"From what I can see, the problem we're having in Orange County is there is a lack of financing for companies, so they are cutting back on office space as a way to save money," says Jeffrey Weller, senior market research analyst with Cushman's Irvine office. "Actually, we still see Orange County very positively. I think most people here feel comfortable with the economy down here, so we won't feel the pinch as badly as in other areas."

In compiling its data, Cushman tracks only the type of projects that affect its brokers and the people they represent, which involves class A and B office buildings with a minimum of 50,000 sf, Weller notes. Additionally, the company tracks vacancy rates by differentiating between direct vacancies and sublease vacancies. For the fourth quarter of 2000, the company reported total vacancy for all of Orange County at 11.2%, with direct vacancies accounting for 9.3% and sublease vacancies totaling 1.9%. The vacancy rate for the first quarter of 2001 was 11.5%.

At the same time, Cushman reports that net absorption for class A and B office space--the strongest office product for the past five years--moved negative by 107,666 sf for the quarter. This suggests that, despite three cuts in interest rates by the Federal Reserve so far this year, some companies can no longer afford as much space as in years past.