"It is time we put some controls on future supply," Angelou emphasized. Referring to the office market, he said, adding, "There's probably 1.8 million sf under construction right now and there's another 2.5 million sf projected. Maybe we need to hold on to some of these other projects a little bit longer."

The inventory of space gives Austin a valuable tool for recruiting new business to Central Texas. It's a good opportunity for out-of-town companies looking to reduce costs. He said Austin needs to re-engage its economic development machinery and aggressively market itself to companies in other parts of the country, particularly California.

While Angelou said the industrial market is healthier than the office market, it too will post a decline in occupancy rates. Current occupancy is 95%. He projects that will drop to nearly 87% in 2002 before rising to 91% in 2004.

In retail, "This is where I think I have some good news," Angelou said. "Not a whole lot of product is coming online. Vacancy rates are about 4% now and should remain steady, if not decline."

Builders will add about 8,600 multifamily units this year, bringing the total to 139,000, Angelou said. "We're anticipating occupancy rates to decline from about 93% to about 90%. Not too bad," he said.

By 2004, the multifamily occupancy rate should rebound to 95%. "People are still moving to Austin, people are still going to have to have a place to live," he said. "Clearly the market has seen a significant upswing over the years. The situation is fairly stable. I would not encourage significant new construction."