The county's office vacancy factor currently stands at 12.2%, including space available for sublet, the report says. But developers are beginning to cut back on the number of new projects, and demand should be strong enough to push the vacancy factor down to about 11.6.% by the second quarter of 2003, the study says.

"There will be some continued short-term weakness due to the slowing economy, but the longer-term outlook is still fairly good," Tong Saetia, a Delta Associates VP and research director for its Western Region, tells GlobeSt.com. "Demand should catch up to the supply and be at equilibrium."

Indeed, Saetia forecasts that about 5.7 million sf of new or renovated office space will come online in Orange County between now and the second quarter of 2003. That's almost identical to the 5.6 million sf of demand that the researcher says will be created in the same timeframe.