The report further sates that sublease space is the main reason the citywide vacancy rate has risen to 8.17% at the end of the first quarter of 2001. About 77% of the sublease space is for more than three years. The average asking rate of long term Class A sublease space in the Financial District is $60.33/sf, 23%less than the net effective rates for direct space.

Cushman & Wakefield predicts that asking rents will continue to slide and vacancy rates to rise throughout San Francisco over the remainder of this year. The firm forecasts milder rental growth and vacancy rate stabilization in the 10% to 12% range in the Financial District in 2002 and 2003.

Financial district rents have dropped over 10% during the first quarter of this year to $62.04/sf, according to a Cushman & Wakefield report. The firm expects the rents to begin to stabilize in the Financial District during the next three years, without further huge drops. By 2003 the firm predicts rents in the low $60/sf in the Financial District.