The city's deterioration of the city's office space market may be easing according to a report issued today by Cushman & Wakefield, one of the city's major commercial real estate brokerages.

The study found that Manhattan has 41.2 million available square feet, the highest total in four-and-a-half years, but in the second quarter of this year only 3.7 million square feet of space was added back to the market, about two million square feet less than the first quarter of the year.

"While we do not expect to see the end of increased availability and declining rents, our midyear statistics certainly give us some optimism that the worst is behind us, as the pace of deterioration has slowed," said Joseph Harbert, chief operating officer of Cushman & Wakefield's New York Metro Region.

Overall leasing activity remained low, totaling 6.3 million square feet at midyear 2009. With leasing activity levels up in June and less space being added to the market, the report said that increases in vacancy also began to slow.

Manhattan's overall vacancy rate at midyear 2009, which includes space available within the next six months, held steady from the previous month at 10.5 percent, the first time there was no month-over-month increase since February 2008, it continued, adding that the overall vacancy rate increased 0.9 percentage points during the second quarter, compared to a 1.6 percentage point increase during the first quarter.

Manhattan's overall availability rate, which includes space available within the next 12 months, increased to 11.5 percent at midyear 2009, according to the report, up from 10.5 percent at the end of the first quarter of 2009.

The average asking rent for Manhattan office space declined to $60.23 per square foot at midyear 2009, down 7.4 percent from $65.01 per square foot at the end of the first quarter 2009, and down 15.9 percent from $71.59 per square foot at midyear 2008, the report maintained.

Average asking rents in Midtown were down 20.4 percent from $83.96 per square foot at midyear 2008 to $66.82 per square foot at midyear 2009. As average asking rents for office space in Manhattan continued to fall, the spread between asking rents for direct space and sublease space increased dramatically from the previous year. In Midtown Manhattan, there was a $12.12 per-square-foot difference between direct and sublease asking rents at midyear 2009, more than four times the $2.67 per-square-foot difference at midyear 2008.

Property sales closed and under contract for transactions priced $10 million and higher totaled $2.5 billion at midyear 2009, compared to $13.8 billion at this time last year.

"We expect to see additional properties brought to market as more owners and lenders will be dealing with the realities of their real estate holdings," said Mr. Harbert. Pricing for major properties that have either closed or gone to contract year-to-date represent more than a 60 percent decline from peak 2007 prices, the report said.

On the stretch of Fifth Avenue from 42nd to 49th Streets, midyear availability remained at 15.3 percent - flat from the end of the first quarter of 2009. On the upper stretch of Fifth Avenue, ranging from 49th to 60th Streets, availability declined to 3.3 percent from 6.5 percent at the end of the first quarter.

The Madison Avenue submarket experienced declines in average ground floor asking rents and an increase in availability. Asking rents fell 21 percent quarter-over-quarter, reaching $745 per square foot at midyear 2009. Availability on the stretch of Madison Avenue from 57th to 72nd Streets increased 2.5 percentage points from the end of the first quarter, to 15.4 percent at midyear 2009.