Grubb & Ellis 2nd Quarter 2009 NYC Market Update

Second Quarter 2009 Office Market Highlights:
• Manhattan availability rose 90 basis points in the second quarter to 14.5%
• Direct Class A average asking rents are down 19% from their 2008 market peak
• Lack of tenant demand caused leasing activity to drop 40% compared to the same time last year
•Negative absorption totaled 6.1 MSF in the first half of 2009, 50% more than recorded in 2008

Click on the picture or click here to read the full report.

Good News Friday - Turning a Corner?

Turning A Corner?

If you missed “Turning a Corner” in the July 2^nd edition of The New York Times, a trip to their Web site is worth your time, particularly because the interactive version of the article is easier to follow. The article describes research done by the Organization for Economic Cooperation and Development on the relationship between industrial production, leading indicators such as consumer confidence and the stock market, and economic cycles since 1969. Noting that leading indicators have turned higher already, the OECD concludes that industrial production is about to follow. Click here to view the interactive graphic.

Several other indicators point to a near-term rebound in production, including the Institute for Supply Management’s manufacturing and non-manufacturing indexes, durable goods orders and factory orders. All of these reports show that new orders are increasing or headed in that direction, and inventories are being depleted, a combination that points to an increase in production activity.

Nonresidential private investment in structures, equipment and software accounts for less than 10 percent of GDP while personal consumption expenditures account for 70 percent, which means that businesses can’t lift the economy out of recession by themselves; they need help from consumers. Nevertheless, business spending will play a supporting role in the coming recovery, particularly as exports to faster-growing markets around the globe begin to rebound. At some point businesses will need to add workers, which will help tip the economy back into a virtuous cycle of growing employment and increased consumer demand.

Grubb & Ellis & Alan Lurie - Five Minutes on Mondays

For those of you who don't know, Alan Lurie who heads up the Project Management group for Grubb & Ellis New York, is also a Rabbi. At our Monday morning meetings, Alan shares his spiritual insights, and he just came out with a book Five Minutes on Mondays. Here's a segment on Fox News discussing Grubb & Ellis, David Arena, Alan Lurie, and Alan's book.

Good News Friday (On Wednesday) Silver Lining

Silver Lining

It’s tough to find the good news in this morning’s payroll employment report from the Bureau of Labor Statistics. Employers shed 467,000 jobs (net) in June, ending the four-month string of lessening monthly losses, while the unemployment rate increased a tenth of a percentage point to 9.5 percent. Job losses since the recession began now total nearly 6.5 million. Where’s the good news in that, you say?

- Keep in mind that employment is a lagging indicator and is unlikely to turn around until next year. Today’s report does not change the outlook held by a majority of economists that the recession will end later this year as GDP turns positive in the third or fourth quarters.

- A sluggish recovery should minimize the potential for an outbreak of inflation. It should help keep interest rates and oil prices low, thereby providing some support for consumer spending, the housing market and the financial sector despite the rising unemployment rate.

- A gradual recovery will provide cover for the Federal Reserve to tighten interest rates and withdraw liquidity from the credit markets in an orderly fashion. If inflation were to flare up, the Fed might need to act precipitously, thereby increasing the potential for back-to-back recessions as in the early 1980s.

- Don’t forget that the 467,000 jobs lost in June is a net number. In the third quarter of 2008 (the most recent data available from the BLS), private employers added 6.8 million jobs and eliminated 7.8 million. Of the 6.8 million jobs added, 5.5 million were at expanding businesses, and 1.3 million were at new businesses. Employers are adding new jobs all the time, and eventually, the balance will shift back into the black with more jobs created than eliminated.

-Lastly, the health care and social assistance sector keeps chugging along with 21,000 net new positions created in June. Educational services also added 13,000.