The study notes "the magnitude and velocity of the recent rise in vacancy rates has certainly varied across markets and property types." But it adds that "while further softening is expected, vacancies should begin to correct as the economy continues to recover and demand growth rebounds. In addition, supply levels have been much more disciplined in this cycle, which will help prevent vacancies from reaching peak levels experienced in the last cycle."

"We should see things starting to recover by 2003," Nancy Chesley, real estate economist and product manager at PPR, tells GlobeSt.com. Chesley points out that construction has begun to shut down in most markets and demand is slowly recovering as the economy is beginning to show signs of improvements and lay offs are beginning to wrap up. In general, it takes about six months for the economic recovery to ripple through the real estate market and Chesley says that this case is no exception.

She is quick to add that a lot of markets are still left with quite a bit of sublease space and some metropolitan markets will take longer to absorb that space than others. In particular the high tech cities, such as San Francisco and Boston, will probably not see the incredibly low vacancy rates that they were seeing two years ago but Chesley emphasizes that that is not a bad thing. "They'll get back to a healthy level," she says, adding that vacancy rates around four to five percent are not sustainable and "are a very tight level" for those markets.