''The continuation of the effect of the dot.com failures is partially to blame,'' according to Grubb & Ellis. ''However, the sluggish national economy has had the great impact, resulting in the slowing of the absorption of office space.''

Increased bankruptcies and the downsizing or departure of large companies also led to an increase in subleased office space.

''The decrease in new product, stimulated by the positive absorption during the period of 1998 through 2000, will result in an overall soft office market through the balance of 2001,'' according to Grubb & Ellis.

And the trend will not be reversing itself in the near future, says David Scherer, senior office advisor for the Las Vegas office of Grubb & Ellis.

''Sept. 11 was the final straw in tipping the economy into a recession,'' Scherer says. ''The Las Vegas economy is definitely feeling the impact from a reduction in tourism and from corporate downsizing. The damaging repercussion will impact the office market at least into the next couple of quarters.''

Tenants, however, are benefiting. Effective rents are decreasing as landlords need to be increasingly competitive in marketing their vacant space, Grubb & Ellis says.