According to C&W's statistics, new leasing in the city has increased by more than six million sf compared to the same period a year ago. That strong leasing activity resulted in a decline in the overall office vacancy rate in Manhattan to 11.4%, its lowest quarterly rate in more than two years. For the nine-months ending Sept. 30, new leasing activity measured 20.9 million sf, compared to 14.9 million sf through the first nine months of 2003.

Larry Zuckerman, senior managing director for Grubb & Ellis agrees, but sees tenants taking more than 100,000 sf still having leverage with landlords. "It's true to an extent. It's a bit of an impact, but not drastic."

According to G&E figures, the third quarter was the first time in 18 quarters that the Manhattan availability rate dropped by over half a percent. Availability has not dropped more than that since 2000. According to Grubb statistics, preliminary leasing activity for the third quarter totaled 3.5 million with Midtown dominating the market with 64% of that activity.