The Catella report says some occupiers have been delayingdecisions to take new space in the expectation that rents willfall, but it implies that they may be disappointed. With anhistorically low vacancy rate of about 2.9%--up from 2.1% earlierin 2001--and with relatively little new development under way,rents are likely to remain stable, the agent forecasts.

Catella puts prime office rents in the CBD at £838 per sq m perannum ($71 per sf per annum), falling to around £640 per sq m ($55per sf) in La Défense; £518 per sq m ($44 per sf) on the RiveGauche and £343 per sq m ($29 per sf) in emerging markets like StDenis.

This resilient occupational market is attracting string interestfrom investors, and according to Catella a record £11.25 billion($10 billion) was invested in French real estate during the firstten months of 2001. This compares with £9.13 ($8.3 billion)--itselfa record--during the whole of 2000.