Oliver T. Carr, Washington's premier downtown developer, jumped at the chance last year when USLICO Co. put a "For Sale" sign on the Olmsted Building, which has a commanding view of the White House from 17th Street and Pennsylvania Avenue.

"Our initial offer was $51 million, $1 million more than they were asking," Carr recalled. "We went up to $52 million, and it went for more."

Carr's competitors were Japanese and British real estate investors. When the competition ended, the landmark was sold for $53 million to Atlantic Freeholds, a partnership that includes two British pension funds and Grosvenor International Ltd., a 900-year-old family real estate empire headed by the Duke of Westminster.

Carr's experience is but one chapter in the selling of U.S. property to foreign investors. Last year, the Commerce Department documented $35.8 billion worth of foreign investments, including $7.5 billion in commercial office buildings and hotels.

Some of the most visible purchases are the huge chunks of urban real estate that foreign investors -- chiefly British, German, Dutch, Canadian and lately Japanese -- are buying throughout the United States, mostly in New York, Washington and Boston on the East Coast, and Los Angeles and San Francisco on the West Coast.

Nationally, foreigners control 13.5 percent of the office space in the top 15 office markets, according to a recent survey by Coldwell Banker Commercial Real Estate Services.

Japanese interest in U.S. real estate is growing so rapidly that Coldwell Banker concluded that it is "inescapable that, considering the scope, scale, rapidity and methodical nature of their commitment, the Japanese will become, at some point sooner than we might anticipate, the dominant force in the United States commercial real estate marketplace."

In Washington, overseas landlords -- mostly British and Japanese firms -- own at least 40 downtown office buildings, about one-third of the office space in the central business district. The Church of England has a stake here, and so do Japanese insurance, textile and construction firms, Dutch pension funds and Canadian investors.

Downtown Washington has drawn the most interest from overseas investors, reflecting foreigners' understanding of and taste for urbanized locations. But foreign investors also have branched into suburban office buildings and construction projects.

Foreign investors own part of Tysons Corner Shopping Center. Aoki Corp., a Japanese firm, has been building houses in Montgomery and Howard counties for nine years, while Hooker Barnes Homes of Australia plans to start building houses in the Washington suburbs.

"Washington is a very good city, with stable {office building} vacancy rates," said Hideki Akamatsu, senior vice president of Nissei Realty, the real estate arm of Japan's giant Nippon Life Insurance company, which last year bought the American Medical Association's Washington headquarters building for $35.7 million. "We'd rather have the stable city rather than one that is up and down."

British groups have been buying D.C. office buildings for several years. One of the latest to enter the Washington market is the real estate arm of the Church of England, which has a $150 million real estate portfolio in the United States, including a half interest in the 251,000-square-foot McPherson Building it is developing on McPherson Square with Prudential Life Insurance Co.

Two British developers own the rebuilt Farragut Square building where the Army Navy Club is located, while the Greater Washington Board of Trade, the Washington area's dominant business group, pays rent on its 20th Street NW headquarters to Prudential of the United Kingdom, a British pension fund.

A British coal workers' pension fund owns part of the Watergate complex, one of the earliest foreign real estate investments here. The apartment, hotel and office complex was built by Societa Generale Immobiliare, a European construction and real estate firm in the 1960s, when the Roman Catholic Church controlled the firm.

German interests have helped finance the Washington Harbour residential and commercial complex along the Potomac River, while offshore funding sources helped finance Columbia Square, the new pink granite office building built at 13th and F streets NW by Houston developer Gerald Hines.

Dutch investors own the 19th Street building where Washington's elite like to dine at the Palm Restaurant. They also own the two TransPotomac office complexes along the Potomac River shoreline in Alexandria, including an office where former White House chief of staff Donald T. Regan has rented space to write a book, and have a 50 percent stake in the Market Square project planned along Pennsylvania Avenue between Seventh and Ninth streets NW.

The Japanese did not own a single building in Washington two years ago. Now Japanese investors have bought at least $330 million worth of real estate at nine downtown sites, have provided mortgages for other buildings and almost daily tour the city looking for more.

The Justice Department rents the building at 555 4th St. NW from a Japanese textile firm, Kondo Boseki. The Federal Communications Commission and National Public Radio pay part of their rent at the glass and steel office building at 2025 M St. NW to Dai-Ichi Seimei America Corp. and Dai-Tokyo Real Estate Investment Corp., the real estate arms of two Japanese insurance companies that own a 75 percent share of the property.

Recently, Shuwa Investments Corp., the American arm of one of Japan's largest real estate development companies, bought about an $80 million share in the partnership that owns the U.S. News & World Report headquarters building in Washington's West End.

The American Medical Association -- which in 1982 built a $20 million Vermont Avenue NW office building as its Washington headquarters -- decided it was good business sense to sell its building to Nissei Realty, the real estate arm of Nippon Life. Last October, the AMA sold its building to Nissei for $35.7 million pocketed a $15.7 million profit and now leases the space it once owned.

"We didn't have the building for sale, although there were offers from time to time," said Reinhard Schneider, the AMA's vice president for real estate. "This offer was in the range we had to look at. When you're involved in real estate, you always look at the profits and see whether you should reinvest them or continue to own the property.

"We did consider who our landlord would be," Schneider said. "But Nippon is a strong financial institution, and we decided that was the kind of landlord we could live with."

Although precise figures on foreign ownership of U.S. real estate are difficult to determine because of the large number of secret deals, no real estate experts question the trend. The Commerce Department's Bureau of Economic Analysis estimates that in just five years -- from 1981 to 1986 -- foreigners increased their equity in U.S. real estate from nearly $9 billion to more than $26 billion.

Other real estate experts, such as those at Salomon Brothers Inc. of New York, believe the foreigners' ownership stake may total $30 billion, while Robert G. Johnson, executive director of the International Real Estate Institute in Scottsdale, Ariz., said he believes the foreign equity may total $50 billion. Foreign investors, he said, actually control $150 billion worth of U.S. property, including the mortgaged portions of the property. Whatever the total, for the moment it remains a small, albeit growing portion of the total value of U.S. real estate, estimated at $2 trillion to $2.6 trillion.

Japanese investment in U.S. real estate has grown from about $600 million in 1984 to what Johnson believes will be $8 billion to $10 billion this year.

Japanese construction firms also have planted a flag here. In 1981, they did less than $50 million worth of work in the United States, according to International Construction Week, a trade newspaper. But last year, Japanese firms did $2 billion worth of work, a 40-fold increase in five years.

The foreign investors -- particularly the Japanese because of the U.S. trade imbalance and the strong value of the yen against the dollar -- often have cash to spare and are looking for a safe haven to make money.

The purchase of prime U.S. real estate typically yields foreigners 7 percent to 9 percent or more on their investment, which sometimes is twice or more the return that they can get on similar properties in their countries.

Initially, foreign investors often paid cash for U.S. properties, and many still do. Now, however, some of the deals are financed in part by mortgages secured from U.S. lenders. The foreign investors are collecting hundreds of millions of dollars in rents from these properties, and Johnson said that some of this money is being reinvested in the purchase of other U.S. properties. But much of the collected rent is going directly to the foreign investors who have made the purchases, he said.

Analysts and development industry executives are divided over the meaning of the vast foreign investment in U.S. real estate.

William Zeckendorf Jr., a large New York developer involved in several deals with Kumagai Gumi, said: "I don't think it means anything. It's making a lot of investors rich. In the long run, it might drive up rents. Properties are reassessed based on sales and tax increases will be passed on to tenants."

Richard A. Apcar, director of the investment analysis division of the Commerce Department's trade and investment analysis office, said: "I don't think they can harm us. They can't take us with them and they generally manage these properties well."

Others see more deleterious effects.

The International Engineering and Construction Industries Council, an umbrella group in the contracting industry, said it is deeply concerned about the growth in Japanese construction contracts in the United States, but not because of their inroads here.

"We don't have any quarrel with the Japanese companies working here," said Bill Beddow, the trade group's lobbyist. "It's the fact that {U.S. firms are} virtually shut out of the Japanese market that concerns us. It's disturbing to us because we have no reciprocal rights." The group is seeking a provision in the trade bill currently in a House-Senate conference that would impose sanctions against Japanese construction firms.

Some also question the side effects of extensive foreign ownership.

Donald R. Slatton, executive vice president of the Apartment and Office Building Association, a trade group here of building owners and managers, said that foreign ownership "tells you we have a strong and healthy community. In that respect it's a compliment.

"But owners that are that far away are going to be a lot less concerned about the community," Slatton said. "For a lot of years, we had a homegrown real estate community. They're more likely to give to the United Way and be concerned about the schools. In that respect, it's not good."

While there has been no virtually backlash against foreign ownership of U.S. real estate so far, Johnson, of the International Real Estate Institute, voiced a worry about the selling of America.

"The problem is what's ahead," he said. "We're selling off property so we can have a good time. Someday we're going to wake up and only be caretakers for our own property. There's only so much prime real estate in the U.S."

Numerous deals were closed throughout the nation late last year, as American sellers rushed to unload their properties before the tax law changes took effect under which the capital gains tax on the sale profits jumped from 20 percent last year to 28 percent this year.

"There was widespread expectation in Japan that many people here would try to beat the tax law change," said Russell C. (Rusty) Lindner, a managing partner of a Washington real estate investment firm who wrote his master's thesis on Japanese investment in U.S. real estate. "There was great anxiety in this market that the Japanese identified."

Yoshio Yamashita, Shuwa Investments' vice chairman, said, "It's a great country, good circumstances for business." In the last few months of 1986, Shuwa paid more than $1.2 billion to buy the Arco Plaza skyscrapers and the Avenue of the Stars buildings in Los Angeles, the ABC building in New York and the PaineWebber building in Boston. Now it has entered the Washington market with its investment in the U.S. News building.

Larry C. Baucom, the managing director of the Washington office of Jones Lang Wootton, a commercial realty broker, said, "Washington is becoming much more of an international city, much more of an economic force in other countries."

As a result, he said foreign companies that once merely hired lobbyists to tend to their Washington business are now likely to establish an office here, and that often leads to the purchase of a building.

Baucom said the District "has a unique advantage in today's marketplace. We have a building size limitation ... it keeps the size of the investment down. The cost here typically is in the $10-million-to-$100-million range, with an average of $30 million to $50 million, which is a perfect size for pension funds around the world, wealthy individual investors and corporations."

Moreover, investors like Washington's ambiance. Nicholas C.M. Renny, vice president of Chestertons Inc., the Church of England's real estate representative in the United States, described Washington as "one of the church's favorite cities. It's very European in scale. It's a very easy city for European investors to get to know."

F. Joseph Moravec, president of Leggat McCall/Grubb & Ellis Inc., another commercial realty broker, and the Washington D.C. Association of Realtors, said that foreigners "like the idea of being in the capital city. They draw the inevitable comparison with Paris or London, the capital and major city. They draw the parallel that Americans don't."

While office vacancy rates are hovering at about 10 percent in downtown Washington and are higher in the suburbs, investors are finding even higher vacancy rates in such cities as Houston, Dallas, Denver, Miami, Chicago, Atlanta, San Francisco and Los Angeles. Whatever the uncertainties elsewhere, investors are certain that the federal government and the private sector employment that it generates are not about to pack up and move.

Some foreign developers have learned the fine art of negotiating unusual deals. Witness the case of John R. Divett, a 51-year-old British developer.

Five years ago, he had never been to Washington. Now he owns a 50 percent share in one of the premier properties in the city, the $26 million rebuilt Army Navy Club, which commands a view of the Jefferson Memorial and Potomac River from its upper floors and a sweeping look at Farragut Square from all floors.

Another British developer, Stefan Wingate, interested Divett in looking at the club's deteriorating property in 1982 and they quickly cut a deal with the club's officials, who reluctantly agreed that the facility was in such a state of mechanical disrepair that it was hopeless to try to save the building.

Divett and Wingate agreed to keep the club's beige brick facade and pay the club the paltry sum of $1.65 million for the development rights and the title to the property. In the exchange, the developers built the club a new facility, including 29 hotel rooms, which opened this summer, while the developers surrounded the club with 104,000 square feet of office space. The club, which was $1 million in debt when the deal was struck, pays no rent for the property, only normal maintenance costs.

"It was quite a thing for them to give up the title," Divett said, "but they came around to my thinking. The property has turned out exactly as we'd wished it to and now constitutes an investment of the highest order." Several law firms have rented space at the building, as well as The New York Times for its Washington bureau.

"There was a recession in '82," Divett recalled. "I took the view that things would get better, so I staked my money on Washington."