SAN JOSE-All over Silicon Valley, tech companies have been forced to cancel plans to expand into new offices while other firms are stuck trying to sublease offices to other business. Palm Inc. postponed plans for a huge new headquarters that was to feature 11 buildings. Computer networking giant Cisco Systems slowed development of its high profile 688-acre Coyote Valley office campus here after job cuts affecting 8,000 workers.

In a “knee-jerk” reaction to the dot-com frenzy, some companies banked space to make sure they would have room for future expansions, according to Zach Siegel, a senior director at Cushman & Wakefield. The glut of sublease space and rising vacancy rates are expected to continue pressure on the wobbly market here through the rest of the year, according to a report from Colliers International.

More than 1.84 million sf of vacant sublease space came on the San Jose market during the first quarter of 2001, according to the Colliers report. Added to the 5 million sf of direct vacant space and overall vacancy increased nearly 75%, from 1.38% to 2.41%.

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