The sky is not falling on city's real estate market.

According to last month's CoreNet Global NYC Chapter panel, the sky isn't falling on the New York real estate industry but the sky isn't the limit either. Assuming America wards off a recession, panelists project a flattening out of the city's commercial market.

"Residential construction really only accounts for 5% of the GDP," said Joseph Harbert, NY metro region COO at Cushman & Wakefield, and moderator of CoreNet's 2008 Forecast panel.

Harbert says the residential market isn't as influential as everyone fears and that all other economic indicators-even those that are beginning to level off--show that the economy remains healthy. New York has seen a slow but steady level of job growth, income (after taxes) has risen 3%, corporate profits remain high, and business sales are up 3% over the last three months. "The world is still full of equity. There are people out there who have money," he added.

Nevertheless, Harbert presented a "worse case scenario" of how the New York market could be affected by massive layoffs: 20,000 job cuts would free 27,045,276 s/f of space, raising the office vacancy rate to 6.9%; 40,000 job cuts would free 31,845,276 s/f, an 8.2% vacancy rate; 60,000 job cuts would free 36,645,276 s/f, a 9.4% vacancy rate; 80,000 job cuts would free 41,445,276 s/f, a 10.6% vacancy rate; and 100,000 job cuts would free 46,245,276 s/f, an 11.8% vacancy rate.

"I think, quite simply, the big wild card out there right now is sublease space," said Dennis Friedrich, president and COO of Brookfield Properties.

That s what took us down last time." Friedech no longer sees double-digit growth in New York's immediate future but isn't expecting any major dips either. The third panelist, Robert Ivanhoe, NY chair of Greenberg Traurig, isn't bracing for the worst just yet. For his firm, he's anticipating growth to level off over the next two years and, potentially, minimal layoffs (if any) within the next six months. He said values were so overinflated that the market flattening was not only inevitable but also healthy.

According to Harbert, Class A rents are fetching $82.41 psf on average. Additionally, 38% of Midtown properties have traded between 2002-2007, which has driven rents and has proven the exuberance of the commercial market in recent years.

What's more is that 2007 has seen 14 transactions for properties falling within the top rent tier: $150 plus psf. Harbert says that's more than any other year in New York's history.

"It seems to be that rent has outstripped technology as the second largest cost, after personnel," Harbert added.

He continued in saying that the financial services sector doesn't hold as much weight in the New York commercial market as one might expect. Though financial firms occupy 33% of office space in the city, Wall Street jobs were flat during the recession that hit the real estate market so hard in the 90s. According to Harbert's outlook, the industry can expect to have less office space in 2010 than it had in 1994; September 11 and residential conversions are attributed with somewhat depleting the availability of office space.

While he expects leasing activity to decline marginally (year-to-date total leasing is at 20 million square feet, a slight decline from 2006), vacancy rates should level off or continue to drop slightly over the next few years.

And what does this all mean for commercial brokers? Well, it just may mean business as usual.