The New York City office market is experiencing higher vacancy and reduced effective rents resulting from the terrorist attack on Sept. 11 and the weakened U.S. economy. While prices of New York City commercial real estate have so far generally held steady, it is expected that prices will soften as additional sublease space comes to market, capital flows expand to other sectors, and expectations for rental rate improvements diminish. Standard & Poor's expects the U.S. economic recovery will be sluggish, employment to grow at a slower pace than usual, and the stock market to remain relatively weak. All these factors suggest that New York City, like other U.S. cities, will face many challenges in its recovery over the next few years.

Before Sept. 11

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