"Job growth in the region, which is heavily focused on the government, has been too weak to support the construction, said Greg Leisch, chief executive officer of Delta Associates. Federal contracting has declined by $7 billion in the last two years and the spending cuts known as sequestration have limited employment and demand for rentals, he said.

“The supply would have been consistent with Washington’s job performance had the federal government not shrunk,”

In other words, despite the increased supply, had the fundamentals of the local economic activity stayed the same, they would have only matched demand at best, and prices probably would have stayed stable/increasing.

It looks to me like this at least as much another example of a price reduction from a demand drop as it is a price reduction from increased supply, if not more.