NEW YORK CITY—In examining the Bloomberg administration's $68.7-billion preliminary budget for 2013 and long-range financial plan for 2016, an analysis released by the New York City Independent Budget Office shows that the five boroughs will demonstrate stronger gains in employment than in income, resulting in a mixed picture for commercial real estate. According to the report, IBO projects that the city will gain 435,000 jobs over the next five years, despite continued weakness in Wall Street revenues, salaries and tax collections for the city.

Kenneth J. McCarthy, senior economist and senior managing director of research at Cushman & Wakefield, tells Real Estate Forum that while job growth will depend on the pace of the overall recovery, office vacancy rates will continue to trend lower and rents will trend higher in Manhattan. As of year-end 2011, C&W reported that Manhattan's overall office vacancy was 9.1%, down from 10.5% in 2010.

"New York City right now has one of the lowest vacancy rates in the country," McCarthy says. "To see healthy job growth in an environment with already-low vacancy rates—along with no new construction due for delivery in the short term—is pretty positive. Overall these numbers suggest that the market should continue to do well."