One of the reports examines the impact of the credit crunch andrecession on the occupational and investment markets for officeproperty in London, New York, Hong Kong and Tokyo–thefour top-ranking international financial centers. The other saysthat office markets around the US are now starting to see somegreen shoots appear after suffering disproportionately over thelast two years due to the financial crisis and the subsequentfallout in office-occupying jobs.

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"International Financial Center markets are specialized, sharehigh exposure to financial markets, and are inherently volatile,"said Raymond Torto, CBRE's global chief economist. However, CBRE'sreport reveals key differences between these four internationalfinancial centers in terms of the effects of the crisis and thetrends that have emerged as signs of recovery have appeared.

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Office demand in New York and London was affected more quicklyand directly by the global banking crisis than in the two Asiancities, according to the CBRE report. In Hong Kong and Tokyo, theglobal recession, with collapsing production and trade, did themost damage to occupier demand. Tokyo's market showed hesitantsigns of recovery over the second half of 2009, while in bothLondon and Manhattan, "There was a significant pick-up in officedemand as financial market conditions improved," according to thereport.

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Investment sales "almost ground to a standstill" in the New Yorkmarket, CBRE's report says, while investment in London's officemarket rebounded over the second half of 2009, with strong demandfrom overseas investors. Values have rebounded even more in HongKong, "almost re-gaining pre-crisis levels," CBRE points out.

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In the US, demand declined 6.6% across the nation's leadingoffice markets during the recession, with the economy having grownduring the past two quarters. Considering this statistic, "It ishardly surprising that the office market is in such rough shapetoday," the report states.

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Now, however, with monthly jobs numbers showing signs ofimprovement, "green shoots are beginning to emerge," the reportsays. It ntoes that office job losses "reached a fever pitch duringthe first quarter of 2009" and have since continued but with farless severity. Furthermore, the employment services category, whichincludes the temporary help services category, posted a modest gainfor the fourth quarter of 2009. Since temporary workers are thefirst to be let go in a recession and the first to be hired whenthe economy recovers, this is a positive sign for the officemarket.

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In addition, the slowing pace of rent decline "signals that manymarkets are now effectively re-priced," although fundamentalscontinue to erode. Nonetheless, the report says that we are nowapproaching a cyclical bottom and points out that most markets havemoved beyond their worst rent declines in this downturn.

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However, these signs "do not by any means indicate that themarket is ready to rebound in 2010," according to the report.Vacancy rates are up by 2.3% to 16.3%, and shadow vacancy continuesto be an issue. "But the slowing deterioration in marketfundamentals and an improving economy over the past two quarterssuggest that the office market is now far closer to recovery thatit was last year at this time," the report concludes.

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