Unlike the early 1990s, when San Diego County plunged into what would become a prolonged recession, the region entered 2002 with a significantly more diversified economy, a lack of overbuilding, comparatively low unemployment rates and many of its recession-related closures and cutbacks already accounted for, according to CoStar's year-end office report for San Diego County.

"San Diego is faring relatively well when compared to other markets," said Erin Miller, CoStar research manager for San Diego. "We are watching the overall real estate and economic market indicators to see how the 2002 economic picture shapes up, but barring any unforeseen events, expect the region to remain fairly stable."

By the end of the first quarter, newly delivered product is projected to have a 68% pre-leasing rate, and a 54% pre-leasing rate in the second quarter.