"Based on our analysis, market performance during the first half of the second quarter was essentially a continuation of the first quarter as demand for space weakened at a very rapid pace," according to the FSW report, which notes that Manhattan's availability rate rose from 12% in Q1 to 13.4% this quarter, with 4.7 million additional square feet put back on the market. That rapid pace slackened during the quarter's second half as the net total of available space added to the market "actually slowed noticeably. While this is only fragmentary evidence, it might be a significant development that represents a 'green shoot' of a nascent recovery."

Mark Jaccom, CEO of FSW, adds in a release, "As the quarter ended, we also found that firms that earlier were not even beginning the decision-making process quickly shifted and ramped up their search activity." The report says the change in tenants' attitude coincided with a generally more upbeat feeling about both the national and regional economies, as the stock market rebounded, he bankruptcy filings of Chrysler and General Motors staved off a shudown of the auto giants and spending from the stimulus package continued to trickle into the national economy.

On a more local level, the report cites the major banks that have received permission to repay their TARP money and have acted quickly to do so. Additionally, for these banks the level of trading activity has jumped; bond issuance has also increased; and net interest margins are fairly wide. "All of these developments are fueling projections that the major financial institutions will end 2009 with stronger balance sheets and substantial gains in annual revenues," the report says.