CBRE's report put Q2 net absorption at minus 929,000 square feet, approximately the same as Q1, pushing the mid-year total to minus-1.8 million square feet. The full-year total for 2008 was 2.1 million square feet.

The bulk of the negative net absorption was due to a couple of large leaseholds that had been on the sublease market but expired in the second quarter, according to CBRE, namely the 375,000 square-foot Charles Schwab space at 1 Montgomery, and a 154,816 square-foot Macy's space at 22 4th St.

At first blush the CBRE data seems at odds with Colliers International. Colliers, which tracks 82.8 million square feet, pegs the overall availability rate 600 basis points lower at 14.1%, which is 60 points below CBRE's estimation of the direct vacancy rate. Colliers' report estimated net absorption at minus 688,512, pushing the year-to-date total to minus 1.2 million square feet.

So what gives? Much of the difference can be explained by how each company deals with sublease space. Colliers says it doesn't add sublease space to its calculations until the sublessor vacates the space while CBRE includes the square footage when the space first comes to market.

The two firms rent numbers also are not comparable because Colliers reports effective rents while CBRE reports average asking rents for direct availabilities only. On the other hand, they highlight the difference between advertised rates and negotiated rates.

CBRE estimates the overall class A average direct asking rent at $37.31 per square foot per year for class A, down 5.8% from the end of March. Colliers estimates the weighted average effective rent – the negotiated deal – at $34.09 per square foot per year for class A, down 9.8% from the end of March, and the non-weighted average at $33.09. Year-to-date, the weighted and non-weighted averages are down 15.1% and 19.6%, respectively. The results are based on the 105 completed deals Colliers has tracked quarter-to-date.

"The descent in rental rates is mainly due to the market experiencing its lowest leasing activity in over fifteen years," says Scott Harper, senior vice president of Colliers' Urban Landlord Partners regional practice group.

Tenants that have been in the market are taking a 'wait-to-see' approach, he says--waiting to see if the market will go lower, waiting to see what their own needs will be in the new economy. Based on the few deals that are getting done and negotiations that are underway, Harper says tenants with 2010-2011 lease expirations are "capitalizing on the City's supply of premium office space at low rental rates to upgrade their facilities."

With many tenants expected to choose to renew with smaller footprints, keeping available space high in the coming quarters, CBRE predicts that asking rates will likely remain at reduced levels. "Despite the challenging market, prospective tenant demand remains high," states the report. "What remains to be seen is how many of these tenants will downsize and how many will choose to relocate to new space or renew at their current location. Currently it appears that a majority of tenants will choose to renew at decreased footprints, continuing the trend of increasing vacancy and declining rents."