Economic boom will live only as long as we keep feeding it.

As owners and landlord of secondary office building Himinel + Meringoff Properties has been an established real estate business for more than 20 years. In the first six months of the new millennium, we have been the recipients of substantial increased net cash flow in our existing portfolio of more than 2 million square feet. Throughout this prosperous period, we have been recognized as smart strategic buyers of secondary office buildings.

But how long will this economic boom continue?

We have built a solid foundation of secondary office buildings in good locations. At the time of purchase, most of these properties were located in emerging; yet not established neighborhoods and were in need of extensive capital improvements and renovations. We created value in the buildings by upgrading well located "C" properties to "B" properties with thorough renovation projects on the hobbies, elevators and facades.

During the last l2 months, current rental rates in our buildings have risen at least 10 percent and in some cases as much as 20 percent. Following are examples of dramatic changes in rental rates in some of our buildings.

Located between 48th and 49th streets, our building at 729 Seventh Ave. is a 17 story property in the burgeoning Times Square district. The commercial visibility, of Times Square, now established area for office use as well as the construction of the new Morgan Stanley building, have benefited 729 Seventh Ave.

We recently added a zipper sign on the north side of the building facing Seventh Avenue, and are considering addling another zipper sign. Tenant lease rents at 729 Seventh Ave. have increased dramatically since last year when rents were $24-$28 per square foot. Although we have 100 percent occupancy we have had many inquiries for space with prospective tenants willing to pay $42 per square foot with a nominal workletter.

At 6 East 32nd Street, a 168,000 square foot building with a new, modernized lobby and new elevators a lease for 8,000 square feet on the sixth floor was completed at $25 per square foot with no tenant workletter. This represents a 24 percent increase over a year ago, when that same floor would have rented for $18 per square foot.

989 Sixth Ave. is a 2l story office building with 91,050 square feet. A "dot-com" company signed a lease just over a year ago at $231 per square foot, an increase of 27.8 percent over the former tenant. In 1999, a public relations firm leased at $29 per square foot, a 631.3. percent increase over the previous tenant. This building has been at 100 percent occupancy since early 1999.

Himmel + Meringoff properties upgraded 411 Lafayette St. by spending in excess of $10 million ins capital and tenant improvements. The facade was completely overhauled, the lobby renovated and new elevators mechanical systems and windows were installed. In 1989, our original marketing approach was to create a "media" building catering to the advertising and new media industries. We implemented this strategy and success fully transformed a farmer manufacturing structure into an upgraded secondary office building.

This marketing vision, created more than eleven years ago is now the "vogue" of the neighborhood. The new media, publishing, and advertising companies have continued to renew their leases over the list twelve months, at renewal rents in the low $30s' per square foot with no workletters.

The steep increase oft rental rates in our "B" buildings over the last 12 months has been primary a result of a booming national and local economy, a strong Wall Street market, and the phenomenal growth of the high tech and Internet industries in New York City. Our company has enjoyed significantly, higher cash flow earnings from these rising rental rates.

Our most recent acquisition, 1356 Broadway, was an extremely complicated all-cash transaction that involved the purchase of four different interests:

* The building was held in the form of a limited partnership originated by Integrated Resources and we purchased this from the existing and controlling general partners of the limited partnership.

* The long-term triple net lease expiring in 2027 had been leased by Republic. Bank or its predecessors since the 1950's.

* We purchased a mortgage note held by Republic Bank that was collateralized by both the leasehold and fee position.

* The land was held in an unusual remainderman interest, where in order to maximize the tax shelter benefits in the building, the land was held as an estate for years by the Integrated partnership formed by Integrated Resources. We purchased this remainderman position from an entity that had bought many of Integrated Resource's former residential interests.

The impending "black cloud" of rising interest rates and inflationary pressures combined with the technological revolution that has boosted price/earnings ratios to historically high level lacking algebraic and mathematical explanations, urge us to take a realistic perspective regarding the future.

We predict that the current economic buoyancy will last at least until the November Presidential election. After that, who knows?