Citywide, prices per square foot have been rising since the first two quarters of '09, and the availability of better-quality assets has been a major factor. But Knakal pointed out that the improvement in per-square-foot pricing does not signal that the bottom was reached a year ago. Instead, it represents "a natural bounce-back" from pricing that went too far in the opposite direction in the wake of the Wall Street meltdown.

"While we do not see these increases as a clear indication that we have reached an absolute bottom, we do believe that the market is in the process of 'bottoming,'" according to the year-end report.

In fact, there are several factors that will continue to exert downward pressure on pricing, not least of which is the Federal Reserve's exit strategy from TALF. Knakal said it could take a number of forms, which include: the Fed ceasing to buy troubled assets, an increase in the federal funds rate, putting more supply on the market with a resulting decline in values or draining reserves out of the system. Declining employment and deleveraging of commercial debt will also challenge pricing, although the great supply of capital on the sidelines will help strengthen it.

On the demand side, Knakal cited a couple of positive trends. For one thing, institutional capital is coming back into the market, having sat it out for the past year. Another encouraging sign is the influx of foreign investors. Knakal observed that many are not real estate players but have made their fortunes in other sectors. "They're coming to New York City and buying buildings as though they're safety deposit boxes," he said.

Along with a discussion of overall trends, Massey Knakal's media briefing presented year-end reports focused specifically on Manhattan, northern Manhattan, the Bronx, Brooklyn and Queens. These were offered with commentary from local experts, including managing directors Kenneth Krasnow and Kyle Mast.