"The rate of rent discounting is slowing as landlords havearrived at the point where they are either effectively movingproperty at the new asking price or they have reached their bottomnumber, even if it means a longer vacancy period," says JanelleBenjamin, co-owner and director of research at Red Real Estate. "Inthis case, landlords may consider waiting for a market recovery tobe less risky than underpricing the property for an extended periodof time."

Studying Manhattan commercial properties between September 2008and October of this year, the firm found that the gap betweenasking and taking rents has dropped below 8% for smaller spaces,versus 15% for bigger ones. In the six months between September '08and March of this year, discounts hovered between 8% and 10%, buthave since fallen.

"As the market has had time to adjust to the shifts in demand,inventory and the overall economic climate, prices have begun toreflect current market values and are more stable," the reportsays. "More accurate pricing means there is less of a spreadbetween the asking rents and the taking rents. This spread is alsosubstantially smaller in the boutique or small space market thanwith larger offices."