"With additional new space coming online and tenants consolidating into smaller, more efficient spaces, there will be further negative absorption ahead," predicts Grubb & Ellis Co. national director of market analysis Robert Bach.

Bach notes four million sf of new space could be added with plans for three new buildings in the West Loop and River North submarkets by 2009. Already, recently completed buildings were supported by anchor tenants looking for a prominent position in trophy properties, rather than market fundamentals, he adds. "The number of contiguous blocks of space 100,000 sf and larger will increase to 46 within the next two years," Bach predicts.

On the other hand, construction is minimal in the suburbs, where the outlook is a bit more promising. "Discipline on the part of developers with regard to spec buildings is showing early signs of paying off," Bach says. "Overall suburban vacancy rates will decrease slightly if no major construction commences."