A second-quarter market report released today suggests that the New York City office market has improved and that the economic deterioration that has plagued the industry may be reversing itself.
The report, released by international commercial real estate services firm Studley, shows that leasing activity in Manhattan has risen from its 20-year low of 3.2 million square feet in the first quarter, to 4.5 million square feet. Also, the addition of sublet supply has slowed in Manhattan. During the peak financial crisis, the report says that sublet space increased by an average of almost 900,000 square feet per month. That rate fell to 525,000 square feet in May and June; the figure has since plateaued.
While there are numerous positive indicators in the market, it’s too early to assume that this trend will continue, the report says.
“These are all good signs,” Steven Coutts, senior vice president of national research services at Studley, said in a press release. “But lest we put the cart before the horse, it’s essential to monitor what happens over the next several months to determine if the second quarter of 2009 marked a turning point in the recession or if it was simply a pause in what is yet to come.” Coutts added that sustained employment growth is essential to long-term recovery in the market.
While leasing activity may have gone up in the second quarter from the low in the first quarter, the figure remains 38
percent below the historical leasing average of 7.2 million square
feet, the report says. TRD