2002 Office Recovery Doubtful

NEW YORK CITY-For those few cockeyed optimists still clinging to hopes of an ’02 recovery in the city’s office sector, mid-year reports from Standard & Poor’s, Trammell Crow Co. and Grubb & Ellis probably won’t make good bedtime reading. A better choice would be Insignia/ESG’s Long Island overview, which credits a diverse industry mix with overcoming the economic challenges of the past two years.

S&P’s analysis, “The New York City Office Market Faces Challenges in its Recovery,” predicts that the erosion in pricing of the past two years will continue as additional sublease space hits the market, capital flows expand to other sectors and hoped-for rent hikes fail to materialize.

In addition, S&P expects the US economic recovery to be sluggish, employment to grow slower than usual and Wall Street to remain a weak sister. That combination puts New York in the same boat as other US cities, all of which are likely to face a series of fiscal fits and starts over the next few years. Factor in the effects of Sept. 11 on the local economy and New York looks especially vulnerable.