Big deals still being made in quiet market.

Throughout the first quarter of 2007, brokers haven't been bashful in relating anecdotes about how the market has seemed to slow. But few are concerned that tenants are finally recoiling from the precipitous rental gains that Manhattan saw amid last year's flurry of leasing activity.

"I think that tenants are just taking a breather to catch up to the way that pricing has risen," said Cushman & Wakefield's recently promoted vice chairman, Josh Kuriloff.

Although rents in Midtown are at record highs, and more deals than ever before are getting done at triple figure rates, Kuriloff indicated that demand will continue to push pricing higher and that the city's occupancy rates--and need for additional office space--will continue to grow.

"If you adjust this market for inflation, it's actually less expensive than 1999 and 2000," Kuriloff said, referencing the years in which Manhattan's office market had previously achieved record high rents and low vacancy. "And on top of that, you have corporations making all-time record profits. The fact is that the market is rising because Manhattan has been undervalued and tenants can afford to pay these rents. If you compare Manhattan to other global cities, it's evident that the city is comparatively cheap."

Activity may have slowed but big deals are quietly being negotiated.

The NBA is in the market, according to brokers, for as much as 400,000 s/f, a search that has led the league to potentially consider relocating its current offices at 645 Fifth Avenue to the Old New York Times Building on 43rd Street, some sources say. But Newmark Knight Frank CEO Barry Gosin, who is leading the NBA's search, said, "We're looking around, but it's way too early." Gosin said that the NBA likely wouldn't consider becoming an anchor tenant in any of the new buildings planned for Manhattan's West Side. In recent months, brokers had said that the NBA had been among a group of large tenants in discussions with Vornado to take space in a 2 million s/f tower that the developer is planning to build on the site of the Hotel Pennsylvania.

One broker said that the Old New York Times building--which the Times sold to Tishman Speyer and will begin moving out of in the coming months to its new Eighth Avenue headquarters--would be an ideal location for the NBA.

Just up 8th Avenue at 50th Street, meanwhile, the advertising giant, Ogilvy & Mather, is planning to relocate and potentially expand as well. Brokers say that the firm had been prowling the market with an 800,000 s/f to 1 million s/f requirement, a block of space that would be even larger than the hundreds of thousands of square feet it currently occupies at 825 8th Avenue. That lease is scheduled to expire in 2009 and sources say that the firm is now in talks with NRDC Equity Partners to replace Lord & Taylor at 424 Fifth Avenue, which would be converted to offices.

Brokers were surprised to hear that Ogilvy & Mather was in negotiations for the deal because only months ago it had been prowling Hudson Square for a massive block of vacancy that would go for rents half of what it will pay at 424 Fifth Avenue. It was assumed at the time that the firm could only afford bargain pricing, but sources say that the firm has adjusted to the expensive realities of the Manhattan market and is willing to now pay the $75 to $80 per s/f rents that NRDC is likely to charge.

NRDC, a partnership between Apollo Real Estate Advisors and National Realty & Development Corporation, purchased Lord & Taylor last year for $1.2 billion in cash and has been searching for a more profitable alternative to the ailing department store at the Fifth Avenue building

CB Richard Ellis's New York CEO Mary Ann Tighe is leading Ogilvy & Mather's space search as part of a larger real estate reorganization being done by WPP, Ogilvy & Mather's parent company.

The United Nations is also getting closer to a deal after ruling out 380 Madison Avenue, a building where the international organization was considering leasing the 225,000 to 250,000 s/f it will need as swing space while it renovates its Secretariat building on the East Side. The UN is still currently trying to hash out just how much of that requirement it will need to take in Manhattan and what part of it can be exported to Long Island City, where space is far cheaper. The UN will also need to lease an additional 80,000 s/f to relocate the Secretariat building's library, a use that, because of its heavy floor load, will almost certainly go to Long Island City.

Vivian Van De Perre, a spokesperson for the UN, said that the UN is still considering its options in Manhattan. But for the space it needs in Long Island City, the world body is in talks with the United Nations Federal Credit Union, which recently finished development of a roughly 400,000 s/f office building at Court Square. The UNFCU plans to occupy much of the building but has hired JRT Realty Group, a subsidiary of Cushman & Wakefield, to lease out over 100,000 s/f of space. The UN will likely have to locate its space in a pair of buildings in Long Island City, and the UNFCU building is likely to be one of the two. The UN needs the swing space until 2014, when its Secretariat renovation is completed.