CHICAGO-A leading economist has found that the current softening in the sublease market is significantly milder than what occurred during the same timeframe of the last market contraction. Office sublease space began its latest climb during the last half of 2007 and has continued.

In a new report, Robert Bach, Chicago-based chief economist for Santa Ana-based Grubb & Ellis, says “there are key differences between current conditions and those of the previous market contraction in 2001 and 2002.” He points out that the US office market posted 24.5 million sf of positive absorption from third quarter 2007 until June 30, 2008, in comparison to 38.9 million sf of negative absorption in the contraction of 2001 and 2002. Overall class A asking rents have also continued to increase, up 7%, compared to a decline of 6.3% during the previous cycle.

Bach’s report shows growing sublease space in the suburban markets of South Florida, Atlanta, Austin, and Central and Northern New Jersey. Although Atlanta “has mirrored the national market with an increase in sublease supply of suburban class A properties,” Bach finds, adding rapid growth in medical and life sciences industries “has served to keep the market in positive absorption territory as of midyear.”

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