Due to these factors, companies looking for large blocks of space may be out of luck in many areas in Manhattan. “You can’t do large deals if you don’t have large spaces,” Harbert said, adding that the market was “hampered” by a lack of space in areas like Midtown South. “If you’re one of those tenants who’s looking for a big block of space and you’re boxed out of Midtown and your natural inclination is to stay close to Midtown and go to Midtown South, you’ve got a problem.”

Downtown, it turns out, benefits from this lack of space in other areas in Manhattan. “It has done a lot better than anyone expected,” Harbert said. “Even without Conde Nast, leasing activity has doubled.” Even though a lot of leasing buzz in Lower Manhattan tends to focus on the redevelopment of the World Trade Center site, Harbert said that leasing in the area isn’t about one building or space.

On the investment sales side, over at the Massey Knakal briefing, large transactions of $100 million or more are driving the market in terms of sales volume, said Bob Knakal, chairman of Massey Knakal Realty Services. In the first half of 2011, Massey Knakal saw $12.6 billion in sales citywide, a 52% increase over Q2 of 2010.

While the $5.4 billion Manhattan office market is responsible for the majority of sales thus far, Knakal said other property classes are still catching up. “When somebody announces they have $12.6 billion dollar volume in the first half of the year, everybody says ‘wow, that’s fantastic,’ but it is concentrated in relatively a few transactions,” Knakal said.

Year-to-date, 960 properties have sold citywide, up 15% from the same period last year, representing an annualized turnover of 1.16%, according to new data from Massey Knakal. But the Manhattan office sector has made up over 43% of the entire market’s dollar volume. “When you look at second quarter sales volume, things look spectacular, but the fact is that the market is still slogging along,” he said. “The upper-end of the market is performing very well, but generally the market is shadowing our national economy where there are some positive signs and some negative signs.”

In the Manhattan office market, 28 properties sold in the first half, an increase of 40% from Q2 of 2010, according to the Massey Knakal data. Cap rates averaged 5.24%, down 116 basis points from 6.87% in 2010. In addition, 20 office condos sold for $256 million, averaging $1,059 per square foot. And outside the trophy class, transactions under $100 million increased by 13% to 390 deals.

Based on these transactions, Knakal said while the number of properties sold are increasing modestly, values are trending upward, but not uniformly. “We are clearly past the bottom in terms of volume and volume is steadily increasing,” he said.

Looking toward the outer-boroughs, Queens saw approximately $452 million in dollar volume, with elevator multifamily buildings, industrial and mixed-use properties leading the way. In Brooklyn, walk-up and elevator apartment buildings continued to dominate the market with approximately $332 million out of $700 million in commercial volume overall. Within the different markets Massey Knakal tracks, the Bronx has outpaced all other markets when compared to the previous year. The Bronx has seen 114 buildings sold in the first-half of the year, up 18% from Q2 2010 and 21% from Q1 2010.

“At the end of last year, we projected that value in Manhattan would appreciate this year and value would stabilize in the outer-boroughs,” Knakal said. “We still believe that is the case.”