While Manhattan's vacancy rate of 4.9% was well below thequarterly national average of 13.6%, the island's available spacefor sublease jumped to over seven million sf, which an increase ofabout one million sf from the end of 2007. The increase ofapproximately 16% compared to the 12% national average. "Most ofthis was from Downtown," although iStar Financial put 107,000 sf at1095 Ave. of the Americas back "after leasing it less than a yearago," Richard Persichetti, client services manager with Grubb &Ellis' New York office, tells Real Estate New York.

He adds, "There was more than just an addition of availablesublease space in the first quarter. We also saw a drop-off inleasing activity," a 15% decline compared to Q1 '07. In addition,Persichetti says, 48% of the square footage leased in Q1 '08 was inlease renewals.

"So most of the demand is not coming from new requirements; it'scoming from tenants renewing in place because they don't want toface moving costs or disruption in business," Persichetti says."For the most part, they're not early renewals, but renewals out ofnecessity. It's good that these firms aren't leaving the city, butat the same time, almost half the demand in the first quarter wasbecause firms had to renew, not because they were looking for newspace." By comparison, 19% of the square footage leased in thefirst quarter of '07 stemmed from renewals, Persichetti says.