Pricing will rise steadily throughout the market--although not at the 40% rate experienced over the last year and a half--and the spread between the average asking rent in Midtown and Downtown will narrow.

According to Powers, a dwindling supply of space and lack of large available blocks has contributed to record-high pricing and shrinking availability rates throughout Manhattan. Based on those trends, he offered the following predictions for year-end 2008 conditions in Manhattan's three real estate markets: Midtown's 2008 leasing activity will total 12 million sf. Availability will inch down further to 6.4% and average pricing will reach a record high of $87 per sf. Concession time will be seven months and tenant improvements will be $42; though Midtown South leasing activity will fall to four million sf for full-year 2008, the availability rate will dip to 7.3% and rents will increase to $54 per sf. Concession time will be six months, and tenant improvements will be $40; unlike in Midtown and Midtown South, Downtown will see robust leasing in 2008, with 5.5 million sf of activity. Downtown's availability rate will dip below 8%, falling to 7.5% at year's end, and pricing will soar past the $50-per-sf level to $53 per sf. Concession time will be six months, and tenant improvements will be $40.

According to Powers, Midtown has three new buildings coming online between early 2009 and late 2010--510 Madison Ave., which will add 300,000 sf; and 250 W. 55th St. and 11 Times Square, which will add a total of two million sf on Eighth Avenue. He predicted that both 250 W. 55th St. and 11 Times Square would be significantly leased up in 12 months at historic rent levels for new construction, and also noted that despite these additions, there is only 0.5% growth per annum to add through 2010 of the total office stock in Midtown, compared with the 2.5% growth that has been characteristic of the supply side since 1980.