Manhattan's overall availability rate stood at 11% at the end of the third quarter, down slightly from 11.1% in the second quarter and the 11.7% rate posted at the end of the third quarter of 2016.

Caggiano notes that some in the market have spoken of a perceived increase in available sublet space. In fact, the numbers indicate that perception is also misguided.

“Sublet space has been remarkably steady as a percentage of the overall market inventory for quite some time, several years as a matter of fact,” he says.

Caggiano adds that the market standard for equilibrium for sublet space is about 2%. Manhattan's sublet space availability at the end of the third quarter was 1.8%, continuing a trend where the rate has been at or below 2% since the first quarter of 2011. Wallach says that with the sublet space at those rates, he does not believe the sublet market is having any negative impact on the overall commercial office market.

Caggiano adds that in comparison to the “dark days” of 2008 and 2009, the sublet market “is not even in the ballpark” of sublet rates that were well above 3%.

Joseph Harbert, president, eastern region for Colliers, says the strong tenant demand in Manhattan is driven by the city's impressive job growth of late. From August 2016 to August 2017, New York City added 89,000 new private sector jobs, a 2.4% yearly increase. New York City bettered the annual rate of employment growth nationally (1.7%) and for New York State (1.8%). At 5.1%, New York City's unemployment rate (as of August 2017), is down 0.4 percentage points year-over-year, but 1.2 percentage points above the year-to-date low of 3.9% in April 2017.

“Active leasing by TAMI, FIRE and public sector tenants all contributed to tightening availability in Manhattan this past quarter and stable pricing,” Harbert notes. “Small to mid-size companies that can leverage flexibility on location are well positioned to capitalize on the market's best value opportunities.”

The public sector, FIRE (financial services, insurance and real estate) and TAMI (technology, advertising, media and information services) paced Manhattan leasing in the third quarter with market shares of 21%, 20% and 20%, respectively.

Asking rents in Manhattan averaged $72.87-a-square-foot, which was stable as compared to the second quarter of this year (down 0.3%), but lower since the third quarter of last year by 1.3%. Pricing was higher or unchanged in eight of Manhattan's 18 submarkets, quarter-over-quarter, Colliers states in the report.

Where perceptions match reality is in the capital markets arena in Manhattan. Total investment sales through three quarters this year stood at $12 billion. The market will have to heat up to reach the $22.1 billion in sales recorded for all of 2016 and the $24.1 billion registered in 2015.

The average sale price for a commercial property so far this year is $318 million, significantly higher than the $246 million in 2016 and $239 million in 2015. The average price of a Manhattan office building through the third quarter of 2017 was $960-a-square-foot, which was up 5.5% year-over-year. Midtown Class A values were 4.75% higher since the third quarter of last year to $1,213-a-square-foot, reflecting continued upward momentum for capital values there, Colliers reports.

“Despite a slowdown in transaction activity, there is no shortage of capital from global and domestic sources seeking investment opportunities in Manhattan,” says Richard Baxter, vice chairman, Colliers Capital Markets. “With destabilizing factors creating global uncertainty, anticipate additional off-shore capital will flow into Manhattan as the flight-to-safety continues. Coupled with a continued low interest rate environment and strong underlying economic fundamentals, capital values will remain strong as we close out 2017.”