"Unlike the over-building years of the 80¹s that was not basedon actual need but on tax advantages and liberal loanavailabilities, the 1998-2000 office expansion was based almostexclusively on the needs the expanding tech sector," says Hansson."This sector required large suites of 10,000 square feet or more toaccommodate their dreams of being the next Microsoft."

Alas, most of their dreams were not met, says Hansson, leavinglandlords to face high vacancies in spaces that do not fit thecurrent needs of users and are not inexpensively or quicklyconvertible. As a result, rental rates are way off. Today, theaverage rental rate stands at $31.00 per sf, where it was beforethe dot-com boom began.

The shrinking of the small-space pool has been occurring sinceAugust, when smaller but still profitable space users began takingadvantage of the market, bargaining for square feet at 1998 prices,says the report. It's that rush that has good small space now moredifficult to find.