In Midtown, average asking rents rose by approximately $2 in March to $58.14 per square foot, and new leasing activity paced slightly ahead of the five-year monthly average of 1.22 million square feet, the report notes. Strong leasing of 550,000 square feet occurred in Midtown South, leading to 160,000 square feet of positive absorption. Average asking rents in Midtown South rose 15 cents from the previous month to $42.72 per square feet. Downtown, asking rents increased by $1.32 to $39.33 per square foot.

The Q1 market report also signaled a general upswing in the office arena. According to data provided by CBRE, citywide average asking rents started at $43.92 in 2002 and peaked at $68.69 in 2007. Coming out of the recession, average asking rents remained between $48 and $49 per square foot. “It’s slowly coming up off the bottom,” Van Buren said.

However, disparities exist in Midtown, CBRE warns. The Q1 market report notes an imbalance between tenants and availabilities for class A space over 250,000 square feet in the area. Currently, only nine of these large blocks remain.

As large tenants vie for trophy space, opportunities for small space in class B buildings may be attractive for potential tenants as well. Maher said the 20,000- to 50,000-square-foot market segment is “much softer” as a significant volume of space remains available. “Not all landlords should just assume that the market is going to go through the roof and they could price their properties irrationally, but there’s enough volume that if tenants are smart, and landlords are smart, each side can get every attractive deals,” he said.

In response to questions about the redevelopment of Lower Manhattan, Myers said Downtown is emerging as an “alternative” to Midtown due to its availability of space, accessibility to transportation and proximity to emerging residential neighborhoods such as Soho and TriBeCa. Similarly to the Plaza District, Maher is noticing a “live and work” trend taking shape downtown. “Tenants tend not to seek space downtown purely because of price,” he said. “People jump to Downtown because of product availability and they can’t find it in Midtown. The good news is that for a tenant that wants 500,000 square feet in a new building, there it is Downtown.”

Other brokerage firms have identified similar results. According to Marcus & Millichap’s 2011 New York City market outlook report, New York “will emerge as the strongest office market in the country,” however, the study found that average asking rents remain 17% less than a high three years ago. In 2007, asking rents were more than $60 per square foot, with taking rents at $55 per square foot.

In 2011, asking rents are slightly above $50 per square foot, while effective rents are still slightly below that number, according to Marcus & Millichap. But the report predicts asking rents to grow by 5% this year to $57.46 per square foot based upon job growth, the generation of 9.7 million square feet of positive net absorption and lower vacancies.

Colliers International’s Q1 Manhattan Office Flash Report also predicted increases in average asking rents based upon steep declines in availability rates citywide, rising from $48.62 per square foot in Q4 2010 to $50.18 per square foot in Q1 2011, though net absorption was just 300,000 square feet.