New York Market Overview

News of Wall Street's financial losses has pushed banks to cut 10,000 jobs and may put more sublease space on the market as they looking for ways to cut back on expenses. Some real estate insiders expect those boardroom decisions to lead to another increase in sublease space in the Manhattan market.

After a strong first half of the year, Manhattan leasing activity declined in the third quarter. But despite the slowdown, which stemmed from a dearth of mega deals, the availability rate and asking rents for the overall market continued to strengthen. Manhattan leasing volume fell from nearly 10.6 million square feet in the second quarter to 6.7 million square feet in the third quarter. The lower volume came after a strong beginning of the year, in which major tenants like Japanese financial giant Nomura Holding America and publishing powerhouse Condé Nast inked deals for 900,000 square feet and up

Average asking rents were up overall and leasing velocity, although down sharply from last quarter, was still in the traditional range. We are back to a normal market in terms of leasing velocity. We had a great first quarter and we had a great second quarter. It is a healthy market. Yet there were causes for concern. The vacancy rate for Midtown Class A properties rose by .1 points to 10.6 percent, in the last quarter there had been negative net absorption in some areas of Manhattan.

Though new development sales slowed severely in Manhattan and Brooklyn in recent months, prices are mostly on the upswing. In Manhattan, the number of sponsor sales recorded in public records declined 18 percent from the second quarter, while Brooklyn declined 34 percent. However, the median sales price per square foot in that same period rose 4 percent in Manhattan to $1,243, and 3 percent in Brooklyn to $594. As for overall sales figures, in Manhattan the median price gained 10 percent since the third quarter of 2010 to about $1.5 million, and in Brooklyn it rose 7 percent to about $600,000.

Foreclosure rates in the New York-White-Plains-Wayne, N.J. areas continued to increase in July over the same period last year, increasing 1.15 percentage points to 5.19 percent, compared with 4.04 percent in July 2010. Foreclosure activity in New York-White Plains-Wayne is lower than the national foreclosure rate, which was 3.44 percent.