After a tough year in 2010, a private commercial real estate firm in New York reported today that office rents in Manhattan are on the rise for the first time since the commercial decline began[1]. While New York real estate has been typically resilient – particularly in the rental sector – when it has come to regaining value and encouraging new development, retail and office spaces have continued to suffer in the city. Now, however, it looks like that trend could be reversing before many experts expected it to do so.

Landlords in the area are seeking rents at $53.34 per square foot, which is up 54 cents from the preceding quarter. Furthermore, even though rents are on the rise, more businesses are leasing space – about 7.5 million square feet were leased in the fourth quarter of 2010 – as renters and lessees try to move into space before rents escalate further. This movement lowered office vacancy rates to 10.5 percent at the end of 2010 and bodes well for 2011.

In New York City, unemployment is on the decline as well, falling to 9.1 percent. That is the lowest number since April of 2009, and the Department of Labor for the state predicted that employment would continue to rise in the area, thereby boosting more office rents and rental volumes. Many analysts consider New York City more of a unique situation than a bellwether, but the signs definitely look good for the area and it’s possible that commercial investors elsewhere can adjust their investing strategies based on what is happening in the “Big Apple.” Does this news make you optimistic about commercial real estate everywhere or does it just make you want to invest in New York?

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