Mid-Year Office Report: Hemorrhaging Space

Here's a look at the highlights:

* The city experienced more than 3.13 million sf of negative absorption;

* The citywide vacancy rate doubled form 4.89%at year's end to 10.86 in June of 2001;

* Direct class A and B rental rates fell by more than 27% in the first six months of the year;

* Sublease space accounts for nearly 40% of the vacant space in the city. More than 5.3 million sf of sublease space is vacant or available for lease;

* Quarterly leasing activity slowed to a three-year low, as only 1.5 million sf of space was leased in the second quarter, compared to 1.5 million sf in the first quarter and 4.8 million in the first quarter of 2000;

* The impact is not uniform citywide. The North Financial District and the South Financial District experienced only a modest increase in the first half of the year, while the SOMA West submarket vacancy rate soared from 5.9% to 15.3%.

As for its forecast, Whitney Cressman says continued sluggish market conditions are likely, as companies give up more space and more office projects are completed.