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NEW YORK CITY-There’s little on the immediate horizon to give the commercial real estate industry any hope of a fourth-quarter rebound, according to the results of GlobeSt.com’s latest Quick Survey. Prior to September 11, some experts were holding out hope of an end-of-year rush to close out impending deals and pump some transactional adrenaline into the industry’s slowing metabolism. But the terrorist attacks delivered a one-two punch that decked those plans, further weakening our economic vitality, and our Quick Survey participants reflect those blows in their responses.

“Office building owners are less cocky regarding rates and terms,” writes one participant in the survey, “and most are being more responsive to RFPs. The primary reason is the competition from subleases and reduced activity due to overall economic slowdown.”In fact, some 64% of our participants project that leasing activity in the fourth quarter will drop more than 10% over last year’s Q4 activity, while 29% say it will dip by less than 10%.

Some 7% can actually boast that their markets are hot despite the news, and activity should grow in the final months of 2001.

It should be noted that 29% of respondents to this question say they reside in the Northeast while the Midwest and the Southwest each claimed 19% of the participants. Some 17% say they hail from the Southeast and 16% from the West Coast.

If most respondents are looking at a decrease in activity, what do they see their clients doing in what remains of the fourth quarter? Most (77%) see them consolidating and subleasing excess space. While 16% of brokers surveyed predict that their clients will relocate within a district, some 6% say their tenants will pack their bags and head out of the CBD–a possible salve for Big City Jitters? Only 1% say their corporate clients will make the reverse trek. This, most likely, is a cost consideration as much as anything else.

“With layoffs being the word of the day,” writes one participant, “it seems that companies are looking to consolidate to about 70% of their former size.”

But another writer seems to believe that relief is only postponed. “Expect a slow recovery to start by second-quarter of 2002,” he writes, “unless additional unforeseen circumstances arise.”

If, in the short term, at any rate, clients are consolidating, it’s no surprise that vacancies will peak by December, and 40% of our participants predict that the rate could be as high as 10%. Slightly less (38%) say it might be as high as 5%. Some 15% of our respondents predict that their markets will remain flat, and only 7% say that vacancies will actually go down.

The regional distribution of respondents to the vacancy question was tightly clustered, with the Midwest claiming most (23%) of the participants. The Southwest followed with 21%; then came the West Coast ( 20%); followed by the Northeast (19%); and the Southeast (17%).

There should be no surprise, given the projections for leasing activity and vacancy growth, that most brokers (38%) surveyed say rental rates are going to plummet by as much as 10%. Some 37% say they’ll drop, but only by 5%, while 25% say the market will experience no change.

In fact, one writer put the current market situation as succinctly as anyone: “Worst market in 25 years.

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