Dolby says he expects APL to undercut the market but doesn't see it as a problem for Oakland City Center because it doesn't have any other large spaces that would be competing against it. Indeed, he sees the availability as potentially a good thing.

"There hasn't been a big chunk of that quality of space in a long time; it opens up an opportunity for someone who maybe could not have afforded the building in the past," he says. "It could also draw a prospective tenant from San Francisco" that it looking to lower its lease cost while also making it more convenient to the labor pool, he says.

Ken Myersieck, an SVP with Colliers International in Oakland reiterated Dolby's statement about the resiliency of the market, in part due to its stable of government and quasi-government tenants. He says there hasn't been any big holes opening up in any of the buildings and doesn't see any big givebacks beyond APL.

"The only thing weighing on Oakland is its perception [as having more crime Downtown than surrounding communities], which isn't true" he says. "But more and more corporations are recognizing that from a practical supply of labor standpoint it's superior to any other market in the Bay Area."

If you look at things the way tenants with lots of employees do, Myersieck says, a 45-minute commute from Downtown Oakland covers a much larger labor pool than San Francisco. "The point is from a practical standpoint, it you are trying to make a decision about moving your business, the biggest socio-political economic labor pool is in and around Oakland," he says. "It's a good argument for saving money."

In addition to keeping existing buildings full the situation also may help fill the new office buildings that are under construction here or recently completed. Shorenstein Properties LLC has broken ground for 601 City Center, a speculative 600,000-square-foot addition to Oakland City Center. The $250-million-plus building will open two years from now, by which time Shorenstein, the investors in its latest fund and equity partner MetLife Real Estate Investments are betting demand will be there. Regardless, Shorenstein president Glenn Shannon is sure he's in the right spot.

"We're not merchant builders, we build to own long term, and so we look for properties that will have durable advantages," Shannon says. "We continue to believe that City Center--being at the heart of the Bay Area economy, sitting on top of a BART station and at the intersection of major highways, and being [less expensive] than other Bay Area markets--is going to be good long-term."

Shorenstein has been actively planning to develop the site for the site for the past three years. The company originally planned to build office space then switched to residential condos before coming full circle. The company holds an option for one other site at City Center, but no plans as yet.

Myersieck says that due to all the gloom and doom tenants are reading in the paper they believe owners should be begging them to sign leases. "But landlords here are pretty sophisticated; they understand the market," he says. "They are not going to hit the panic button and fire-sale space, so what ends up happening is a disconnect between landlord and tenant."

That, of course, stagnates deal flow, which is not good for brokers, who get paid for transactions. Next year will see some activity, though, as owners look to hold onto their properties.

"There were a lot of commercial real estate loans made between 1999 and 2004, most of them five- to seven-year ARMs, so these loans have maturities coming up," Myersieck says. "If you acquired it at $500 per square foot and put $350 per square foot of leverage on it and now the value is $350 per square foot, somebody is going to have to take a hit. It will either be subject to a massive restructuring or it will go back to the lender."

Recent tenant additions to Oakland City Center include Mathematic Policy Research Inc. (8,031 square feet; 505 14th), the California Automobile Association (9,964 square feet; 505 14th), Schuff Steel (4,918 square feet; 1300 Clay) and SoGreen Yogurt (1,460 square feet; 500 12th). Recent renewals and expansions include Public Health Institute (23,738 square feet at 555 12th, 3,976 square feet at 500 12th), Siegel and Yee (6,073-square-foot renewal and expansion; 499 14th).