Data produces performance anxiety.

Just when it seemed that the pace of Manhattan leasing was on the mend with a strong month in May, CB Richard Ellis second quarter data shows that activity tapered markedly in June leaving many to wonder how the market will perform in the second half of the year.

"It's a big question that I think everybody is thinking about right now," said Dean Shapiro, executive managing director at CBRE.

Midtown experienced the sharpest drop off, tallying a paltry 790K s/f of leasing in June, less than half the 1.64 million s/f done in May and even farther behind the mammoth 1.82 million s/f accomplished in June of 2004. Midtown South follow suit, but slowed not as severely, leasing 380K s/f in June versus May's 460K s/f. It echoed Midtown when its performance was compared year over year. MTS leased 860K s/f in June of last year.

Shapiro indicated that June's slowdown likely isn't a trend. "June certainly was a very unimpressive month, but things change from one month to the next," Shapiro said, also adding that 2005's overall leasing activity has been strong compared to recent years.

Leasing figures can be misleading however. Shapiro stressed that slower uptake doesn't necessarily mean that certain types of space, like trophy class A offices, aren't in strong demand and can consequently command increasing rental rates that exceed the pace of average rises for Midtown. Midtown rents in June were $53.77 psf, a moderate increase from May's $53.43 psf and markedly above last June's $50.32. Buildings like the GM building, Carnegie Hall Tower, 590 Madison Avenue, and 570 Lexington Avenue have attracted hedge funds and other types of financial firms that often are willing to shell out three figure rents.

"They cater to the kind of high flying tenants that just want what they want and are willing to pay for it," Shapiro said.

Conversely, just because rents have been slowly rising in Midtown doesn't meant that every space can garner more rent. "The Madison Avenue/Park Avenue area may on average be commanding more rent, but there are a lot of spaces where the rents are not rising," Shapiro said.

A portion of the market that has experienced some stagnancy is the leasing of big block space. Dubbed by many as the type of shrinking commodity that should be able to capitalize on its scarcity and achieve higher rents, big blocks instead have been sitting fallow for the most part.

Lack of big leasing deals has been the primary culprit for the dive in leasing figures in 2005 as compared to the year before, but it hasn't prevented just finished 505 Fifth Avenue from bagging some big deals and proving that new office developments can be successful even during a period of mediocre fundamentals. Financial company CIT signed on as the anchor tenant in the building with a 130K s/f lease that was inked in June and was the month's biggest. That deal was followed by a 45K s/f lease for four floors. Both transactions were brokered by CBRE.

"That building really goes to show that a well conceived, well executed project can be a success even in tougher market conditions," Shapiro said.

Catering to high-end boutique office tenants with its 11K s/f floorplates, 505 Fifth Avenue has been able to command rents above $80 psf.

Although rents may be rising in Midtown, Shapiro disagreed with a much-reported trend that landlords have been refraining from signing early renewals with tenants in order to wait until the market yields further increases.