The report also emphasizes that the city is a segmented marketwith different dynamics for each submarket and asset class. Out ofthe city's eight submarkets, the financial district and Back Bayexperienced significant negative absorption of one million sf and215,223 sf, respectively, but these numbers were offset by positiveabsorption in the South Boston Waterfront and Fenway/Kenmoresubmarkets of 328,011 and 298,368 sf, respectively.

Average asking rents for all types of properties, includingsublease space, for the third quarter were $39.99 per sf, adecrease of 4.5% from last quarter's rate of $41.86. Thesetenant-friendly market conditions have led many companies toevaluate their approach to real estate. Many tenants, according tothe report, whose leases are up from 2004 to 2006 are acting early,in order to take advantage of the situation.

The report emphasizes that, on a positive note, the past yearhas seen an increase in velocity with over 2.25 million sf ofrecorded transactions and another 500,000 sf pending. Nearly a yearago, in the aftermath of September 11, velocity was practically nonexistent. But most of these transactions have been leaserenewals.