Though it's too soon to tell what the exact effect of the rather dramatic increase in office vacancies will be for CMBS, market players are playing it safe and putting the sector under close scrutiny.

And there is enough reason to be extra careful. According to Torto Wheaton Research (TWR), the national office vacancy rate at the end of the second quarter of this year is now at a four-year high of 10.8%, up from 8.1% at the end of 2000. A Standard and Poor's report on property market trends said that the amount of occupied office space may have declined again by 17 million square feet during the second quarter, just after declining by 16.9 million square feet in the first quarter of the year.

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