Braced for a punch, markets are expected to fight back.

Real estate experts say that the Manhattan real estate leasing and investment sales markets aren't likely to slacken in the face of recent economic turmoil.

Last Friday, the U.S. Department of Labor announced that the nation's payroll fell by 4,000 jobs in August, the first

time it has declined in four years. The report, which also slashed initial payroll estimates for June and July by a total of over 80,000 jobs, touched off fears that the sagging residential market and the affect it may be having on consumers' wallets finally could be permeating into the overall economy.

(Rew-online.com published a full report on the job report last week along with the Fed's release of its beige book last Wednesday.)

Many analysts have even speculated that a recession could be on the way.

But leading leasing brokers in the city say that the demand for office space has pushed vacancy levels in the city to such low rates, rents will continue to remain strong even if there is a lull in leasing activity.

"I don't think that the market is in danger of tanking," said Barry Gosin, vice chairman and CEO of the real estate services firm, Newmark Knight Frank.

Gosin noted that, unlike the office market during its last peak in 1999 and 2000, most tenants occupy the space that they have leased in recent years, lowering the probability that they will dump their offices and flood the office market with supply in the event of an economic slowdown.

Because in the previous cycle many tenants had taken space based on anticipated growth, the market was quickly saturated with large tracts of cheap sublease space when the economy faltered in the early 2000s and tenants shed the offices they had warehoused, which caused rents to come crashing down.

At worst, rental growth will merely slow in the current market said Stephen Siegel, CB Richard Ellis's global chairman of brokerage and one of the city's busiest dealmakers this year.

"There may be a little less velocity in the market and instead of seeing 30-40% growth a year, you'll see 10%," Siegel said.

Because so little has been added to the city's inventory of office space in recent years and vacancy is so low, developers haven't dropped plans to build new office towers in Manhattan, despite the threat a weakening economy poses to their leasing prospects and the recent problems in the debt market that have made capital for development more expensive and significantly harder to secure. "When you develop, you're delivering something 4 or 5 years out, so you don't know what the market conditions will be," said Douglas Durst, copresident of The Durst Organization, which is building the 2.1 million s/f office tower One Bryant Park and is among a shortlist of leading developers in the city who are vying to develop millions of s/f of commercial and residential space on the MTA's West Side Rails Yards.

Deals in the investment sales market, which had risen to record levels in recent years fueled by the abundance of inexpensive debt, are expected to slow, but most experts say the pause will be temporary and values will largely remain intact.

"Look, it's like getting hit by a huge punch from Mohammed Ali. Of course people are going to take a knee and be woozy," said Robert Lapidus, president and chief investment officer of L&L Acquisitions, of the effect the credit crisis has had on the sales market for commercial real estate.

"I don't think anyone expects that the volume of deals for the rest of the year won't be impacted."

The pullback in capital and tightening lending standards that have resulted from the crisis have taken highly leverage buyers out of the market, but Lapidus anticipated others will take their place. "Manhattan is the kind of place where, whenever a group of buyers is taken out, another steps in and replaces them," he said.

"You have overseas buyers who look at Manhattan as cheap because the currency exchange here gives them a 30% discount."