CHICAGO—At first blush, Studley's third-quarter office report appears to be optimistic, with the CBD demonstrating a vacancy decline from 17.6% to 17.2% from Q2 and suburban office space also showing moderate improvement. But Joe Learner, Studley's EVP and co-branch manager, points out that things aren't quite as sunny as the numbers are indicating.

"There are pockets of demand, partly coming from the technology sector," he acknowledges. For instance, Google Inc. announced last summer that it would take down 572,000 feet at the Merchandise Mart in the Northwest Loop area in a widely touted deal. A couple of months later, United Airlines announced its own large lease at Willis Tower.

It's true that demand is high for the loft space favored by technology firms. This is where Chicago, especially the CBD, is experiencing tightening of office space and could see some new construction in this very niched arena. But "outside of the tech world, activity continues to be sluggish," Learner says.

He goes on to say that the suburbs aren't doing a whole lot better than the non-tech areas of Chicago's CBD. One main reason is because the suburbs are more corporateoriented and, as Learner puts it, "corporate America has been successful in doing more with less." As such, demand is soft no matter where you look.

The one exception might be the northern suburbs, where Abbott Laboratories is located. The massive pharmaceutical manufacturer announced last year that it would split into two entities, the first dealing with established and over-the-counter pharmaceuticals and the second (dubbed AbbVie) overseeing proprietary pharmaceuticals. As Abbott Laboratories is known for taking down a lot of space, especially in the northern suburbs, the split could help boost absorption and decrease vacancy as the company leases more space. "Once Abbott gets this sorted out, it may go back to its space-eating habits," Learner comments.

Otherwise, he says local office trends mirror the national trends. "If you look at what's going on nationwide, companies are using this time to modernize their space while looking out for their balance sheets," Learner notes. "Landlords, in the meantime, are looking to prolong or to get out of their debt situations. This typically requires credit tenants with longer-term leases, but it's not creating more absorption."

Nor will this really change during the near term. Learner believes that employers have finished "right sizing" and hiring for the time being and have brought in enough employees to accommodate their businesses. That, combined with continued problems in China and Europe, could continue to put a dent in both absorption and vacancy declines not just in the Chicago area, but nationally as well.