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End to the free-fall in sight.

The surge in office leasing which pushed the office vacancy rate down to 16.8 percent in December, as compared with 17.6 percent in December, 1991, is solid evidence that the real estate industry is on the road to recovery.

Of course, there is still an abundance of vacant space, particularly in the newer office buildings in Manhattan. However, if the recent upswing in leasing activity is a barometer of things to come, we can expect that the space, in time, will be absorbed.

A return to the glory days of the 1980's is unlikely, but the real estate industry's long fall may at last be over; a turnaround is clearly at hand.

At Newmark, we have found that non-profit agencies that are with the social problems that trouble New York, as well as small businesses, are absorbing substantial blocks of office space. Reasonable rentals and favorable lease terms are especially attractive to the non-profit organizations.

However, how rapidly and to what extent the commercial real estate market recovers will depend largely on the lending policies of those banks that have been reluctant to make loans.

If banks want to encourage investment and business expansion, it is essential that they become more receptive to the financing of new projects and the refinancing of sound existing properties.

While the commercial market was in the doldrums, banks rejected out-of-hand virtually any kind of loan proposal. Now, they must carefully evaluate reasonable lending opportunities, and become more flexible in their policies. In this way, they can play a major role in reviving the economic health of the industry, and the city.
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Title Annotation:Review & Forecast, Section I; increase in office leasing activity in New York, New York indicates recovery of real estate market
Author:Gurla, Aaron
Publication:Real Estate Weekly
Date:Jan 27, 1993
Words:269
Previous Article:Foreign buyers make subtle shifts.
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