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

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In common with Washington, DC New York has emerged from therecession “somewhat resilient,” due to its depth of buildinginventory, status as a global business center and strengtheningfundamentals, says the Cassidy Turley report, prepared by RobertSammons, VP of research, and research analyst Caylor Mark. Thattranslates into strong leasing performance across Manhattan's threesubmarkets.

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Nonetheless, the report adds, “uncertainty in the form ofmidterm elections, government policy regarding financialinstitutions, shadow space and employment” all stand as potentialdisruptions to progress in the commercial market. As a result, “NewYork remains in position for a drawn-out recovery, but stillvulnerable to setbacks brought on by the political and economicarenas.”

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

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To return the office vacancy rate to equilibrium, Manhattanalone would have to add 80,000 office-using jobs, Sammons and Markwrite. That’s “well within the realm of possibility,” consideringthat New York City gained just under 120,000 office positionsbetween the low point of August 2003 and the next peak in April2008,” the report states. However, they add, “that increasetook almost five years to accomplish.”

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

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More broadly, Colliers notes that “almost across the board,substantial downward revisions to the US economic forecast wereissued by governmental organizations, investment companies, andthird party economic forecasting entities” during Q3. Emerging dataon actual economic performance forced these downward revisions tothe forecasts, says the Colliers report.

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For example, orders for manufactured goods declined, while “newsabout employment, home sales and residential mortgages showed thata robust recovery was again delayed,” the report states. “Manyeconomic fundamentals, though, are strong, and the task is to putin place the mix of monetary, fiscal and regulatory policy thatwill let those fundamentals play out.”

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Additionally, Colliers notes that concerns about the financialservices sector here began to mount during Q3. “Unease developedthat was focused on the new financial sector regulations, and thedegree to which they would constrain growth in precisely thoseareas of the industry for which New York City holds the competitiveedge,” the Colliers report states. “While the legislation hasbecome law, the precise regulatory rules are still being negotiatedand codified. Perhaps the implementation of the new law will not beas onerous as feared.”

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