A new report on Manhattan Economic Indicators issued today by Eastern Consolidated Real Estate Investment Services maintained that the prospects for significant improvement this year are "rather bleak."

"Commercial sales volume held steady at the anemic pace recorded in previous quarters, job losses increased, the office availability rate was little changed in the quarter but the average asking rate plummeted by $10 per square foot," the report said.

It said that preliminary commercial property sales estimates show that total volume for 2009 was $5.7 billion, down from $23.6 billion in 2008 and $62.8 billion in 2007.

"The volume of multi-family property sales was $434 million in the fourth quarter," it continued, "up from $410 million in the third quarter and well ahead of the first and second quarter volumes of $195 million and $310 million, respectively."

"New York City's job losses accelerated at the end of 2009 after holding steady through the summer. In October and November 2009 (the last month available) the City lost a total of nearly 30,000 jobs putting the aggregate loss for the current recession at 139,600 jobs or 3.76 percent. As bad as this looks, the loss compares favorably to the losses at the national level: 7.2 million or 5.2 percent. New York's status thus far in the current recession is also better off than it was in the last two recessions," according to the report.

"The only good news in the office market at the end of 2009," it said, "was that available sublease space declined by nearly 1 million square feet to 16.2 million square feet. The overall availability rate, however, increased by almost as much. At the end of the year, the Manhattan availability rate was 13.7 percent, up from 13.6 percent at the end of the third quarter. Midtown's availability rate climbed to 14.6 percent from 14.3 percent at the end of the quarter."

"The bigger story in the year-end numbers," it continued, "is how steeply the average rent decline in the quarter, most notably in Midtown where the average rent fell to $49.30 per square foot from $58.20 per square foot: a 15 percent decline in one quarter. A closer analysis shows that this decrease was largely due to rent changes made at a dozen or more buildings on the upper end of the Plaza district...[that lowered their rent significantly, or removed the rent altogether from the listing."

"The last time that the Midtown average asking rent fell to $49 per square foot (where it is now) from its most recent high was in the third quarter of 2002 which was six quarters after its peak (first quarter of 2001)....If history is to repeat itself, rents will start to rise in the first quarter of 2011. However, the Manhattan availability rate is much higher today (13.7 percent) than it was in 2003 (less than 12 percent) so even if job growth resumes in 2010, which could happen, it may take longer for office rents to turn the corner."

The report noted that "a number of indicators still bode reasonably well" for the city's future. "First, our residential real estate market has not suffered nearly as much as the rest of the U.S....More importantly, foreclosure rates in New York City are considerably lower than the rest of the U.S. Second, the steep drop in asking rents especially in tertiary markets like the Garment Center put the city in a favorable position to lure companies to Manhattan. Finally, job losses have been comparatively more modest than the rest of the U.S. and investors in real estate recognize this. It suggests that New York City is cushioned fro the worst of the recessionary forces. It will take more time for owners to get comfortable with the current prices to start selling, for banks to write down the value of their troubled loans and for lenders in general to finally have enough faith to lend. But when the time comes, New York will see a turnaround in commercial sales ahead of most markets across the U.S."