ATLANTA-The surplus of sublease office space in Atlanta and Nashville hovers just below the 24% total surplus of all available office space nationwide, according to a second-quarter report by New York-based Grubb & Ellis Co. and Pittsburgh, PA-based PNC Real Estate Finance.

Atlanta has 7.56 million sf of sublease office space, representing 23.2% of its total available office space.

On the report’s listing of 58 metropolitan markets, Atlanta stands in 43rd place. South Bend, IN has a 2.2%-sublease portion of total available office space; San Mateo, CA, 43.1%.

In 44th place is Nashville with 1.15 million sf of sublease office space, representing 23.5% of the total available there. Greenville, SC fares somewhat better in 35th place on the list. It has 383,490 sf of sublease office space, representing 18.8% of the total available.

Co-authors of the report are Bob Bach, national director of market analysis for Grubb & Ellis, and Elizabeth Ptacek, senior analyst, market research for PNC.

“There will be a race over the next three years between any market recovery and the rate at which sublease space expires and returns to the market,” the report predicts.

Bach estimates the overall office market nationwide is not likely to achieve balance until 2005 at the earliest.

The analysts detected a slight decline in sublease office space during second-quarter which “could potentially signal the start of a sustained recovery.”

The report notes that brokers are more concerned than building owners about available sublease space because many tenants are honoring current leases on vacant space.

Bach warns, however, that if balance is not restored for another three years, “much of the sublease space will certainly become a liability for landlords well before the market has really fully recovered.”

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