The outlook from the San Diego office of Cushman & Wakefieldis that 2008 "will be a relatively flat year for the local officemarket, with continuing slower net absorption and higher vacancy."According to the latest quarterly report from CB Richard Ellis, theflattening was already under way during the second half of 2007.Commenting in the company's quarterly report, CBRE senior vicepresident Jeb Bakke says, "The 2007 office market started off onfire and cooled through the last two quarters." The transition thatis taking place in 2008 continues a "transition from the hot,capital driven investment market we started with in the beginningof (2007), ending with uncertainty in the economy and the capitalmarkets in crisis," Bakke says in the report.

Lower demand for office space, rising vacancy and a softening inthe all-time high rental rates of 2006 and early 2007 are thetrends now, according to Steve Rosetta, executive director withCushman & Wakefield. However, he adds, "San Diego'shistorically strong and diverse economy that is grounded in growthareas such as biotechnology, defense, entertainment and tourism,should minimize impact from other slowing industry sectors."

This transition year of 2008 follows "an incredible run since1995" in the San Diego office market, according to Cushman &Wakefield. Since 1998, 416 new office buildings totaling 24 millionsf have been added to the market.