"As predicted in the recently-released 2003 Economic Forecast, our best estimates show that our economy may experience a marked improvement in the third quarter of 2003," she says.

Unfortunately, commercial real estate is a lagging indicator and isn't one of the sectors showing improvements.

The direct office vacancy rate increased to 14.9% in the fourth quarter of 2002, nearly 3.5 percentage points higher than the fourth quarter of 2001. The vacancy rate now stands at 17.9% when sublet space is included.

Market analysts expect that the office vacancy rate may increase another 3% to 5% over the next six to nine months before slowly recovering, she said.

In addition, the industrial vacancy rate remained relatively stableduring the third and fourth quarters of 2002, at about 7% direct vacancy and 8% with sublease space. The average industrial lease rate declined slightly to $6.58, down from $6.64 last quarter. Industrial construction activity increased to about 2.8 million sf introduced in 2002compared to 2.2 million sf feet completed in 2001.

On the positive side, the Denver metro Leading Index increased for the first time following four months of stagnant activity and a steady downward decline since about January 2001. This index is a predictor of changing economic conditions six to nine months in the future. If this increasing trend continues, it is expected that local economic conditions will show marked improvement during the third quarter of 2003, Silverstein says.

In addition, layoff activity seems to have slowed, although it's not over. And new unemployment claims were flat in December.

Finally, there is some good news on the tourism front.Colorado skier visits, measured as one skier skiing one day, were up more than 18% through December. Total skier visits have reached 2.9 million due to healthy snowfall and sales of season passes.