, the tide of office development was rolling so rapidly eastward through downtown Washington that a building could make money even on the edge of the 14th Street porno district if it had the right architect, the right developers, the right leasing agents.

Developer Melvin Lenkin and his son Edward, zoning superlawyer Robert Linowes, Jim Eichburg, the president of the giant Smithy Braedon office management and leasing firm, and even architect Moore put money into the 1400 I St. project.

By the time the office construction wave rolled out to sea the following year, work on the building had progressed beyond the point of no return, Barruetta said.

The building now sits dead in the water. Nearly 90 percent of its 154,000 square feet of office space and 80 percent of its 10,000 square feet of retail space is unrented.

It was even worse until last week when two tenants finally signed up after being given what Barrueta described as "a very good deal, I mean a really good deal."

The developers of 1400 I St. are not alone in their plight. A forest of for-lease signs has bloomed on dozens of new and nearly completed office buildings in the city, many of them east of 15th Street and south of Massachusetts Avenue, in the old downtown that was the "new frontier" of office development.

Though office workers have recaptured a couple of blocks south of Thomas Circle from the street people and streetwalkers, much of the "new frontier" is still untamed territory, especially at night.

At the end of April, Washington had 10.5 million square feet of office space available for rent, two-thirds of it in new buildings, reported Julian J. Studley Inc., an office leasing firm.

At the rate offices are being rented today, it will take more than four years to fill that space with tenants.

About 3.5 million square feet of the vacant office space--almost a two-year supply for the entire city at present absorption rates--is under construction and unleased in the area bounded by 15th Street, Capitol Hill, Massachusetts Avenue and Pennsylvania Avenue, according to Smithy Braedon.

Why do developers continue to build in the face of a growing supply of office space? Real estate broker Justin Hinders has one answer: "Ego." Real estate operators "have the biggest egos in the world," he said.

Real estate attorney Robert Linowes offers this explanation: "Builders are a breed unto themselves. They go through phases, a change-of-life situation. Everyone goes crazy building office buildings. Before that it was apartment buildings, and before that housing developments, nursing homes, new towns, planned communities. When some builders have success, they all say 'That's the thing to do.' Then there's a temporary slowdown, and people become more realistic, more practical."

Linowes said he was "always a little nervous about the amount of office space under way" when the structure was under construction. "But it was what seemed an insatiable market that turned out to be satiable."

Barrueta said he first took the idea for the I Street building to others who eventually became members of the development team. He concedes that "it looked like people were putting up too many office buildings when construction started in the fall of 1981 , but we felt that of all that were going up, ours was the best location. It faced a park, was right on top of a Metro station and had a good, efficient design."

Some say that confidence was baseless.

The office space market "began to soften up in 1980," said Hinders. He believes the recession was getting under way at about the same time ground was broken at 1400 I. If the developers "had been paying attention to the market" they could have delayed construction, he said.

Like many a deal in Washington, the one that eventually gave birth to the 1400 I St. building was conceived over lunch, in this case at the luxurious Metropolitan Club. Barrueta told architect Moore about the building he envisioned over the 14th Street entrance to the McPherson Square Metro station. The trains would bring hundreds of commuters and shoppers into the building and surrounding area every day.

Moore was convinced by Barrueta's arguments and agreed to join the development team.

Next to come on board was Melvin Lenkin, whose development company is one of the biggest and busiest in the Washington area. Lenkin, his wife, son and daughter together own 36 percent of 14th and Eye Streets Associates, the limited partnership that was set up to develop the building. They put up $360,000, according to records of the partnership on file with the District of Columbia government. Stephen T. Leubecker, an employe of Lenkin's development company, owns a 4 percent share in the building, a $40,000 investment.

Lenkin and his son, Edward J. Lenkin, are the general partners, in charge of the construction. Next in size of ownership are Barrueta, who received 15.4 percent interest in the partnership for a contribution of $154,000, and Moore, who owns 12 percent in return for $120,000 in capital. L & B Investments, number five, is an investment group made up of several members of Linowes' law firm. L & B paid $100,000 for a 10 percent interest.

Often described as "tough," the elder Lenkin is known to some as "Cashcall Lenkin," a reference to the frequency with which he is said to call partners for cash when more money is needed for a project.

Mel and Edward Lenkin, described by Barrueta as "very private people," did not return telephone calls made to request an interview for this article.

Moore said his part-ownership of the building is "really an irrelevant aspect" of his work on the design of the structure. His architectural firm, Arthur Cotton Moore Associates, "has been retained at arm's length . . . for professional services," he said.

These owners and others who joined the team were not deterred by the location of the building, in the heart of the 14th Street stretch of strip joints, fast-food places, and pornographic movie theaters and bookstores.

"The neighborhood is not an asset," said Moore, "but when you're in a transitional area you have to put up with it. Most people could come and go in the building via subway trains without ever involving themselves in the opposite side of the street."

Directly across 14th Street are Benny's Home of the Porno Stars, The Cocoon Adult Movies, Paradise Adult Books, Adam & Eve Books and This Is It The Most Beautiful Girls in Washington. Down the block are the Adam & Eve Model Studio and Casino Royal Adult Theater.

Linowes and others point out that some movies and strip joints have already moved away to make room for new buildings, and they predict those remaining will not be around much longer.

"During the next two or three years, I believe we will see a massive change in the area. Public transportation and everything else are there, particularly in relation to our building," Linowes added.

Leasing specialist Hinders is not so sure. He cited the "tackiness" of the neighborhood and said, "It's a good location but it's somewhat premature for the leasing market. . . . People are not comfortable there."

The land at 1400 I belongs to the Washington Metropolitan Area Transit Authority, which has leased it to the Lenkin group for 50 years at $510,000 a year, with an option to extend the lease for another 49 years.

Moore said his design "begins with the need to not touch the ground where the Metro is, meaning we had to literally suspend the building over the Metro entrance. The few columns allowed have been formed into large gateways. . . . There's going to be quite a few references in the lobby design and in various parts of the plaza to older subway architecture. The lobby will be done in the fashion of the Paris Metro. The whole ceiling over the Metro entrance will be painted as an illusionistic sky. It will be a classical painted sky scene."

Construction of the building is being financed by a $16.5 million loan from American Security Bank.

Despite the paucity of tenants, Barrueta says he is not concerned about the building's fate. The structure is "striking," he said, and a number of prospective tenants have expressed interest. The law firm of Beekman & Farmer has signed a lease for 10,000 square feet of space, and the American Postal Workers Union has rented 5,000 feet.

Asking price for the offices ranges from $18.75 to $25.75 per square foot, which is low for new office buildings downtown. But the developers are offering a variety of other inducements to lure tenants. These include taking over leases in other buildings, offering free rent or rental discounts for a period of time and contributing to the cost of interior decorating and finishing.

Linowes said he is not concerned about his investment despite the "continuing period of softness" he expects in the commercial real estate market. He notes "increased interest" from prospective tenants and says 1400 I is still on firm financial ground.

"We were able to obtain decent financing that was set just before the market went crazy," he said. "It still appears to us a . . . long-term good investment. Lenkin and Smithy Braedon the leasing agent know what they're doing."

Linowes plans to move the offices of his growing law firm soon, but not to 1400 I St. The firm will take up residence in the Oliver T. Carr complex at Metro Center.

"I don't like to be my own landlord," said Linowes, whose law firm currently has 40 attorneys at work. "Secondly, I like the building I'm moving into, I like the way it looks and what it overlooks."