Dozens of property investors, from San Diego to San Francisco,are beginning to suffer from vacancies created by shrinking demandfrom dot-com tenants. Meantime, a small but growing number ofretailers have begun trimming back their Golden State operations,even as some retail investors struggle to cope with the string ofclosures triggered by failures in the movie-theater business.

"The current low rate of unemployment, the narrowing of theinterest rate spread and the disappointing corporate profits havebeen pointing to the end of the economic expansion for some time,"says Edward Leamer, an economist at UCLA's Anderson School ofBusiness. Though the national economy will slow more thanCalifornia's next year, he adds, the statewide unemployment rateappears certain to rise and growth here will moderate in 2001.

The dot-com shakeout that started on Wall Street last spring isnow spilling over into California's office market, where dozens offailed or downsizing Internet tenants have put more thantwo-million sf of their office space up for sublet.