The report indicates that increased funding in technology andslight improvements in the stock market's performance demonstratethat the economy is heading for a rebound, but the city'scommercial real estate market will not follow suit as quickly asits turnaround will be directly linked to sustained job growth inthe area.

According to the report, there was positive absorption thisquarter for a year-to-date net absorption of 347,849 sf. Overallvacancy rates, however, at 16.2%, are relatively the same as theywere throughout the year and are up from 14.2% at the end of 2002.Interestingly, the report points out that the vacancy rate fortower space on floors 20 or above is only 6.4%, indicating what itcalls a "two-tiered market" with class A high-rise spaceexperiencing different dynamics than the general market.

The city continues to have about 1.7 million sf of subleasespace available, but the amount of sublease space has been reducedby nearly one million sf since the end of 2002 as short-term leasesconvert to direct space and tenants take advantage of the dealssublease transactions can offer.