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PORTLAND-The amount of sublease space nationally is approximately 142 million square feet or roughly 24% of all available space nationally and equal to virtually all of the new office space built and delivered to the market in the years 2000 and 2001, according to a just-released mid-year report by Grubb & Ellis and PNC Real Estate Finance.

In Portland, there’s 1.4 million sf of sublease space, which is equal to just last year’s construction deliveries and constitutes 19.7% of total available space in the market, according to the local Grubb & Ellis office. If that sounds good compared to the national numbers, it sounds fabulous compared to other West Coast markets like San Jose, San Francisco and Seattle, where sublease space represents as much as 40% of all available space in those markets.

That’s where the good news ends, however, because when Portland’s direct vacancies are included and put up against the region’s average net absorption, there’s more than four years of overhang–not counting new deliveries.

All told, Portland currently has 5.5 million sf of vacant space on the market. Average net absorption over the past five years has been 1.2 million sf. By that math, there’s 4.6 years worth of vacant space on the market. Factor in new construction deliveries over the next four years and an expected second wave of cutbacks by corporate America and it’s going to take sustained above-average absorption for several years to soak up the excess supply.

All this does not bode well for the timing of four planned Downtown office towers for which brokers are currently seeking prelease commitments so their developers can take to the bank in order to obtain a construction loan.

The four projects– Block 38 (400,000 sf), 100 Columbia (315,000 sf), Two Main Place (300,000 sf) and One Waterfront Place (235,000 sf)–total 1.4 million sf. Each of the projects would likely need to be at least 50% preleased to obtain a construction loan, and that seems a near impossible task these days as potential tenants, looking to stand pat on occupancy costs during the economic storm, are finding the sweetest deals with their existing landlords.

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