"The low level of available space is due to a lack of new supplyin the Manhattan office market," noted Joseph Harbert, COO of theNew York Metro Region for Cushman & Wakefield at thepresentation. "Though many projects have been announced, and areeither in the beginning stages or under construction, relativelylittle has been added to the market in the past 10 years."

Harbert and industry experts in the audience explained thattheir predictions as far as Q1 '08 goes are relatively fine, withcarryover deals expected to close, however they are "waiting forthe shoe to drop," and are relatively uncertain about how Q2 '08will pan out. According to Harbert, little reprieve is forecastedfor the next several years. Manhattan's office space inventorytotals 390.6 million sf, and in the next three years minimal newconstruction will come on the market. "Considering that more than15 million sf was leased in Midtown Manhattan alone this year, theseven million sf being added to the market in the next three yearswill do little to ease Manhattan's space shortage," Harbertexplained.

As a result of declining supply, overall asking rents forManhattan office space reached new highs in 2007. By year-end,average asking rents had increased 28.7% from the end of 2006,reaching $65.08 per sf. During the last three months of 2007,slightly more than five million sf of office space was leased inManhattan, less than in each of the previous three quarters.Overall, leasing for all of 2007 was down 12.8% from 2006,measuring about 23.6 million sf. Though many are quick to blamethis slowdown on financial uncertainty caused by the credit crisis,other major factors come into play, Harbert explained. "Recordasking rents and decreasing available space have given prospectivetenants fewer options from which to choose."