It's the highest negative absorption in nine years, Robert Kramp, Grubb & Ellis' regional client services manager, tells GlobeSt.com. The first negative hit in seven years came at the end of 2001 when Grubb & Ellis reported a downturn of 267,000 sf.

Today, overall vacancy is 14.8% while the CBD, the hardest hit, is 10%. The CBD is down 881,872 sf mostly due to the 675,000 sf vacated by Enron. Other big losers in the absorption game include the Uptown/Galleria submarket with negative absorption of 374,714 sf and Greenway Plaza with a minus 177,810 sf.

Only seven of 19 submarkets recorded positive absorption. The Near Southwest had 134,864 sf; Northwest Freeway, up 98,685 sf; and the Medical Center, 60,641 sf in the black.

Kramp says many tenants are underutilizing their current office space. That, in turn, will could cause vacancy rates "to eclipse 15% as nearly 500,000 sf of lease expirations occur in the second quarter of 2002." As it stands, vacancy rose a full percentage point in the first quarter.

As vacancy goes up, rents go down. Class A rates fell $1.13 per sf to a grand total of $23.33 per sf while class B rates dipped 16 cents per sf to $17.63 per sf. Kramp says six of the 19 submarkets saw shrinkage in lease rates for both classes.

Meanwhile, sublease space too is on the rise. The latest count has sublease space riding at 4.1 million sf in comparison to 3.5 million sf just three months ago. Kramp predicts sublease totals will continue upward until the fourth quarter, the earliest that a significant change could be felt.