Leasing in the office market has been confined to smaller spaces over the past two quarters. Space available for sublease is up significantly and inventory continues to come on the market. Vacancy rates are up on stabilized properties as well as properties constructed in the past 12 months.

Office construction has slowed as only two new buildings were completed in the second quarter. Office construction has also dropped to 66,000 square feet from 106,000 square feet last quarter. On the other hand, the new Dixie Regional Medical Center Outpatient Pavilion at 150,000 square feet and the IHC Jubilee Home (not included in the under construction numbers) will be a significant addition to the health care uses in the area. 

Outlook for remainder of 2008

Much like the industrial sector, we will continue to see leases signed but much of the activity will be relocation of existing businesses. Expect sublease space to continue to hit the market. As indicated previously, landlords are making concessions to at-tract and maintain good tenants, although don't expect those concessions to necessarily show up in asking lease rates.

As reported previously, expect creative offerings, well-designed space, and well-located space to see acceptable levels of traffic while less desirable locations or poor layouts will struggle.