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There's no doubt the issues on the local, national and global economic and political scene are responsible for a softening of the Manhattan office market. But does that mean favorable lease terms are out of the question for businesses? Absolutely not.

Last year was a record one for leasing transaction volume, yet activity in the first quarter of 2012 dropped 50%. Stalled activity, coupled with lack of demand from large tenants, appear to be the culprits. Despite the slowdown, vacancy rates showed a pronounced decrease from 8.4% in the first quarter of 2010 to 7.4% at the end of 2011. But don't be fooled by these conflicting signals as vacancy rates are a lagging indicator and the current decrease is a reflection of the leasing transactions that closed in 2011. Given the decrease in leasing activity in the first quarter of 2012, we expect vacancy rates will increase during the year.

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