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NEW YORK CITY-During the second quarter of 2001, the availability rate for office space moved up slightly in Midtown and Downtown, to 5.3% and 5.4%, respectively. At the same time, the class A Midtown rate declined by more than $10 per sf, while remaining unchanged, at approximately $50 per sf Downtown, according to data compiled by Julien J. Studley Inc.

Over the last six months, the local commercial real estate market has slowed down with “surprising speed,” in Studley’s words, and has seen a dramatic growth in sublease space. This rapid response to a slowing economy is unusual because the market typically takes more than six months to feel the consequences.

From the second quarter of last year to 2Q of 2001, the amount of sublease space has shot up citywide over fivefold, from 1.8 million sf to 10.2 million sf. How long these conditions will last is anyone’s guess, but they do force tenants and owners alike to balance the risks and benefits of subtenancies, Studley notes.

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