(Crystal Proenza is associate editor of Real EstateFlorida.)

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WEST PALM BEACH, FL-A second-quarter special report by JonesLang LaSalle indicates that sublease space is on the rise in majoroffice markets throughout the country, but has not escalated beyondthe decade's peaks. Those peaks are qualified as taking place from2001 to 2004, during the market's last downturn triggered by thedot-com bust.

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The report singles out South Florida as the hardest-hit market,with increases in sublease space ranging from 105% to almost 300%compared with last year at this time. Nationally the total is uponly 12.3% from 44.8 million sf last year to 50.3 million sf.

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Alice Lucia, senior vice president with JLL in Fort Lauderdale,says the escalated numbers in this region are directly related tothe residential market. "Many of the spaces available for subleaseare in direct correlation to the subprime fallout," Lucia tellsGlobeSt.com, citing tenant examples including Lydian Mortgage,Deutsche Bank, First Franklin and Countrywide Financial.

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"Historically, the market has always demonstrated a shallow poolof space users that have tracked trends in business cycles," saysTom Capocefalo, managing director with Studley in South Florida."To that extent, markets that tend to have technology, financialservices or call-center operations will be the first to shiftpersonnel resources elsewhere that will then offer space to thesublease market."

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According to the JLL report, in Fort Lauderdale 234,568-sf ofsublease space was on the market at the end of the second quarter,a 135.1% increase from this time last year. Miami currently has409,594 sf of sublease space, a 105.3% increase.

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West Palm Beach saw its space nearly quadruple, from 84,675 sflast year to 332,357 sf this year. That city came the closest thanany other to its decade peak, which was 348,072 sf, according toJLL—only 4.5% less than the current number.

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Until there is stability in the credit market and housingmarkets, we won't expect to see this space get absorbed, saysLucia. "Based on current economic conditions in conjunction withadditional development, we don't anticipate a correction to takeplace until mid-2010," adds Capocefalo. "As in all markets,additional supply or, more importantly, sublease supply willcompete with direct space inventory. Subject to demand, directspace and sublease space will compete with each other untilabsorptions start to level out."

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