"We have yet to see the peak in vacancy rates in downtownMinneapolis and the Southwest submarketduring this phase of theeconomic downturn," he says. "However, we do project vacancies tobe at or neartheir peaks in other submarkets, most notably the Westand Northwest and in St. Paul and its surroundingsuburbs."

Metro area-wide, the year-end vacancy rate for all types ofmulti-tenant office buildings is projected tobe 12.7%, 2.7percentage points higher than the 10% vacancy ending last year,according to a new outlook study put out Wednesday by thecommercial real estate firm based in Bloomington, MN. Adding inspaceavailable for sublease and the overall year-end vacancy rateis projected to be 15.2% versus 11.9% atyear-end 2000.

A surge in sublease space pushed vacancy rates up in both theMinneapolis Central Business District and the Southwest submarket,according to Ohmes. In Minneapolis, for instance, the vacancy rateis at 11.8%, up from 9.2% a year ago, and is expected to rise to16% to 17% by end of next year.