Many districts reported increased office vacancies in metropolitan areas inthe second quarter, with signs of additional weakening in July, according tothe Fed study.

"The sluggishness that has affected the US economy for some time nowfinally is being felt in our speculative, multi-tenant office market," Feldman says. "As a result, for the first time after some seven consecutive years of unprecedented prosperity, our local office market is experiencing a general slowdown accompanied by a sense of judicious caution, as both tenants and property owners await a clearer indication of where both the national and local economies are headed."

Feldman adds there continues to be a slow and gradual decrease in occupancy, one that commenced in January 2000, when the local office market stood at an all time high of 94.3%. It slid to 92.3% in January of this year and then still further to 91.1%. He says this slide isattributable to company downsizing and slower commitments to the 2.6 million sf of new office space that came on line within the last year.