With a full-blown panic gripping global debt and equity markets, one might expect a dramatic softening in office leasing market fundamentals, featuring sharply higher vacancy rates and plunging rents. One would be wrong. The fundamentals have been softening all year, but the pace of softening has been moderate. The national office vacancy rate ended the third quarter at 14.3 percent, an increase of 130 basis points since vacancy bottomed at 13 percent in the fourth quarter of 2007. By comparison, vacancy rose by 300 basis points in the opening three quarters of the prior softening cycle, in 2001 and 2002. Net absorption fell into the red for a second consecutive quarter, but just barely, at negative 2.1 million square feet. Space under construction finally moved lower by 6 million square feet, ending the third quarter at 94 million square feet. Space offered for sublease increased for a fifth consecutive quarter, to 91.5 million square feet, its highest level in three-and-a-half years. Asking rental rates were largely flat compared with both the prior quarter and the year-ago quarter, though effective rates are falling as landlords beef up their concession packages. Tenants facing lease expirations are favoring short-term extensions over new, long-term leases.The moderate pace of softening in the third quarter does not mean the office market will get by unscathed. Market fundamentals trail changes in employment, which itself is one of the last economic indicators to respond to a shifting cycle. Most likely, the United States has been in a shallow recession since the first of the year. The lack of credit, spending cutbacks by businesses and households, and the vaporizing of trillions of dollars in stock wealth and home equity are conspiring to drive the economy into a deeper recession. Tenants will be able to drive a hard bargain in 2009 if they are confident enough in their own profit outlook to take advantage of their expanded negotiating leverage.Robert Bach is senior vice president & chief economist at Grubb & Ellis Co.