"Much has changed for the New York office market in the past year," James Delmonte, VP and director of research for JLL's New York office, says in a release. "Positive absorption levels indicate that activity has finally outpaced new supply coming to the market. As a result, overall vacancy levels improved slightly in Manhattan for the first time in several quarters and average asking rents showed signs of flattening."In Midtown, vacancy rates fell across all property types in Q1, says JLL. The overall vacancy rate in Midtown declined to 13.6%, a 4.9% drop from the 14.3% vacancy seen at the end of 2009. Delmonte notes that as Midtown's less expensive sublease space is spoken for, there may be an increase in asking rents.

He adds, however, that the increase " will be a reflection of the mix of space on the market rather than price adjustments from landlords. Net effective rents, which had fallen by more than 42% from peak levels in 2008, have also begun to flatten. Since concession packages are a leading indicator of market conditions, these changes may be a further sign of market improvement."

JLL's end-of-quarter report coincides with the release of the New York City Office of Management and Budget's monthly report on economic conditions. Using Cushman & Wakefield data, the NYCOMB report for March notes that the city's commercial office market "appears to have stabilized," as leasing activity picks up, vacancies flatten out and rents stop falling.