For the first time in months, the office vacancy rate for Los Angeles County has shown improvement, according to first-quarter statistics from Cushman & Wakefield.

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The overall office vacancy rate dropped from 18.8% in the fourth quarter of 2002 to 18.1 in the first quarter of 2003. The decrease is attributed primarily to the leasing of sublease space.

In addition, rental rates in the LA market declined minimally in the early part of 2003. The asking rental rates for Class-A CBD office properties was $25.44 per sq. ft. In the fourth quarter of 2002, rental rates measured $25.56 for CBD space.

There is a cloud on the horizon, however. Cushman & Wakefield reports that there is currently about 1.3 million sq. ft. of speculative construction expected to be completed in 2003, but only about 49.3% of that space is pre-leased. The delivery of this space over the course of the year, combine with slow tenant activity, could potentially push vacancy rates back up to the 2002 level.