Michael Frisolli, a founding partner at Richards Barry & Joyce notes that the vacancy rates in this area will hit 19.5% for the fourth quarter of this year as compared with a vacancy rate of 6.9% for the fourth quarter of 2000. "That is a significant jump in vacancy rates," he says, pointing out that those rates have been climbing throughout the year. The first quarter of this year saw a 7.69% vacancy rate here while the second quarter that number was up to 12.4%. By the third quarter, vacancy rates here were 15.4%. The availability rate looking out over the next 12 months will be 24.5%.

Frisolli says that sublease space continues to be the driving force behind the rising vacancy rates. "In the fourth quarter there was a 35% increase in sublease space alone," he says. "Direct space saw a 20% increase." In addition, adds Frisolli, things are not going to look up for a while here. "We think the market has not settled yet. It will get worse before it gets better," he says, although he adds that the lack of demand makes it difficult to determine when the market has hit bottom...

Still, Frisolli notes that pockets of demand have increased recently. While no significant deals have been signed yet, a handful are close to being finalized in Newton and Waltham for 150,000 to 200,000 sf.