Part of that ugliness is the fact that tenants are trying to get recessions and rent breaks in this environment. "The pressure on rents is intense," Hankowsky said. "Every deal is a fight."

The area where Liberty, the owner of 77 million square feet of office and industrial, is seeing its toughest occupancy challenges is in the big box industrial sector, with single-use buildings more than 500,000 square feet that are normally housed by retailers or consumer-products companies. "These guys, fundamentally, are almost extinct in the market," Hankowsky said. Liberty's overall occupancy came in at 89.4%, down from 90.1% during the prior-year period.

There is some good news, though. On the plus side, tenant distress is down, Liberty executives said, and a lot of subleasing activity is taking place in the portfolio.

Additionally, Liberty was able to raise cash during the quarter. The company sold $35 million of assets in the second quarter and $11 million since then, bringing it to about $91 million for the year on the way to its goal of $160 million in all of 2009. Through asset and stock sales, Liberty so far has raised $660 million this year.

Despite some distressed properties coming on the market, Liberty executives aren't planning any acquisitions this year. But that could change depending on the environment. "We anticipate there might well be opportunities," said Hankowsky.

Liberty's earnings per share came in at 35 cents during the second quarter, up from 34 cents during the same year-ago period. FFO per share was at 72 cents, down from 80 cents.