The region's brokers and developers have loved their business lately. Construction's booming, rents are rising and tenants are scrambling to find new space.
Then in the past three weeks, the ruble plunged, the Dow Jones Industrial Average dove, and the Asian financial crisis suddenly seemed more acute.
With shocks rippling through the world's financial markets, brokers wonder how badly they will affect the real estate market.
So far, the stumbles in the Dow Jones haven't hurt any construction, leases or trades in the works, brokers said.
It won't hurt projects coming through the pipeline now, brokers said. And there's still a good balance between sellers and buyers, renters and landlords, they said. Still, the troubles are so sharp, brokers feel they can't be ignored.
"There's some caution but I don't think it's going to be a pulling back altogether," said Bill Collins, managing director with the District-based brokerage Cassidy & Pinkard.
Stock market pressures seem to have sidelined real estate investment trusts, Mr. Collins said, but they've seen their stock prices sagging for months. That has kept them from using good stock prices to finance acquisitions and expansion - at the same time that real estate prices have risen in the face of the demand the REITs helped generate.
Financing also remains as available as it used to be, and rates haven't really changed, said Cassidy and Pinkard officials.
"The underwriting on the debt side has remained through this recovery pretty conservative for the most part," Mr. Collins said.
Common tenants are insulated from instability on Wall Street as well.
In the District, "Our primary tenants are law firms and associations. They're not going to be impacted by what's going on in the stock market, " Mr. Collins said.
In Northern Virginia and western Fairfax County, the market is driven by high-tech firms.
"Jitters in high-tech stocks cause jitters in real estate investors, but at least near term there's too much pent-up demand," said Kurt Stout, senior research director working at the Tysons Corner office of the brokerage Grubb & Ellis.
"It's moving and growing. A bunch of firms are trawling, trying to find a deal," Mr. Stout said.
He says it will take eight months to see if the stock market's troubles infect the real estate market.
The biotech firms driving much of the growth in Maryland are more exposed to stock market troubles because of the way they finance expansion, said Larry Thau, executive director of the Maryland office of the brokerage Insignia/ESG.
Often fledgling companies hitch their financing to the stock market through initial public offerings, or use stock value to boost their credit ratings, Mr. Thau said. It's also more common for them to go to landlords to help finance expansion, which is more expensive because of the labs they use.
It's still not clear whether collapsing stock prices will pinch biotech expansion credit, he said.
Several analysts agree that gyrating stock prices won't throw expansion plans off course.
"No. Only the economy can do that," said Kevin Moore, an analyst with Bankers Trust New York.
But that view isn't universal.
"If [developers] think that the stock market is the foreseer of an economic downturn, which it could be, and they start slowing their demand, it slows demand for space and employment growth," said Glenn R. Mueller, managing director of real estate research for Legg Mason in Baltimore. "One follows the other and it becomes a self-fulfilling prophecy."
In the 1980s, developers kept adding space and banks kept financing it despite slowing demand. Now the market is much more disciplined, and willing to hit the brakes.
A major bank in this market told Mr. Mueller last week it was tightening its lending, he said. …