Why build when offices remain empty.

A fundamental principle of economics is the law of supply and demand. When applied office building construction, the supply of unoccupied existing office space far outstrips the demand for new structures in many U.S. cities.

In the case of 10 major U.S. cities, all with office vacancy

rates hovering above 13 percent, there was no new office building construction in 1991, according to the biannual survey by Oncor International, an international real estate company. Two other cities -- Dallas and Houston -- which ranked highest in Oncor's study of 55 U.S. and foreign cities, with vacancy rates of 26 and 28 percent respectively, recorded limited construction activity late in the year.

Office construction has eclipsed demand in many metropolitan areas. Crains Chicago Business recent issue quotes Chicago real estate experts as saying the nation's third largest city may not see new office construction until the end of the decade.

Around the country, this dearth of new construction is expected to continue. F.W. Dodge is projecting office construction will drop from 100 million to 95 million square feet in 1992. The report says since 1985, newly started construction has been reduced by more than 50 percent "yet the glut of empty spaces continues to haunt the construction market....Until this huge inventory of available space is assimilated, it is premature to consider the recovery of commercial building."

               Vacancy Rate
Stamford, CT        26%
New Orleans, LA     25%
Phoenix, AZ         25%
Denver, CO          23%
Fort Worth, TX      22%
Hartford, CT        21%
St. Louis, MO       21%
St. Paul, MN        20%
Nashville, TN       18%
San Francisco, CA   13%
Source: ONCOR International
According to ONCOR's study none of
these cities recorded any office
construction in 1991.