According to the survey, absorption decreased from negative514,193 sf to 420,878 sf. This represents an increase in occupiedspace of over one million sf but the survey emphasizes that this isdue to recent events--specifically the opening of One Lincoln andcorporations pulling large blocks of sublease space off the market."These are one-time events, and although they are positive signs,the result of these events was positive absorption that does notaccurately reflect conditions in the market," notes the report. Ifthese events were removed from the statistics, absorption wouldremain at approximately negative 500,000 sf.

The vacancy rate of 16% is nearly equal to last quarter'svacancy and up from 14.4% at the end of 2002. The report points outthat the vacancy rate for tower space on floors 20 and above isonly 6.2%, which indicates what it terms a "two-tiered market" withclass A high-rise space experiencing different dynamics than themarket as a whole. The vacancy rate for direct space increasedslightly from 11.9% to 12.5%, caused primarily from changes in thesublease market.

The amount of available sublease space was reduced this quarterfrom approximately 2.3 million to approximately 1.9 million sf,caused by companies taking space off the market, short-term leasesconverting to direct space and by tenants continuing to capitalizeon the economic advantages of sublease space, which while they areusually for shorter terms, are lower in rent.