The Washington Association of Realtors says 4.6 million square feet of new or renovated office space in the District was leased in 1987, up from 3.39 million square feet in 1986.

At the same time, only 3.9 million square feet of new space became available during last year, down from 4.36 million in 1986. Together, those two factors helped lower the city's overall office vacancy rate from 11.27 percent in 1986 to 10.5 percent last year.

Michael V. Prentiss, former president of Cadillac Fairview Urban Development and now president of his own firm, Dallas-based Prentiss Properties Ltd., said that while "everyone here bemoans the 10 percent vacancy rate," Washington still stands out as a good market for office development compared with vacancy rates elsewhere.

Prentiss, speaking to the real estate brokers at a meeting this week, said average vacancy rates nationally are 16 percent for central business districts and 23 percent for suburbs. Dallas has a 32 percent overall vacancy rate, one of the highest in the nation.

"That's pretty tough no matter what way you look at it," Prentiss said. "Dallas has 37 million square feet of vacant space and {absorbed only} 3 million square feet in 1987. It makes it pretty obvious why we're interested in Washington."

Prentiss' company is developing property at the intersection of Rte. 50 and the Capital Beltway in Fairfax County and in Centreville, as well as downtown sites.

The Realtors reported that annual rental rates in the District last year ranged from $19.50 to $43 a square foot for new space and $16 to $36 a square foot for existing space. In 1986, rental rates ranged from $22 to $42 a square foot for new space and $18 to $31 a foot for existing space. Here's another lesson in the riches of Washington real estate.

Six years ago, two British developers, John R. Divett and Stefan Wingate, cut a deal with officials of the Army Navy Club to rebuild the facility overlooking Farragut Square. But the aging building was in such a state of mechanical disrepair that the club's officials reluctantly agreed that it was hopeless to try to save it.

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

Law firms occupy about half of the office space and the New York Times has moved its Washington bureau into the building.

In all, Divett and Wingate put up $5 million of their own money for the initial planning work and development rights. They spent a total of $26 million on the project.

Now they have sold the 12-story building to a Dutch pension fund for more than $40 million.

IN THE BUSINESS ... U.S. Housing Markets reports that the number of housing permits issued in the United States fell 14 percent in 1987 compared with 1986. Despite the decline, Washington and two other housing markets -- New York and Seattle -- saw increases in the number of permits issued. The number of permits issued in the Washington area totaled 42,945, up 4 percent over last year, making the city second only to Los Angeles, which issued 51,897 ... DEC Design Development Corp. has completed the restoration of the Morrison-Clark Hotel and Restaurant, a historic inn at Massachusetts Avenue and 11th Street NW that was built in 1864 in the "Italianate" style. The 54-room inn and the restaurant, which features four distinctive settings, will open for business next month ... Norfolk Southern Corp. and Gates, Hudson & Associates Inc. have formed a joint venture to develop Southern Plaza, a mixed-use project at the intersection of Duke and Henry streets in Old Town Alexandria on the site of the former Alexandria public tracks ... New Properties, a new real estate company located in Rockville, will specialize in the sale of new homes ... The Fairfax County Board of Supervisors has approved a rezoning for a 114-acre, mixed-use project of 1.74 million square feet of office, residential and retail space in the Fair Oaks area. The project will be built by Sequoia Building Corp. and include 1.2 million square feet of commercial space, 600 residential apartments, shops, restaurants, a day care center and a health club. Ground breaking is planned for next fall and the project is expected to take seven to eight years to complete ... 2501 Porter, a new luxury apartment building in Cleveland Park, will offer residents a concierge service that will arrange services for anything from at-home beauty and massage appointments to catering, grocery delivery and entertainment reservations -- in short, "anything to free up the executive too busy to take care of household details." The project, being developed by Richmarr Construction Corp. and managed by the Charles E. Smith Cos., is scheduled for occupancy in May ... Capital Homes reported more than $62 million in new home and land sales during 1987 ... A community of 200 custom-designed homes is under construction at Aspen on the Lake, a 130-acre wooded hill overlooking Lake Linganore in Frederick County. The developer, Aspen Associates, plans to limit construction to 20 houses a year to preserve the natural environment ... The Washington Suburban Sanitary Commission has bought an 18-acre site at the Maryland 95 Corporate Park to build a new 12-story headquarters, which is slated for completion in June 1990.

PERSONNEL FILE ... Weaver Bros. Inc. has named Martin R. West Jr. chairman of the board and chief executive and Donald G. West president and chief operating officer ... The Northern Virginia Board of Realtors gave John Neill, president of Fairfield Homes, its Gold Key award for superior service to the home-buying public. The Realtors also honored nine other builders, including Lester Sorensen, Sorensen Construction; Ken Epstein, Landmark Communities; Chuck Langpaul, NV Homes; George Middleton, Richmond American Homes of Virginia; Althena Sonneville, Edward Carr & Associates; Arthur Foster, Foster Bros.; Dan Demeria, Centex Homes; Chip Cross, Cross Builders, and Keith Kretzinger, Van Metre Cos. ... Gary Internicola has been named senior vice president of Eaton Design Group, a McLean firm that does interior design for office buildings ... Susan Matlick, president and chief executive of Phillips and Knott Community Developers, was awarded the Executive Officers Council's Seldon Hale Award for outstanding career achievement ... Mary Tharpe has been named vice president of marketing for the residential sales division of Shannon & Luchs.