The net absorption for the first quarter, as well as 2007, marka dramatic change from the positive absorption and steadily risingrents of the years preceding 2007. Average asking rate for thecounty's 107 million sf of office space, at $2.73 per sf per month,remains 10 cents higher than it was a year ago, but the asking ratehas dropped four cents from the fourth quarter of last year.

Holdner expects asking rates to level off for the short term,but landlords are already more willing to negotiate than they werea year or two ago, so it's likely that building owners will offermore concessions in the form of free rent, reduced parking fees,more generous tenant improvement allowances and relocation fees asthe year goes on.

Overall activity has slowed too, with the total of leasing andsales at slightly more than two million sf for the first quarter ofthis year, compared with an average of about 2.5 million sf to 3.5million sf. The combination of negative absorption, reducedactivity and newly built space on the market has pushed thecounty's vacancy rate to 13.82% this quarter and its availabilityrate to 18.69%, compared with last year's first quarter low vacancyrate of 8.47% and availability of 12.35%. Holdner points out thatOrange County's 13.82% vacancy rate is a long way from the recordvacancy of 24% in 1988.