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HOUSTON-Houston economist Dr. Barton A. Smith predicts office vacancy will “penetrate the 10% barrier and remain below that level for the foreseeable future.” The relief won’t come until 2003, according to Smith’s charts.

Smith had made his prediction at a recent Houston Real Estate Symposium. Right now, vacancy is riding at 12%, he says. Smith is the senior economist for the University of Houston’s Center for Public Policy. His research has been conducted in conjunction with the Institute for Regional Forecasting at the center.

The graph continues to dip from this point on and dipping under 10% in 2003. According to Smith’s chart, vacancy stays well below 10% through the end of the forecasting period in 2006.

In his report, Smith says “from 1995 to 1998 office absorption greatly exceeded new supply, transforming what had been a relatively soft market into a surprisingly tight market within less than a half decade.” He concludes that “new supplies will remain essentially consistent with new demand” although new office construction is on the rise.

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