Third quarter 2001 brought a negative net absorption of 403,000 sf to the office market here, as reported by Delta Associates Inc., an affiliate of Chicago-based property giant Transwestern Commercial Services. This figure illustrates a significant drop from second quarter 2001, when the market experienced a positive net absorption of 564,000 sf.

Meanwhile, vacancy levels are on the rise. The direct vacancy rate here jumped from 10.3% at mid-year to 11.1% at the end of the third quarter, while the direct Class A vacancy rate rose from 12.5% to 14.3%.

As vacancy levels have risen, construction of new office projects here has slowed to a virtual standstill. "No significant construction began in the third quarter of 2001 in Orange County," the Delta report says. "In fact it appears that construction was halted in some cases.