The numbers underscore the concern. The CBRE report puts Scottsdale's inventory at 15.1 million sf, of which 13.32% or 959,864 sf is empty. The quarterly net absorption was only 185,432, with 1.19 million sf under construction.

Grubb & Ellis' Scottsdale numbers are slightly different, with 12.8 million sf of inventory and two million sf or 15% vacant. Its researchers put absorption at 550,000 sf. But again, a little less than one million sf is under construction.

Hastings points out that the subprime fallout is beginning to have an impact on the office market although the entire home-building and mortgage industry began slowing down before that fiscal crisis began. However, many subprime lenders with small and large amounts of office space are melting away, leaving vacancies. "You had New Century Financial that came here, took space, then left almost overnight. That's 30,000 sf of sudden space," Hastings stresses.

Still, Hastings says he doesn't see oversupply as a long-term problem. "Some landlords will lose tenants and some will see occupancy decline," he says. "Once the supply is under control, then we'll go back to a steady growth, probably by the end of 2008."