"Despite the doom and gloom about the economy in the papers, the findings reflect that throughout Q3, Chicago is still adding jobs and showing positive absorption," says Tamara Kos, a Transwestern EVP who heads up leasing in the CBD. "While growth has slowed in Chicago compared to very robust activity in recent years, at this point we're still not negative. Certainly the last few weeks have been kind of scary, so how deeply our market is going to be impacted by the great credit crisis looking forward remains to be seen."

Though leasing activity has held steady so far, Cushman & Wakefield researchers suggest a decline will be seen in the next quarter and into 2009. Rental rates were up, increasing to more than $30 per sf in the third quarter, as a result of new Class A product, according to a Cushman & Wakefield's third quarter market report. However, the company's researchers indicate the expectation that rental rates are on their way down.

"Rental rates have peaked and will be down in 2009," said Howard R. Perino, senior director with Cushman & Wakefield, in the report. "Absorption of space will be significantly lower in the next several quarters as companies stop to evaluate the effects of the financial crisis on Wall Street on their business. The likely response is that companies will need less space, and in some cases a lot less space, than in 2008."

According to his company, overall absorption in the market will take a hit in future quarters as well, as space becomes vacant due largely to construction completions. In the next year, three large new buildings will be opening, all of which are one million sf or more, and have had great success in preleasing. John Buck Co.'s new tower in the West Loop, 155 N. Wacker, is already more than 50% preleased. Hines' 300 N. LaSalle is more than 90% preleased still a year out from opening, while 353 N. Clark is nearly 70% preleased.

"You still have large tenants, and firms with expiring leases, who would like to have the opportunity to be in a new building," Kos tells GlobeSt.com. "Companies are always looking to be in the newest and best buildings, so these buildings will open without a lot of vacancy. There aren't going to be a lot of other buildings getting started that will be able to get preleasing and have the financial credibility in the near term because of the debt market."

Kos says no significant space or big buildings will open up through the remainder of 2008, which will help maintain market stability for the time being. However, Kos says she predicts no further growth will be seen in the fourth quarter reports, and that numbers may begin to reflect flat or negative absorption.

"In terms of tenants pulling the trigger to sign leases, there may be a slow down in the future based on what's happened the past few weeks, but I don't expect the fourth quarter statistics to be terribly negative," Kos tells GlobeSt.com. "I see a slowdown in expansion but not great consolidation, so we're going to see some tenants that might delay plans to take expansion space. We might see more sublease space enter the market, but we've had a minimal level of sublease space in Chicago's CBD since 2000 when the dot com bubble burst." Kos says additional sublease space has already come onto the market, with a small increase of about 300,000 sf in the third quarter. Currrently, only about 1% of the 152-million-sf market is made up of sublease space, she says.

Helping to stabilize the market will be several large leases that have been signed recently or are expected to be signed by year's end, including MillerCoors' move into 150,000 sf at 250 S. Wacker and Chicago Mercantile Exchange's 100,000-sf expansion at 10 and 30 S. Wacker. Also strengthening Chicago's market in the face of economic instability has been a move of many large companies into the city from the suburbs and elsewhere in the nation - a trend Kos expects to continue. Recently, BP Amoco moved to 240,000 sf at South Wacker Drive from Naperville, Kos says.

"We still have tenants coming into this market from other markets in the country or the suburbs," Kos says. "We're still seeing a migration of firms moving from the suburbs into the downtown area, the reverse of what happened here in the 1990s. Looking over the next year or two, I don't see any reason that would change. The CBD will continue to profit from the suburbs loss of some of those tenants."