Right now, there is about 3.4 million sf of sublease space onthe market, says Nick Pavlakovich. To a large part, that is drivingthe overall office vacancy rate, which he estimates at 18%, a bithigher than other firms put it. He pegs the CBD's office vacancyrate at 13%; southeast suburban at 22% to 23%; and northwestcorridor, 35% to 40%. And another 750,000 sf to 850,000 sf ofsublease space will hit the market by the end of the first quarter2002, he predicts. Meanwhile, he says only 350,000 sf to 400,000 sfof the subleased space has been leased.

Still, a closer examination reveals that the sublease space isnot as dire as it has been in other downturns, Pavlakovich says."The big difference in earlier downturns is that the sublease spacehad five to 12 years left on its term," he says. "Now, we'redealing with sublease space for two to three years at themost."

Some sublessors are not coming to the table with building ownerswilling to bring tenant improvement dollars to retrofit the space,Pavlakovich says. Owners often aren't motivated to do so, becausethe company, unless it filed for bankruptcy, is still paying rent,he says. "For the most part, we're dealing with physical vacancy,not economic vacancy," he tells GlobeSt.com.