The million-dollar question facing developers is whether New York City can absorb all of the office space that will materialize over the next three to five years. At least 10 million square feet of office space is in various stages of construction or planning in the city, even without taking into consideration Tishman Speyer’s planned build-out of the West Side Rail Yards and the World Trade Center development.

Probably the largest obstacle is whether these planned developments would be able to secure financing in today’s credit market, which has been badly weakened by the collapse of the mortgage-backed securities marketplace on Wall Street and the subprime meltdown. Nevertheless, many industry leaders are confident that the new office buildings in various stages of development, particularly along Eighth Avenue in Midtown, will be leased to meet the needs of the commercial office marketplace.

“Most of the projects planned for Eighth Avenue and in Midtown will be completed over a five-year frame, so as a percentage of total stock, these additions will be quite small,” the president of the City Investment Fund, Thomas Lydon, said. “I believe the market will absorb this space quite handily, especially in Midtown.” “Most of the projects will be built only if pre-leasing of at least 50% of the space has occurred,” he added. “This will prevent a potential excess that causes rents to drop below a reasonable rate of return on cost — say, 8%. Rents will be north of $100 per square foot, but the projects on Eighth Avenue will still be seen as pioneering by tenants, so the ability to push rents is a risk.”

About 4 million square feet of office space is scheduled for development on Eighth Avenue. In November, the 52-story New York Times building opened with a gala celebration. The 1.5 million-square-foot tower is between 40th and 41st streets, across from the Port Authority Bus Terminal, and is jointly owned as office condominiums by the New York Times Company and Forest City Ratner Companies.

Directly across the street, construction is under way at 11 Times Square, a development by one of New Jersey’s most prominent developers, SJP Properties, and the Prudential Insurance Company. Construction commenced in June 2007 on the 40-story, 1.1 million-square-foot commercial and retail tower, on what is the last developable land on Times Square. According to real estate sources, a number of foreign banks and financial service companies have expressed interest in leasing space in the tower, which is the first new speculative development built in Midtown in years and is scheduled to open late next year.

Nearby, on the northern end of the Port Authority Bus Terminal, construction is scheduled to begin in 2010 on a 1.3 million-square-foot, 42-story tower developed by Vornado Realty Trust and the Lawrence Ruben Company. The joint venture is to pay approximately $500 million to the Port Authority over the length of the 99-year lease.

Industry leaders expect a developer to be selected for another office tower on a site between 42nd and 43rd streets on Eighth Avenue, now owned by the hospital workers’ union, 1199 SEIU United Healthcare Workers East.

On the west side of Eighth Avenue between 44th and 45th streets, another union, Local 6 of the Hotel Employees and Restaurant Employees International, has retained a real estate consultant to review a request for proposals for the development of its property, which could be developed as a mixed-use project with retail, office, and residential space.

According to members of the construction industry, the Related Companies and Boston Properties are scheduled to begin demolition this spring on a 1 million-square-foot office tower on the east side of Eighth Avenue between 45th and 46th streets.

Industry leaders say they are confident that Boston Properties will be successful in leasing its planned $1.7 billion, 1 million-square-foot office tower, at 250 W. 55th St., near Eighth Avenue. Gibson, Dunn & Crutcher has already signed a lease for 220,000 square feet of space, and it is likely that another law firm, Proskauer Rose, will take between 500,000 and 600,000 square feet in the tower, which also would have 25,000 square feet of retail, real estate sources said.

“In a market that measures over 350 million square feet of commercial space, it is projected that a disproportionate number of Manhattan leases, approximately 17%, or 60 million square feet, will begin rolling in 2010,” one prominent real estate owner, who requested anonymity, said. “Many of these leases were signed in the late 1990s, or 2000, with an average term of approximately 10 years. A substantial portion of these leases are tied to lead tenants that are out of space as a result of recent mergers and acquisitions or organic growth. As a result, many often have satellite locations at various properties, exacerbating their office space inefficiencies. In an effort to create greater working environment efficiencies, these larger tenants are either forcing smaller tenants in the market so they can consolidate under one roof or relocating entirely themselves.”

He continued, “Only a few major blocks of office space, such as the properties under construction on Eighth Avenue, near the Port Authority and other mass transportation, can accommodate these types of requirements.”

A few blocks from Tishman Speyer’s planned 8.1 million square feet of office space on the Hudson Rail Yards is a development by Brookfield Properties. In February, Brookfield announced that it planned to begin construction on a $600 million platform over the rail tracks for two office towers on a superblock site bounded by West 31st and 33rd streets and Ninth and Tenth avenues. According to published reports, Brookfield has owned the site for more than 22 years, and its architect has designed two towers, a 1.9 million-square-foot building at the northeast corner of the site and a 3.4 million-square-foot structure at the southeast corner.

Construction is progressing on 47th Street between Fifth and Sixth avenues on the New York Diamond Tower, a 725,000-square-foot, $433.5 million project by Extell Development. The New York City Industrial Development Agency approved financing assistance for the project. Benefits would be provided on a “sliding scale,” depending on the level of occupancy by businesses that are in the diamond and jewelry industry, or those that are new to or expanding in the city.

If 85% of the building is filled with such businesses, Extell will be eligible for city and state tax benefits equaling $49.6 million, of which $37.5 million will be provided by the city. The developer will not receive any benefits if it fails to fill at least 65% of the new building with diamond and jewelry industry-related occupants, and at least 20% with business that are new to or expanding in the city.

Another building that has been approved to receive financing assistance from the city’s Industrial Development Agency is the mixed-use office tower planned for Park Avenue between 124th and 125th streets. The 630,000-square-foot tower is a joint venture of Vornado Realty Trust, MacFarlane Partners, and Integrated Holdings. Major League Baseball’s new cable television network has agreed to lease about 20% of the tower, including the second and third floors, which would serve as network studio space, and the top two floors for executive offices. About $20 million in tax breaks is being granted to the property, of which the developer will receive about $15 million and Major League Baseball $5 million.

Leasing has begun on two new buildings on Madison Avenue in the Plaza district. The steel is rising on Macklowe Properties’ 30-story, 300,000-square-foot office tower at 510 Madison Ave. at 53rd Street. In December, Macklowe signed its first lease with investment firm Jay Goldman & Company. The financing of the project was finalized last month by ULLICO and Deutsche Bank, and the first tenant is expected to move into the premises by the end of the year or the first quarter of 2009.

Less than two blocks away, at 545 Madison Ave., LCOR is completing a gut renovation of the 17-story office building at the corner at East 55th Street. The 140,000-square-foot building is expected to be leased to 17 or fewer boutique firms. LCOR signed a 75-year land lease in November 2006 and expects to welcome its first tenants in the fourth quarter of this year.

“The Macklowe and LCOR projects should do very well even in a more competitive market,” Mr. Lydon of the City Investment Fund said. “The rents in these locations could easily be in the range of $125 to $150 per square foot.”

In Lower Manhattan, construction is progressing on Goldman Sachs’s new 42-story, 1.9 million-square-foot headquarters along West Street between Vesey and Murray streets. The Liberty Development Corporation approved $1.65 billion in tax-exempt Liberty Bond financing for the building, and Goldman Sachs has been given $650 million in city and state subsidies for building the headquarters.

At least 4 million square feet of office buildings are in the planning stages in Brooklyn and Queens, not including Forest City Ratner’s Atlantic Yards development.

Construction has not yet commenced on Tishman Speyer’s planned office development on the site of the Queens Plaza Municipal garage. The developer has announced plans to build the Gotham Center: four towers, some more than 40 stories tall, totaling 3.5 million square feet of mixed-use space on the two parcels in Queens Plaza. Real estate sources said the first phase of the project will be a 20-story, 750,000-square-foot office tower, with the city committed to leasing about half of the space.

Industry leaders are voicing skepticism about new office development in Brooklyn and Queens, however. As one real estate banking officer put it: “If these projects did not happen when the market was hot as a pistol, I don’t see this going to happen over the next couple of years. Who is going to pay the rents for the new construction in these locations?”

With millions of square feet planned over the next decade, the general consensus is that the market will absorb the additional commercial office space. The biggest question facing these developments is the lack of available capital and liquidity in the present climate. Nevertheless, expect to see new towers rising in Manhattan to serve the growing demand of companies operating in the best city in the world.

Mr. Stoler, a contributing editor of The New York Sun, is a television and radio broadcaster and a senior principal at a real estate investment fund. He can be reached at mstoler@newyorkrealestatetv.com.