Making matters worse yet, there is "a huge amount of sublease space" on the market, says Grubb & Ellis national director of market research Robert Bach says, some of it discounted to 50% of the cost of direct space. Another 4 to 5 percentage points can be added to the total, adds Grubb & Ellis senior vice president Steve W. Kling, of "shadow space" in the suburbs.

"I don't see the situation improving for landlords in the short term," says Cushman & Wakefield senior director Rob Marquardt, also predicting vacancies in the 25% range ahead.

His firm's recent report pegs vacancy in this 21.6-million-sf submarket, the largest outside Chicago, at 20.7%, up 8.7 percentage points from a year ago. Meanwhile, average weighted rental rates for direct space is down 2% to $21.67 per sf.

That didn't stop Atlanta-based Wells Real Estate Investment from closing on its $90-million purchase of Windy Point I & II from Chicago-based Fifield Realty Corp. at the end of 2001. The deal at a 9.37% capitalization rate was the largest in the suburbs last year.

While buyers are calling again, Grubb & Ellis senior vice president Thomas R. Eames and Hines Interests senior vice president Thomas J. Danilek say they are not looking to take on tenant credit risks. "There's a tremendous amount of money out there, but people aren't going to take the lease-roll risk," Danilek adds.

While the space glut is not as severe or threatening as it was in the early 1990s, it's back to the future for property owners, tenants and their representatives, Marquardt suggests.

"Responding to the increased pressure and vacant space, landlords will be forced to compete for tenants more aggressively with concession packages more like those enjoyed by tenants in the early 1990s," Marquardt says. "Typical concessions will include further net rental reduction, gross rent abatement, moving expenses, lease assumptions and telecommunications expenses."

The suburban vacancy rate of 19.9% is 7.3 percentage points higher than the beginning of 2001, according to Cushman & Wakefield. "Approximately 2 million sf of the currently available sublease space will reach lease expiration in 2002 and 2003 and convert to available direct space," Marquardt says. "Before this cycle is over, we will see direct vacancy rates increase at least another 5% in most suburban submarkets, and maybe another 10% in some submarkets. It is an excellent time for tenants to capitalize on the aggressive market conditions."