"We expect continued strong fundamentals," Equity Office president Tim Callahan told analysts. "But we will see some weakening in demand." Management said it expects rental rates in the trust's portfolio to increase on average by 3% next year, with markets like Dallas and San Francisco showing no growth in rental rates. The trust said absorption continued extremely strong this year and the prelease rate in the trust's development pipeline was 40% in the third quarter.

Following the acquisition of Cornerstone Properties this summer, management said that the credit rating agencies are very focused on the trust paring down its large debt load. Financing activity resulted in a significant decrease in floating rate debt in the quarter to 12%, with fixed rate debt being 88%.

In response to analyst questions about Equity Office's potential interest in trophy properties currently available in the New York market, management said that debt concerns were making the trust cautious on any acquisition activity. Management said that analysts could expect Equity Office to be in fewer markets going forward as the trust disposes of assets it views as non-strategic. If there is any significant acquisition activity, management said it would likely be on a joint venture basis. Management also said it is currently looking at JV opportunities in Equity Office's existing portfolio, with proceeds being used to pay down debt.