The study notes that the overall suburban market--which includes eight submarkets--ended the first quarter with a direct vacancy rate of 11.4%, but that number leaps to 19.5% when sublease space is included. Overall, this market experienced a total negative absorption of two million sf.

"It appears," notes the study, "that much of the shadow space, which was not included in the numbers at year-end, has now become more defined with the active marketing efforts of many subtenants." The increase in vacancy, which is caused by the existing sublease and direct space as well as additional large blocks of space that are becoming available in the market, pushed rental rates down to $23.92 per sf from the $26.65 per foot logged at year-end 2001.

According to the study, the suburban market has experienced "weak tenant demand" in the first quarter of this year. While activity has increased, many tenants are reluctant to finalize a transaction, extending the leasing cycle. Among the perks building owners are offering in order to finalize transactions are flat rental rates for the term of the lease, free rent, turnkey build-outs and smaller security deposits. Rents are also being discounted.