Of major concern is that half of the firms have leases that expire by 2008. The study found that 55% of those with leases set to expire by 2008 expect to renew their occupancy, while 15% say they definitely would not renew at their current locations. Half of those say they still plan to remain in Lower Manhattan. And 30% of companies remain undecided.

"New initiatives need to be considered," Jaffe says to keep and attract businesses to the area, particularly in a time period when a large amount of construction activity will take place in the area.

According to Jaffe, this year's report suggests increased revenues and the expectation that the economy will continue to improve convinced companies the time is right to increase staff and boost space requirements. Compared to results from 2003, four times as many companies are expecting to hire new employees as opposed to those that are planning to lay off workers.