Job Growth Will Lead the Way to Recovery

"I see more a sense of urgency in the market," he noted, adding that some expect there to be an interest rate increase before the November election. "Sellers are looking to put product on the market."

New leasing activity for the quarter, which represented the most square footage leased during any three-month period over the last two years, totaled 7.7 million, compared to 5.8 million during the same timeframe last year.

Trends to be on the lookout for include a possible influx of publishing concerns in Lower Manhattan, due to the cost factor and the fact that a majority of the industry's employee base lives in Brooklyn or New Jersey and the appeal of Midtown South due to the better quality of available assets.

Maria Sicola, senior managing director, research, spoke of a recently introduced company product—-the Barometer, which provides a projected performance ranking over the next 24 months. Florida markets such as Orlando, Tampa-St. Petersburg, Palm Beach and Ft. Lauderdale lead the way, according to the research. She anticipates that the Manhattan market will feature stable vacancies and "aggressive" growth next year.

The overall vacancy rate fell to 12.2% at the end of the first quarter from 12.5 % at year end 2003. Overall sublease vacancy declined to 3.1 % at the end of the first quarter of 2004, from 4.1% at the end of the first quarter 2003. Subleases now account for 25.5% of total available space compared to 32.8% last year. Average asking rental rates declined overall, to $40.06 at the end of the quarter from $40.53 at the end last year, due largely to a "significant decline" in Downtown rents, which dropped to an average of $33.68 from $36.92. Rents in Midtown and Midtown South experienced increases, to $31.04 from $30.37 in Midtown South, and to $45.61 from $45.37 in Midtown.