Companies that inked significant expansions this quarter include Capital Group, Winston Strawn, FTI Consulting, O'Melveny & Myers and Merrill Lynch. Although net absorption is down a little bit from previous quarters, Schroeder says several large lease deals are expected to be signed, which should boost absorption figures. BEA Systems, McKesson Corp., Blue Shield, Bain & Co. and Army Corps of Engineers all are likely to sign deals over 75,000 sf during the third quarter, though some are likely to be renewals, says Roeder.

"In general, you are seeing a lot of big tenants expanding where they are at," says Roeder. "My personal guess is this time next year we will have seen job growth; it's not only the big sized companies growing but also the small to mid-sized companies. I am continually receiving calls from brokers representing tenants I've never heard of, which means the tech market is coming back to some extent."

The specter of single-digit vacancy rates and, therefore, higher lease rates, have some developers moving ahead with office projects. Tishman Speyer and Beacon Capital are both said to be moving forward on neighboring Mission Street projects, and Shorenstein Co. and Equity Office Properties Trust also are vying to become the first out of the gate. Their completion wouldn't occur before 2009 at the earliest, however, which means CBD vacancy likely will continue to fall for at least the next 18 months, says Schroeder. In addition, he says some owners of class B and C assets who were considering residential conversions are now taking a second look at whether they might just as well rehab the buildings for office use.