GVA Williams releases report on third quarter activity.

Demand for space in Manhattan was still strong in the third quarter of 2000, but not as strong as the unprecedented levels experienced in the first half of 2000. Asking rents increased at a relatively modest rate, and overall absorption of space has leveled off. These are the findings of the Third Quarter Market Report issued by New York City-based GVA Williams.

According to the report, "The leveling of rental rates and availabilities in many submarkets is not necessarily an indicator of a market downturn. There are many possible reasons for this leveling, including the shake-out of Internet firms."

GVA vice chairman Robert L. Freedman said. "The economy, no matter how strong, could not sustain the unprecedented level of growth experienced in the first half of 2000. While the real estate market remains fundamentally sound, the rate of growth in the future can be expected to be at a more modest rate than in the past several quarters. This is not necessarily bad news. The availability of space in some submarkets may add needed breathing room to the overall market."

Overall availability in Manhattan fell to 4.9%, from 5.1% last quarter. However, the absorption was only 1.3 million SF as compared with absorption of 5 million SF in the second quarter and 10.5 million SF in the first quarter of 2000. Average rents continued to rise, to $56.75 per SF, an increase of 4.2% from last quarter's level of $54.44.

Midtown South posted the first negative absorption in five quarters, with the availability rising to 4.4% from 4.0% last quarter -- an increase of 300,000 SF.

The report also cites a new trend: the sale of so many trophy properties at the same time. The Seagrams Building, CBS Building, 1301 Avenue of the Americas, and 666 Fifth are amongst the properties cited in the report that are geared toward the investor with $200-400 million.