And Insignia Richard Ellis's research shows that supply is stillincreasing with a rise from 14.8 million to 16.7 million sf overthe second quarter. The surge in vacancies has been most evident inthe City of London, where the vacancy rate rose from 7.0% to 8.5%in just three months. This situation could worsen next year unlessthere is a surge in leasing activity, because IRE calculates thathere is 2.2 million sf of unlet space under construction in theCity due to come to the market during 2003.

The West End, which is less dependent on financial serviceoccupiers, has proved more resilient, with vacancies rising from5.2 million sf to 5.6 million sf over the quarter. A 22% leap inWest End leasing activity saw 1.1 million sf taken up during thequarter. This is the first time for a year that West End leasinghas hit the long-term average.