NEW YORK CITY-Likening the New York office sector’s recovery to a steady drive down the gridiron, Cassidy Turley’s new third-quarter report nonetheless identifies the employment picture as one of the obstacles on the way to the goalpost. Similarly, a separate report from Colliers International notes “doubts about the strength and longevity” of improving US fundamentals as Q3 ended, and both reports note that Manhattan’s fundamentals do not exist entirely in a vacuum isolated from the rest of the country.

In common with Washington, DC New York has emerged from the recession “somewhat resilient,” due to its depth of building inventory, status as a global business center and strengthening fundamentals, says the Cassidy Turley report, prepared by Robert Sammons, VP of research, and research analyst Caylor Mark. That translates into strong leasing performance across Manhattan's three submarkets.

Nonetheless, the report adds, “uncertainty in the form of midterm elections, government policy regarding financial institutions, shadow space and employment” all stand as potential disruptions to progress in the commercial market. As a result, “New York remains in position for a drawn-out recovery, but still vulnerable to setbacks brought on by the political and economic arenas.”

Looking specifically at the employment picture, the Cassidy Turley report notes that office-using jobs have shown weaker growth this year. “In fact, job losses for the full year have continued within securities, information and business services,” the report states. Office-using sectors have accounted for just 20% of the jobs added this year, compared to 40% in 1993 as the downturn of the early ‘90s subsided.

To return the office vacancy rate to equilibrium, Manhattan alone would have to add 80,000 office-using jobs, Sammons and Mark write. That’s “well within the realm of possibility,” considering that New York City gained just under 120,000 office positions between the low point of August 2003 and the next peak in April 2008,” the report states. However, they add,  “that increase took almost five years to accomplish.”

In its Q3 report, Colliers also cites employment as one of a number of potential obstacles. The Colliers report notes a slowdown in leasing volume during Q3 compared to the prior four quarters. However, Colliers says the actual decline was “moderate and likely within the expected range of variability.”

More broadly, Colliers notes that “almost across the board, substantial downward revisions to the US economic forecast were issued by governmental organizations, investment companies, and third party economic forecasting entities” during Q3. Emerging data on actual economic performance forced these downward revisions to the forecasts, says the Colliers report.

For example, orders for manufactured goods declined, while “news about employment, home sales and residential mortgages showed that a robust recovery was again delayed,” the report states. “Many economic fundamentals, though, are strong, and the task is to put in place the mix of monetary, fiscal and regulatory policy that will let those fundamentals play out.”

Additionally, Colliers notes that concerns about the financial services sector here began to mount during Q3. “Unease developed that was focused on the new financial sector regulations, and the degree to which they would constrain growth in precisely those areas of the industry for which New York City holds the competitive edge,” the Colliers report states. “While the legislation has become law, the precise regulatory rules are still being negotiated and codified. Perhaps the implementation of the new law will not be as onerous as feared.”