Financial services regain Midtown leasing lead.

The financial services industry has reclaimed the mantle of leadership in Midtown office leasing during 1994, according to a new report by the Edward S. Gordon Company, Inc. (ESG).

The Gordon Industry Report shows that the financial services sector was responsible for leasing 773,000 square feet of Midtown office space in the first four months of 1994 - more than twice as much as the next highest industry. In all of 1993, financial services companies leased 1.46 million square feet, and were edged out for top honors by the slimmest of margins. Law firm leasing exceeded 1.47 million square feet last year.

In the Downtown market, financial services companies have continued to hold sway during 1994. However, this industry is not dominating Downtown leasing activity to the same degree that it did last year. For the first four months of 1994, financial services companies recorded 858,000 square feet in Downtown leasing - 60 percent more than accounting firms, which were second with 327,000 square feet. For all of 1993, leasing volume by financial services companies dwarfed the next closest industry by 400 percent, according to the Gordon Industry Report.

"The financial services sector has been a prime impetus behind the recovery of commercial real estate in Manhattan," says Stephen B. Siegel, president of ESG. "The rising profitability on Wall Street over the past three years has prompted many of these firms to return to an expansion mode. This is a good sign not just for the real estate market, but for the New York economy as a whole."

Siegel cited Goldman Sachs' 420,000 square feet of expansion space at One New York Plaza and Morgan-Stanley's purchase of 750 Seventh Avenue as major 1994 real estate transactions that have been precipitated by growth of the financial services sector.

However, financial services is not the only industry fueling growth. In the Midtown market, entertainment and banking - the second and third most active industries thus far in 1994, according to ESG - have generated accelerated leasing velocity: 409,000 and 338,000 square feet, respectively. Both industries are on pace to easily eclipse their total leasing for all of 1993.

In contrast, law firms have experienced a market slowdown in Midtown, falling to fourth place thus far in 1994 with 306,000 square feet in leasing. The insurance sector has climbed to the fifth position with 145,000 square feet - up from eighth in 1993.

In the Downtown market, there is a wide gulf this year between the two top industries, financial services and accounting, and the rest of the field. Insurance is third at 134,000 square feet and law firms are fourth at 103,000 square feet.

All of the statistics cited in the Gordon Industry Report are based on more than 500 Manhattan office leasing transactions tracked by ESG during 1993 and the first four months of 1994.