THE sluggish economic recovery has held down demand for office space in the metropolitan area. But an abundance of capital has meant that trophy office buildings in Manhattan have sold for eye-popping prices, such as the $1.4 billion paid for the General Motors Building. This apparent paradox continues the pattern of recent quarters, according to real estate professionals, suggesting that not much has changed in the commercial real estate market since the beginning of the year.

The executives tie the weak demand by tenants to employment statistics. "We have not seen a lot of new hires; it seems as if we have a jobless recovery," said Peter G. Riguardi, the president of Jones Lang LaSalle, the brokerage and services company. "If that would improve, I'd be a lot more optimistic."

But the outlook for the future is still cloudy. Brokers who represent landlords say they see glimmers of activity that could mean space being removed from the market and a firming of rents. But brokers who specialize in representing tenants say that plenty of space is still hanging over the market and that the bottom may not have been reached.

Nevertheless, with interest rates still relatively low and investors skeptical of other assets, the most desirable buildings in the city are still the subject of bidding wars, like the one for the G.M. Building, which sold for about $800 a square foot, compared with $300 to $400 square foot for more ordinary properties.

"Building prices are strong, but there are not that many for sale," said Anthony E. Malkin, the president of W&M Properties, a management and development company. "Everybody wants a certain type of product, but there is only so much of it."

He said the most desirable buildings are those filled with good-credit tenants tied to long leases. "Properties with rollovers are not popular because of the exposure to vacancy," he said. "That reduces the pool of properties for sale."

The market for retail space has been as uncertain as for offices, with some major deals concluded, but with others falling apart, brokers reported. Home Depot is due to enter Manhattan by opening two Expo Design Centers — one in a 120,000-square-foot store on 23rd Street between Fifth Avenue and Avenue of the Americas and the other at the site of the old Alexander's store between 58th and 59th Streets and Lexington and Third Avenues.

But months of negotiations to bring the flagship Abercrombie & Fitch store to a 30,000-square-foot space at the southeast corner of 57th Street and Madison Avenue abruptly came to a halt when the retailer decided not to proceed. "That was a real disappointment," said Alan Victor, an executive vice president of Lansco, a brokerage specializing in retail properties.

Meanwhile, the city's hotel operators are experiencing their third consecutive year of declining revenues, as a result of the falloff in international and business travel and Internet bargain-hunting on the part of leisure travelers, according to PricewaterhouseCoopers, the accounting and consulting firm. Sean Hennessey, the firm's director of hospitality consulting in the metropolitan area, said that a rapid upturn in travel is not expected anytime soon and that increased comparison shopping on the Internet by travelers will make it harder for hotel operators to nudge room rates higher.

"The outlook is weak as far as the eye can see," Mr. Hennessey said. "Any positive impressions are based on expectations, not facts."

The real estate executives who see signs of gathering strength in the office leasing market cite the fact that more space was leased in the first half of this year than in the corresponding period last year, and statistics showing an upward creep in the percentage of the asking rent that tenants are agreeing to pay when signing new leases in some parts of the city.

"Overall activity is up," said Bruce Mosler, the president of United States operations for Cushman & Wakefield, a brokerage and services company that represents both landlords and tenants. "We have leased 11.4 million square feet so far this year, compared to 9.2 million square feet in the same period in 2002."

He said sublet space, which competes with space being offered directly by landlords was down to 30 percent of the space in the market from 35 percent at the same time last year. At the top of the market in 1999 and 2000, sublease space totaled 18.6 and 18 percent of total vacancy, respectively, according to Cushman & Wakefield.

Mr. Mosler said the outlook in Manhattan was for "a slow, steady recovery."

But Gregg Lorberbaum, a managing principal of the New York office of the Staubach Company, a tenants' broker, does not see the fundamentals in place for an increase in demand. "The broad market in this town goes as Wall Street goes, and they are still laying off people and paying smaller bonuses," he said.

He said that layoffs have increased the amount of "shadow space" that is available. This is space that is left vacant or significantly underused after a company's work force is downsized, but is not officially on the market while the company leasing it decides whether to offer it for sublet or keep for future growth.

Those decisions are complicated by accounting rules that require charges against current earnings for the difference between any sublet rent received and the direct rent paid to the landlord. "If a company has to take other writedowns, they probably will throw real estate in as well," Mr. Lorberbaum said. "Nevertheless, shadow space will put downward pressure on rents."

But the accounting rules may complicate property-management decisions, particularly for publicly owned companies subject to the constant scrutiny of financial analysts, Mr. Malkin said. "If a company abandons space, it must recognize the entire lease obligation immediately," he said. "If you are talking about 500,000 square feet for 10 years, that could be a $150 million hit and the company may just decide to sit on the space," he added. "It has a lot to do with managing earnings."

Mr. Lorberbaum said that while effective rents may be firming in some areas of Manhattan, others are still in decline. "We are not close to the bottom in Downtown," he said.

James Meiskin, the president of Plymouth Partners, also a tenants' broker, noted the stubbornly high unemployment and the fact that the remaining employees at many companies are being compressed into less space as reasons that more space is coming to the market than is being leased. "There was 500,000 square feet of negative absorption in the second quarter of this year," he said, using an industry term meaning more space was offered than was removed.

He said the outlook is that employment and economic growth for the rest of the year will be slow at best. That makes it a good time for tenants to lock in current rents. "Smart tenants are focused on renewals," he said. "These rents will not go on forever."

The overhang of office space on the market means that tenants can be pickier about where they locate, avoiding older buildings with outdated equipment, known in the industry as Class C space, said Mark S. Weiss, an executive vice president of Newmark & Company Real Estate. Instead, they can choose the newest and best located buildings, known as Class A, or those that are somewhat older, but often in good locations, known as Class B.

"Class A is trading at about 10 percent off asking rents, Class B is 15 to 20 percent off and Class C is not trading at all," he said. "Nobody is making deals in Class C because there is so much Class B available at Class C prices."

John Powers, the president for tristate operations for CB Richard Ellis, the brokerage and services company that recently acquired the New York-based Insignia/ESG, said he expected availability Ü the industry term for space that is vacant or available for sublease Ü to drop slowly for the rest of the year, and effective rents, which reflect the value of periods of free rent and contributions to alter or finish interior space, to increase. "Availability by the end of the year will be below where it is now, although Downtown will be softer," he said.

CBRE recently published some information rarely made available by brokers: how far actual rents were discounted from the landlord's asking rent, with the data shown by submarkets in Manhattan. The figures disclose a modest recovery in Midtown, from a recent low of 85.12 percent of asking rents early this year to 88.16 percent about midyear.

The situation in Midtown South is more complicated. The discount from asking rent fell as low as 77 percent in the third quarter of last year before rising to 92 percent in the first quarter of this year, at a time when the asking rents were declining from the mid $30's per square foot to the low $30's. Asking rents leveled off in the low $30's at midyear and the taking rate to 85.9 percent.

According to the figures, the Downtown market is softening, even though asking rents have been declining there as well. Taking rents rose from a recent low of 79 percent in the second quarter of last year to as high as 86 percent in the first quarter of this year. But the ratio fell to 73 percent in the most recent quarter, as some big sublease deals at the World Financial Center pulled down the average.

These figures, while interesting, may represent a false precision in a market where landlords are said to be increasingly aggressive in marketing space and tenants are looking for deals. "Nobody really knows where the market is," said Marcus Rayner, a principal in Cresa Partners, a tenants' broker. "If someone is asking $75 a foot for Class A space, I'd try to get it for $50."