Market could bounce back by second half 2003.

The national economic slowdown, coupled with a volatile stock market have been the two major factors attributed to the recent decline of New York City's commercial real estate market. However, industry experts predict that New York City - with its diverse business base -- will be able to come out of the doldrums sometime in the second half of 2003.

One main reason for this optimism is that developers in New York City did not start an overbuilding craze during the economic expansion of the 1990's as they had in the late 1980's and which contributed to the severity of the recession of the early 1990's. As a result, market availabilities, although somewhat high, are still much lower than in other markets across the country where over-development is a larger problem. Even the flood of sublease space (according to industry data, nearly 40% of the leasing activity in NYC can be attributed to sublease space) currently entering the market is not as significant as other major office markets.

Another reason for being somewhat hopeful is that the investment real estate market seems to be revitalized. During the past nine months, savvy local and foreign investors have entered the New York City real estate market in full force. Indicative of this trend is the acquisition of 1290 Avenue of the Americas for $745.5 million by the Jamestown Advisors, the sale of Blackacre Capital's 417 Fifth Ave. for $127.5 million and UBS, AG's lease sale at 10 East 50th St. for $95 million.

Taking all these factors into account, as well as New York City's standing as the world's leading business center, we believe that there is light at the end of the tunnel. Moreover, if investment activity continues at the current level, the New York City commercial real estate market will be in good shape for a strong showing during the second half of 2003.