Office leasing in Charlotte's center city is the slowest since the early 1990s recession, but the majority of the nation's 50 largest markets are doing worse.

Only five cities -- Raleigh; Bakersfield, Calif.; Milwaukee; Sacramento and Washington -- reported better downtown occupancy rates than Charlotte in the first quarter. In a nationwide survey, Colliers International pegged Charlotte's center city vacancy rate at 10.3 percent compared to the national average of 15.1 percent.

"You can attribute that basically to the fact that the banks have maintained a stable employment base in the downtown area," said real estate analyst Frank Warren of Frank Warren & Associates. "Their space needs have remained fairly constant."

But double-digit vacancy rates are unusual in the center city, which was reporting just under 5 percent a year ago.

Over the past two years, Wachovia and Bank of America have vacated leased space in some uptown buildings and consolidated offices in the center city. And new buildings such as the 46-story Hearst Tower have opened, luring tenants out of older, less desirable offices.

Colliers International counted only about 100,000 square feet of space under construction in the core -- good news for building owners who must compete with new offices.

"Charlotte is more fortunate than some of those other cities, because developers here put the brakes on new construction early," Warren said.

Atlanta, which the Charlotte Chamber visited last week with about 100 business and civic leaders, is reporting a vacancy rate of 13 percent with 1.24 million square feet under construction.

In parts of Atlanta's core, developers have begun converting vacant office buildings to loft apartments and condominiums, giving up on leasing to office tenants.

Could that happen in Charlotte, which is enjoying a resurgence in center city residential development? Probably not, the experts say.

"Where that has worked, the buildings have been older, with smaller floors and in close walking distance to jobs," Warren said. "We have such a limited base of those buildings here."

Also, said Tim Newman, president of Charlotte Center City Partners, "We still have enough land in the center city and the capability to do new residential development tailored to certain market segments."

Colliers International put Charlotte's first-quarter suburban office vacancy rate at 19.7 percent.

Most real estate experts consider 10 percent an optimum vacancy rate, because it indicates the market has space to accommodate expanding and relocating businesses.

Charlotte's center city competes well against larger cities, because many companies consider uptown rental rates a bargain for space in a financial hub near two of the nation's largest banks.

Also, tenants get amenities for employees along with their leases in the skyscrapers.

In the first quarter, uptown landlords were quoting an average $22.90 a square foot annual rent for Class A space, generally considered the market's newest and finest.

That's a good deal, Warren said, because parking in the center city is affordable, restaurants are abundant and "the synergy of uses makes downtown a desirable place to be."

In Boston, for example, landlords were quoting an average Class A downtown rate of $43.50 a square foot in the first quarter.

Uptown Charlotte has slightly more than 1.3 million square feet of vacant office space. In recent weeks, tenant interest has picked up, real estate salespeople say.

But Charlotte real estate forecasters don't expect the market to regain pre-recession momentum until next year, when economists say job generation and business expansion could increase.

Colliers International predicts that the national office market will "hobble along" for the foreseeable future.

"Significant job losses in February, March and April suggest businesses across the country continue to reduce headcounts wherever possible, leaving demand for office premises at extremely low levels," the real estate firm wrote in its first quarter survey.

With more than 55.4 million square feet of offices under construction nationwide, Colliers International said, vacancy rates likely will continue rising as rental rates decline.

The national overall office vacancy rate of 1rcent could rise to 17 percent this year and 2004, the firm said.