The study ranks L.A.'s office space as the eighth most expensive among the U.S. cities surveyed and the 28th most expensive worldwide. New York ranked most expensive in the United States at $51.57 per sf per year for office space at the end of the fourth quarter of 2002, and Tokyo took the top spot at $110.91.

The report says Class A rent averaged $29.40 per sf per year in Los Angeles at the end of 2002, and it predicts that number will slide to $28.80 by the end of 2003.

The dip in L.A. office rates is part of a trend. The Grubb & Ellis forecast predicts that office rents will slide in all but nine of the 48 U.S. cities surveyed. The flat and declining office markets are a result of the nation's sluggish economy, and the report says U.S. office markets generally are "unlikely to return to equilibrium" before the year 2007.

Office rents are also expected to drop by 2% in Orange County this year, dipping to $24 per sf per year from a year-end figure of $24.48. Orange County ranked 42nd worldwide in the study and 17th most expensive among U.S. office markets.

West Coast markets in general will post the biggest decreases in office rents this year, according to the report, which says Seattle will lead the way with a 6.1% drop, followed by San Jose, Calif. with a 5.8% reduction and Oakland with a 4.5% drop. In contrast, two Florida cities are expected to become more expensive, Ft. Lauderdale by 3.3% and West Palm Beach by 2.8%.