NEW YORK CITY-The Federal Reserve said Wednesday in its latestBeige Book that the tristate region’s economy has strengthenedfurther since its last report in mid-April, noting particularlythat commercial real estate activity in the New York City metroarea has picked up lately. The Fed’s report comes as CB RichardEllis says Manhattan’s leasing volume during May spiked by morethan one million square feet over the previous month.

“Leasing activity, which was very depressed throughout most of2009, has picked up noticeably since the beginning of this year andis now back up to ‘normal’ levels,” according to the Fed. Itnotes that much of the recent pickup has come from legal firms“and, to a lesser extent, from business services, media, andgovernment agencies. In contrast, there has been a dearth of newleasing by financial firms.”

Nonetheless, the Fed says the metro area’s vacancy ratescontinue to edge up, “as businesses tend to be taking less spacethan they had at prior locations.” The trend is belied, however, byManhattan’s office vacancy rate, which has declined for twoconsecutive months.