Nationwide, office markets improved slightly in the fourth quarter of 2003 as vacancy rates decreased in both the downtown and suburban markets, according to Cushman & Wakefield research. "Leasing is on par," Sicola says, "just not as robust as 2000." In fact, the level of leasing activity has been relatively consistent over the last seven quarters. She notes that the suburban markets were hit hard and face a more difficult recovery. "I expect no change until 2005."

Sublease space continues to decline. On a national basis, sublease space represents approximately 18% of overall available sf and is now at it lowest level since year-end 2001 when it was at 108 million sf. And the national downtown vacancy rate (15.2%) and the national suburban vacancy rate (20.8%) both decreased from the third quarter, from 15.5% and 21.2%, respectively.

Some of the hot markets in 2004 should be Midtown Manhattan, Philadelphia, Portland and Washington, DC, Sicola points out. Washington, DC remains the only downtown market with a single-digit overall vacancy rate (8%), while Midtown Manhattan's overall vacancy rate remained virtually unchanged at 11.9% in the fourth quarter of last year.