"Since the financial services industry is tied so closely to occupancy in Manhattan, it makes sense that any effect in that industry would affect the real estate market," JLL's James Delmonte tells GobeSt.com. "If you look at the chart, it appears that the stock market bottomed out in the first quarter of 2009, so if the 12-month correlation holds true, we should see asking rents reach bottom in the first or second quarter of this year."
Since the stock market's post-Lehman dive, the S&P 500 has rebounded. Does this mean that rents will start climbing later this year? "This downturn may be different; the lag may be a little longer," says Delmonte, VP and director of research for JLL's New York office.
For one thing, there's the fact that the stock market has gone on something of a rollercoaster ride over the past 12 months, thus making rent increases harder to peg. In fact, Delmonte says, "Our forecast is that rents will be essentially flat this year."
JLL predicts more Manhattan leasing activity this year than there was in'09, particularly when comparing the first half of last year to what we'll see in the first to quarters of this one. "In the first six months of '09, most people were just waiting on the sidelines to see where the market would go," Delmonte says.
He adds, however, "I'm not sure I'd say it will be back to historical levels. Much of the activity will be renewals and relocations, given the fact that we haven't returned to any kind of growth in office-using employment. So there isn't likely to be a lot of substantial absorption this year."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
