Companies that inked significant expansions this quarter includeCapital Group, Winston Strawn, FTI Consulting, O'Melveny &Myers and Merrill Lynch. Although net absorption is down a littlebit from previous quarters, Schroeder says several large leasedeals are expected to be signed, which should boost absorptionfigures. BEA Systems, McKesson Corp., Blue Shield, Bain & Co.and Army Corps of Engineers all are likely to sign deals over75,000 sf during the third quarter, though some are likely to berenewals, says Roeder.

"In general, you are seeing a lot of big tenants expanding wherethey are at," says Roeder. "My personal guess is this time nextyear we will have seen job growth; it's not only the big sizedcompanies growing but also the small to mid-sized companies. I amcontinually receiving calls from brokers representing tenants I'venever heard of, which means the tech market is coming back to someextent."

The specter of single-digit vacancy rates and, therefore, higherlease rates, have some developers moving ahead with officeprojects. Tishman Speyer and Beacon Capital are both said to bemoving forward on neighboring Mission Street projects, andShorenstein Co. and Equity Office Properties Trust also are vyingto become the first out of the gate. Their completion wouldn'toccur before 2009 at the earliest, however, which means CBD vacancylikely will continue to fall for at least the next 18 months, saysSchroeder. In addition, he says some owners of class B and C assetswho were considering residential conversions are now taking asecond look at whether they might just as well rehab the buildingsfor office use.