You asked a specific question which I will address first.
Can you register a trademark then require an existing domain owner to give up that domain?
No. The registration predates your trademark and therefore cannot violate the law. In fact, within some areas, they could potentially have a claim against your trademark if they have been operating under that name for some period of time. However, since the site is just blank, it does not apply. Any complaint filed with ICANN, would result in no action.
Now for other topics.
Is cyber squatting illegal? Only in respect to existing copyright or trademark laws for any particular country using the reasonable man standard. ICANN can be queried to settle domain name disputes, however, if there is a name conflict, expect that the registration of the trademark and the locale and usage as well as general recognizability of the trademark to come into play. For example, a local trademark used as a .de domain name will not trump a .com site registered in the U.S. which has a reasonable claim to that name. The .de trademark will not trump the U.S. trademark in this case assuming that the .de trademark is not recognized outside of the country and it is reasonable that a U.S. registrant would not be aware of the prior use of the trademark in another country and the use of the trademark is clear within the U.S.
Where cyber squatting becomes illegal is with willful malicious intent to deny access to a trademark name, profit from a trademark name, mislead, conduct fraud, and any other action. But as stated earlier, the trademark must be recognized. Coke Cola, Deutsche Bank, Wells Fargo, Riggs Bank, and Harrods are all largely recognized. However, Smittys here in the U.S. is well known but not necessarily in the U.K. Only if Smittys is registered with willful intent does any use become illegal. If a store in London registers smittys.co.uk, for legitimate usage, it would not necessarily be illegal.