The main drop in activity has been during the last six months,and is largely attributable to the significant cooling of the USeconomy, reflecting the fact US-based companies, attracted by theproximity to Heathrow airport, form a large part of the area'soccupier base.

South East office agency director Mark England said that, whilethe changes in activity need to be placed in the context of astrong market during 2000, they are still quite marked.'Development activity has also levelled, with very little newspeculative development having started in the last six months,' hesaid. 'There are now 3.5 million sf of offices under construction,which will inevitably lead to further increases in supply given thecurrent market conditions.'

However the report anticipates that activity should improve inthe first half of 2003 as confidence returns.