The CBRE study tracks business services buildings of 10,000 sfand larger, which "continued to show some volatility in 2007 withlower absorption and construction numbers than 2006," according tothe CBRE report. The study suggests that one reason for the changeis that some businesses have delayed expansion or relocation plans"until the economy shows its hand." Vacancy remained high in theNortheast and East Central submarkets, 23% and 14% respectively,with several large buildings in those submarkets vacated byowner/users.

Overall, the Tucson office vacancy rate for yearend 2007 stoodat 12.61%, up from 11.01% at mid-year and up from 11.98% in 2006.Picor researchers point out that "inevitably the continuingpopularity of office space ownership has taken a toll and vacanciesin multi-tenant properties surged from 10.9% in March to 13.4% inSeptember '07."

Downtown Tucson recorded absorption of 52,995 sf, primarily dueto Pima County taking space in the Bank of America building. TheNorth Central and East Central areas also posted positiveabsorption numbers, but the northwest submarket "broke its trend ofpositive absorption in 2007" by registering negative 74,496 sf atthe end of the year, according to CBRE. Approximately 100,000 sf ofoffice product is under construction and another 45,000 sf is setto break ground in 2008.