"Much has changed for the New York office market in the pastyear," James Delmonte, VP and director of research for JLL's NewYork office, says in a release. "Positive absorption levelsindicate that activity has finally outpaced new supply coming tothe market. As a result, overall vacancy levels improved slightlyin Manhattan for the first time in several quarters and averageasking rents showed signs of flattening."In Midtown, vacancy ratesfell across all property types in Q1, says JLL. The overall vacancyrate in Midtown declined to 13.6%, a 4.9% drop from the 14.3%vacancy seen at the end of 2009. Delmonte notes that as Midtown'sless expensive sublease space is spoken for, there may be anincrease in asking rents.

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He adds, however, that the increase " will be a reflection ofthe mix of space on the market rather than price adjustments fromlandlords. Net effective rents, which had fallen by more than 42%from peak levels in 2008, have also begun to flatten. Sinceconcession packages are a leading indicator of market conditions,these changes may be a further sign of market improvement."

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JLL's end-of-quarter report coincides with the release of theNew York City Office of Management and Budget's monthly report oneconomic conditions. Using Cushman & Wakefield data, the NYCOMBreport for March notes that the city's commercial office market"appears to have stabilized," as leasing activity picks up,vacancies flatten out and rents stop falling.

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Long term, the NYCOMB report says, "the office market appears tohave reached a bottom. It will likely remain at this nadir untilfirms become more comfortable with the business environment andbecome less risk averse." Because of a large supply of unoccupiedspace on the market, "it will take some time before landlordsregain pricing power." C&W will issue its own quarterlyforecast next week.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.