"We have yet to see the peak in vacancy rates in downtown Minneapolis and the Southwest submarket during this phase of the economic downturn," he says. "However, we do project vacancies to be at or near their peaks in other submarkets, most notably the West and Northwest and in St. Paul and its surrounding suburbs."

Metro area-wide, the year-end vacancy rate for all types of multi-tenant office buildings is projected to be 12.7%, 2.7 percentage points higher than the 10% vacancy ending last year, according to a new outlook study put out Wednesday by the commercial real estate firm based in Bloomington, MN. Adding in spaceavailable for sublease and the overall year-end vacancy rate is projected to be 15.2% versus 11.9% at year-end 2000.

A surge in sublease space pushed vacancy rates up in both the Minneapolis Central Business District and the Southwest submarket, according to Ohmes. In Minneapolis, for instance, the vacancy rate is at 11.8%, up from 9.2% a year ago, and is expected to rise to 16% to 17% by end of next year.