2Q16 OFFICE MARKET OVERVIEW TABLE OF CONTENTS

3 Introduction

4 Executive Summary 21 Development Overview 5 NYC Market Perceptions: Broker Opinion Poll 22 Commercial Development Pipeline 6 Manhattan Office Market Overview 23 Commercial Development Horizon Map 24 World Trade Center Development Overview 7 Leasing Activity by Market 25 Far West Side Development Overview 8 Top Transactions 2Q16 26 Midtown East Development Overview 9 Industries Driving Leasing 10 Manhattan Submarket Comparison 27 Boutique Development Overview 11 Asking Rent Trends 12 Taking Rent Trends Brooklyn and Long Island City 28 13 Taking Rent Corridor and Submarket Comparisons Office Market Analysis 14 Net Effective Rent Trends 29 Brooklyn Office Development in the Pipeline Map 15 Concessions Analysis: Work Amount 30 Brooklyn’s Changing Inventory 16 Concessions Analysis: Free Rent 31 Brooklyn Market Trends: Overall 17 Triple-Digit Taking Rent Assets 32 Brooklyn Market Trends: Prime 18 Manhattan Top-Tier Trends 33 Brooklyn Submarket Snapshot 19 Top-Tier Trends 34 Asking Rent Comparison

20 Enhancing Image: Lobby Renovation Analysis 35 Long Island City Trends 36 Long Island City Submarket Snapshot

2 2Q16 INTRODUCTION

3 EXECUTIVE SUMMARY

 Second quarter Manhattan leasing outpaced the 10-year quarterly average, as renewal activity counterbalanced a drop in tenant relocations. A strong quarter for Midtown outpaced below-average leasing for Midtown South and Downtown.

The financial sector and  FIRE and health care tenants drove top deals in the second quarter. TAMI leasing was muted relative to recent quarters.

renewals drove second  Asking and net effective rents continued to climb, with Midtown South outpacing growth in Midtown and Downtown. Several Midtown South submarkets are now priced competitively with Midtown.

quarter leasing, while  Downtown asking and taking rents reached a historic high during second quarter 2016, as the FIRE and TAMI sectors solidified their presence in the market.

pricing and other market  Availability held steady from the prior quarter and the prior year. However, new construction combined with shadow space and future large-block lease expirations are expected to push the availability rate up.

fundamentals held  Property owners have increasingly considered strategies to enhance their building’s competitive advantage ahead of large-block availabilities steady. anticipated in Midtown.  Over 15 million square feet of development projects in Manhattan are scheduled for completion by 2020. Another 14 million square feet are in the pipeline.

4 NEW YORK CITY MARKET PERCEPTIONS Broker Opinion Poll: A Survey of NGKF Brokers

1. WHAT CAN WE EXPECT IN LEASING OVER THE NEXT YEAR? 2. WHAT IMPACT WILL BREXIT HAVE ON NEW YORK CITY’S COMMERCIAL REAL ESTATE MARKET?

12% Other Stability 46%

Improvement 0% 28% Negligible: 47% Positive: New York City’s It will drive economy is not additional Slow-Down 52% entangled with the investment to U.K. New York City Other 2%

0% 10% 20% 30% 40% 50% 60% 14% Negative: It will create lasting uncertainty in the market

3. WHICH OF THE FOLLOWING ATTRIBUTES HAS THE GREATEST Additional Comments: IMPACT ON A BUILDING’S COMPETITIVENESS IN ATTRACTING TENANTS? • Negligible, as there will be a transition period of some length. If corporate tax reduction here is effected, there should be a positive impact on U.S. companies. 80% With the initial uncertainty there should be an inflow of foreign capital seeking 70% relative safety. 60% • Positive to capital markets, negative to leasing. 50% 40% • Slight positive with some financial institutions expanding. 30% 20% • Long-term money will buy "cheap" properties in London. This will cool slightly the 10% NYC market. 0% Amenities Location Stable and Lobby and Consistent Building Ownership Aesthetics

5 2Q16 MANHATTAN OFFICE MARKET OVERVIEW

6 LEASING ACTIVITY BY MARKET First Half Leasing

Key Relocation activity kept Manhattan leasing stable compared to the prior year and ten-year Takeaway average.

Manhattan (MSF) Midtown (MSF) 25 14

12 20 19.2 MSF 10 10.4 MSF

15 8

10 6 4 5 2

0 0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Relocations Renewals Average First Half Velocity Relocations Renewals Average First Half Velocity

Midtown South (MSF) Downtown (MSF)

8 6 7 5 6 5.6 MSF 4 5 4 3 3.3 MSF 3 2 2 1 1

0 0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Relocations Renewals Average First Half Velocity Relocations Renewals Average First Half Velocity

Source: Newmark Grubb Knight Frank Research

7 TOP TRANSACTIONS 2Q16 Manhattan

• Seven of the top 10 transactions Company Address Market SF Lease Type Industry were FIRE tenants, and two were UBS 1285 Avenue of the Americas Midtown 890,861 Renewal FIRE health care. None were TAMI.

• 60% of the top 10 deals were NYU Langone Medical Center 222 East 41st Street Midtown 389,522 Direct New Health Care renewals.

PricewaterhouseCoopers 90 Midtown 240,605 Direct New FIRE • Nine of the top 10 transactions occurred in Midtown. Visiting Nurse Services of New 220 East Midtown 237,434 Direct New Health Care York

D.E. Shaw 1166 Avenue of the Americas Midtown 195,375 Renewal FIRE

Credit Suisse 11 Midtown South 186,396 Renewal FIRE

Professional Alston & Bird 90 Park Avenue Midtown 122,525 Renewal Services

Merrill Lynch 75 Rockefeller Plaza Midtown 122,418 Direct New FIRE

New York Life Insurance Renewal & 420 Midtown 114,709 FIRE Company Expansion

Wells Fargo Capital Finance 100 Park Avenue Midtown 103,000 Renewal FIRE

FIRE = Finance, Insurance, and Real Estate TAMI = Tech, Advertising, Media, and Information

Source: Newmark Grubb Knight Frank Research

8 INDUSTRIES DRIVING DEMAND

Key FIRE activity gained momentum while leasing among TAMI industries dropped in comparison Takeaway to recent years.

2Q16 Leasing by Industry FIRE versus TAMI Leasing Activity

50% 100% Other Other Other 16% 8% 10% Apparel & 90% Apparel & Retail, 4% Apparel & Retail, 4% Retail, 2% 45% 80% 40% TAMI TAMI 28%

70% 20% 35% 60% TAMI 30% 34% Prof Svcs 54% Prof Svcs

12% 30% 29%

50% 14%

27% 26%

40% 20%

30% Prof Svcs FIRE 12% FIRE 16% 50% 20% 47% 10%

FIRE 10% 21%

0% 0% Midtown Midtown South Downtown 2013 2014 2015 2016 YTD

TAMI FIRE

Source: Newmark Grubb Knight Frank Research

9 MANHATTAN SUBMARKET COMPARISON

Key Midtown South submarkets and the Far West Side have seen the greatest growth in rental Takeaway rates during this market cycle.

Availability Average Asking Asking Rent Growth Since 2010 Rate Rent ($/SF) MANHATTAN 11.1% $76.25 Eastside 57% Midtown 11.5% $82.54 Far West Side 100% Eastside 9.3% $74.09 Grand Central 50% Far West Side 13.8% $83.19 Grand Central 15.5% $77.59 Murray Hill 50% Murray Hill 10.4% $61.60 Park Avenue 57% Park Avenue 11.3% $103.24 Penn Station 82% Penn Station 8.5% $64.52 Plaza District 69% Plaza District 14.2% $110.57 Sixth Ave/Rock Ctr. 49% Sixth Ave/Rock Ctr. 11.1% $88.07 10.6% $81.82 Times Square 44% Times Square South 10.4% $62.18 Times Square South 69% Westside 9.0% $70.34 Westside 67% Midtown South 7.8% $71.98 Chelsea 97% Chelsea 7.6% $65.47 East Village 120% East Village 0.8% $60.78 Flatiron/Union Square 7.9% $71.07 Flatiron/Union Square 67% Hudson Square/Meatpacking 10.7% $83.96 Hudson Square/Meatpacking 200% Soho/Noho 4.9% $70.22 Soho/Noho 60% Downtown 12.4% $61.85 Downtown East 59% Downtown East 11.3% $57.18 Downtown West 64% Downtown West 13.1% $67.73 Tribeca/City Hall 16.3% $61.26 Tribeca/City Hall 49%

Source: Newmark Grubb Knight Frank Research

10 ASKING RENT TRENDS Average Asking Rent by Market ($/SF)

Key Year-over-year asking rent growth continued generally on pace with rent growth over the last Takeaway six years.

Average Annual Change Since Trough (2010) Change since 2015

$95 MT 6.4% MT 6.8% $89.02 MTS 10.1% MTS 7.6%

$85 DT 7.9% DT 8.8% $82.54

$75

$71.98 $65 $58.93 $57.02 $61.85 $55

$51.56 $45 $40.76

$39.28 $35

$25 2Q05 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16

Midtown Midtown South Downtown

Source: Newmark Grubb Knight Frank Research

11 TAKING RENT TRENDS Average Annual Taking Rent by Market ($/SF)

Key Midtown South and Downtown lead taking rent growth in the recovery, but recently that growth Takeaway has slowed. Meanwhile, Midtown has picked up.

Average Annual Change Since Trough (2009-2010) Change Since 2015

$95 MT 4.7% MT 5.4%

MTS 8.7% MTS 2.7%

$85 DT 7.1% DT 3.1%

$75.18 $75 $74.48

$65 $68.38

$53.07 $55 $54.01 $52.31

$44.26 $45

$38.05

$35 $34.70

$25 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Midtown Midtown South Downtown

Source: Newmark Grubb Knight Frank Research *Midtown 2016 YTD average impacted on a weighted basis by Citadel deal at 425 Park. Including that deal, the average is pushed to $80.74/SF.

12 TAKING RENT CORRIDOR AND SUBMARKET COMPARISONS Average taking rents for direct deals with +5-year terms

Key The Far West Side and Hudson Square/ Meatpacking captured higher taking rents than Takeaway and six other Midtown submarkets.

Average Base CENTRAL Average Base By Submarket Market PARK By Corridor Market Taking Rent ($/SF) Taking Rent ($/SF) PLAZA DISTRICT Park Avenue MT $109.99 Park Avenue MT $117.20 WESTSIDE EASTSIDE PARK SIXTH AVE Upper AVE/ MT $105.85 Plaza District MT $98.18 ROCK (47th - 65th Streets) TIMES CTR SQUARE G.C. Far West Side MT $81.83 STATION MTS $83.28 41ST ST PORT AUTHORITY GRAND CENTRAL Avenue of the Hudson Square/ FAR TIMES SQUARE MTS $81.29 SOUTH MT $77.37 Meatpacking WEST Americas SIDE PENN MURRAY HILL PENN STATION 32ND ST Sixth Ave/Rock Ctr. MT $78.94 30TH ST STATION Madison Avenue MT $76.13

Westside MT $72.05 FLATIRON/ Lexington Avenue MT $76.02 UNION CHELSEA SQUARE Eighth Avenue MTS $69.63 Eastside MT $68.05

UNION SQUARE 14TH ST East 40s MT $69.00 Penn Station MT $67.78

6TH AVE 6TH Park Avenue South MTS $68.70 HUDSON Grand Central MT $66.64 SQUARE/ MEATPACKING Fifth Avenue MTS $67.31 Chelsea MTS $65.11 EAST West 40s MT $66.98 NOHO/ VILLAGE SOHO Lower Fifth Avenue Flatiron/Union Square MTS $64.48 MT $66.07 (32nd - 47th Streets) Times Square South MT $62.25 MT $66.07

Downtown West DT $60.74 TRIBECA/ CITY HALL Madison Avenue MTS $65.30

CITY Times Square MT $59.80 HALL Broadway MT $63.84 DOWNTOWN WEST Downtown East DT $49.65 DOWNTOWN West 20s MTS $63.23 EAST Midtown East 20s MTS $60.69 Midtown South Downtown Broadway DT $53.65 *Park Avenue Submarket and Corridor averages are impacted on a weighted basis by Citadel deal at 425 Park. Water Street DT $51.71

Source: Newmark Grubb Knight Frank Research

13 NET EFFECTIVE RENT TRENDS Average net effective rents for direct deals with +5-year terms

Key Net effective rent growth slowed in the first half of 2016. Meanwhile, the delta between Midtown Takeaway South and Downtown has nearly evaporated.

NER Rent Trends Difference Between Taking Rent and NER

$70 30%

$65 $63.16 25% 25% $61.56 $60 Downtown property 20% owners boosted concessions to $55 18% land large tenants relocating from other markets. $50 15%

$45 11% 10% $41.91 With large-block $40 As conditions availabilities expected improved and taking in Midtown, owners again rents increased, Midtown increased concessions. 5% owners pulled back on $35 concessions.

$30 0% 2010 2011 2012 2013 2014 2015 2016 YTD 2010 2011 2012 2013 2014 2015 2016 YTD

Downtown Midtown Midtown South Downtown Midtown Midtown South

Source: Newmark Grubb Knight Frank Research *Midtown 2016 YTD average NER impacted on a weighted basis by Citadel deal at 425 Park. Including that deal, the average is pushed to $68.24SF.

14 CONCESSIONS ANALYSIS Work amount for direct deals with +10-year terms, +10K SF

Key Work allowances have jumped in most Takeaway submarkets, particularly in Midtown.

2016 YTD Average Work Amount ($/SF) Percent Change Year Over Year

Plaza District $96.05 28% Grand Central

Grand Central $84.70 22% Plaza District

Park Avenue $83.39 18% Chelsea

Westside $79.38 17% Penn Station

Times Square South $76.15 14% Park Avenue

Sixth Ave/Rock Ctr. $72.50 5% Westside

Penn Station $70.00 5% Sixth Ave/Rock Ctr.

Eastside $68.44 5% Hudson Square/Meatpacking

Hudson Square/Meatpacking $66.99 4% Eastside

Downtown East $63.08 3% Flatiron/Union Square Chelsea $62.50 3% Times Square South

Flatiron/Union Square $60.00 -6% Downtown East

Downtown Midtown South Midtown Downtown Midtown South Midtown

Source: Newmark Grubb Knight Frank Research

15 CONCESSIONS ANALYSIS Free rent for direct deals with +10-year terms, +10K SF

Key Free rent has been more stable than work Takeaway allowances over the last year.

2016 YTD Free Rent (Months) Percent Change Year Over Year

Times Square South 10 13% Plaza District Penn Station 10 13% Chelsea

Park Avenue 10 11% Times Square South 11% Hudson Square/Meatpacking 10 Penn Station

No Change Chelsea 9 Park Avenue No Change Sixth Ave/Rock Ctr. 9 Hudson Square/Meatpacking No Change Plaza District 9 Grand Central No Change Grand Central 9 Downtown East -11% Westside 9 Eastside -11% Eastside 8 Westside -13% Downtown East 8 Flatiron/Union Square -13% Flatiron/Union Square 7 Times Square -18% Times Square 7 Sixth Ave/Rock Ctr.

Downtown Midtown South Midtown Downtown Midtown South Midtown

Source: Newmark Grubb Knight Frank Research

16 TRIPLE-DIGIT TAKING RENT ASSETS Number of buildings that signed $100+ taking rents each year

Buildings with $100+ Taking Rents Key The number of buildings that achieved triple-digit In 2016 YTD rents remained on par with the same time last Park Avenue Takeaway year. 667 Madison Avenue 280 Park Avenue 350 Park Avenue 60 375 Park Avenue 499 Park Avenue 50 601 Lexington Avenue 17 Plaza District 10 East 15 437 Madison Avenue 40 650 Madison Avenue 660 Madison Avenue 15 767 Fifth Avenue 30 Sixth Avenue/ 12 1095 Avenue of the Americas 8 1114 Avenue of the Americas 8 1330 Avenue of the Americas 20 11 39 7 Times Square South 34 7 Bryant Park Westside 3 26 26 10 4 21 20 17 250 West 15 16 11 Chelsea 8 111 Eighth Avenue Hudson Square/ Meatpacking 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 404 West 14th Street 860 Washington Street 1Q-2Q 3Q-4Q Soho/Noho 770 Broadway Source: Newmark Grubb Knight Frank Research

17 MANHATTAN TOP-TIER TRENDS Transactions with taking rents over $100/SF

Key Most triple-digit deals are relocations under 20,000 square feet. Large relocations make up Takeaway the smallest share of top-market transactions.

100

16

75 26

50 22 9 16 19 7 74 12 58 13 25 15 8 9 46 38 38 34 29 31 4 6 24 11 18 17 13 19 4 5 11 10 3 2 8 6 7 4 0 3 1 1 1 3 3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Transactions Under 20K SF: Relocations Renewals and Expansions Transactions Over 20K SF: Relocations Renewals and Expansions

Source: Newmark Grubb Knight Frank Research

18 MIDTOWN SOUTH TOP-TIER TRENDS Transactions with taking rents over $60/SF

Key Like Midtown, smaller relocations make up the majority of top-of-the-market transactions in Takeaway Midtown South.

80

70 11

60

50 5

40 10 6

30 60 8 14

43 20 35 36 4 3 24 5 10 2 21 2 6 3 14 14 9 2 1 5 9 6 6 1 1 1 0 4 5 3 3 0 2 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Transactions Under 20K SF: Relocations Renewals and Expansions Transactions Over 20K SF: Relocations Renewals and Expansions

Source: Newmark Grubb Knight Frank Research

19 ENHANCING IMAGE: LOBBY RENOVATION ANALYSIS Impact of Lobby Renovations for Select Class A Midtown Buildings

Additional Lobby Renovations Average Taking Rent in the Pipeline Pre-Renovation $62.28/SF 1155 Avenue of the Americas

1271 Avenue of the Americas Lobby Renovation Completed 2013-2015 575 Fifth Avenue

12 East 49th Street

Average Taking Rent 65 East 55th Street Post-Renovation $73.58/SF 237 Park Avenue

399 Park Avenue Percent Change +18.1% 605 Third Avenue (+27.3% when adjusted for floor)

20 2Q16 MANHATTAN DEVELOPMENT OVERVIEW

21 COMMERCIAL DEVELOPMENT PIPELINE Manhattan (MSF)

Key The delivery of marked the first building to open of a total 16.75M SF of new Takeaway construction planned at the Far West Side.

2014 837 Washington Street 2017 390 Madison Avenue 2019 1 16 1 WTC 540 West 26th Street 512 West 22nd Street 2015 7 Bryant Park 76 Eleventh Avenue 106 West 56th Street 430 West 15th Street 2 Pike Street 14 2020 Avenue 2016 10 Hudson Yards 2018 300 Lafayette Street 860 Washington Street 3 WTC TBD 855 Avenue of the Americas 425 Park Avenue 2 WTC 12 2 Manhattan West 89 Bowery 61 Ninth Avenue 66 Hudson Boulevard 40 Tenth Avenue 10 414 West 15th Street 438 Eleventh Avenue 75 Ninth Avenue 44 Union Square East

8 New Expected Potential Construction Delivery Delivery 6 85.0 MSF 15.4 MSF 13.7 MSF

4

2

0

TBD

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Newmark Grubb Knight Frank Research

22 3Q14 MANHATTAN DEVELOPMENT UPDATE

FAR WEST SIDE MIDTOWN EAST

4b 66 HUDSON 6 5 6 4a BOULEVARD 7 BRYANT PARK 1 3d MANHATTAN WEST 3b ONE VANDERBILT 3c 4a 3 HUDSON 2 AVENUE 425 PARK BOULEVARD 3a 4b AVENUE 5 450 WEST 33rd STREET 390 MADISON 2 AVENUE

55 HUDSON 3b YARDS 3a 1

3d

3c Retail space 10, 30 & 50 HUDSON YARDS

WORLD TRADE CENTER AND DOWNTOWN

2 WTC 1 2

Memorial 3 1 WTC 4 WTC Transportation Hub

3 WTC 4 WTC DEVELOPMENT OVERVIEW World Trade Center

WORLD TRADE CENTER

PORT AUTHORITY SILVERSTEIN PROPERTIES OF NY/NJ, DURST 1 World 2 World 3 World 4 World 2 1 Trade Center 2 Trade Center 3 Trade Center 4 Trade Center 1 3,000,000 SF 2,800,000 SF 2,500,000 SF 2,300,000 SF 5

4Q 2014 TBD 2018 4Q 2013 8

Completed Planned Under Construction Completed 7 104 stories 88 stories 80 stories 72 stories 6 Signed Condé Nast, 3 Signed MediaMath, Moody’s, High 5 Seeking an Signed GroupM Morningstar, IEX, and Games, xAd, and anchor tenant public sector tenants others

4 INFRASTRUCTURE AND AMENITIES

WTC Retail at Westfield World Fulton Center Transportation 5 6 Brookfield Place 7 8 Trade Retail Hub

2014 2015 2016 2016

Completed Completed Completed Completed

Source: Newmark Grubb Knight Frank Research

24 DEVELOPMENT OVERVIEW Far West Side

FAR WEST SIDE

MITSUI FUDOSAN, THE RELATED BROOKFIELD THE RELATED BROOKFIELD BROOKFIELD MOINIAN TISHMAN THE RELATED OXFORD, COMPANIES PROPERTIES, QIA COMPANIES PROPERTIES, QIA PROPERTIES, QIA GROUP SPEYER COMPANIES RELATED 450 W 33rdSt / 10 Hudson 55 Hudson 30 Hudson 1 Manhattan 2 Manhattan 3 Hudson 66 Hudson 50 Hudson 5 Manhattan 11 Yards 22 3 Yards 44 Yards 5 West 6 West 77 Boulevard 8 Boulevard 9 Yards West 1,700,000 SF 1,800,000 SF 1,300,000 SF 2,600,000 SF 2,100,000 SF 2,100,000 SF 1,800,000 SF 2,850,000 SF 2,300,000 SF 2016 2016 (Renovation) 2018 2019 2019 TBD TBD TBD TBD Completed Under Renovation Under Construction Under Construction Under Construction Planned Planned Planned Planned 52 stories 16 stories 50 stories 90 stories 67 stories 67 stories 66 stories 70 stories 62 stories Tenants include Tenants include Tenants include Mixed-use Mixed-use Coach, L’Oréal, Signed Boies, Signed Project in early Project in early Chase Digital Media, Time Warner, HBO, development development BCG, SAP, Vayner Schiller & Flexner Skadden Arps stages of planning stages of planning Markit Group CNN, KKR possible possible Media

INFRASTRUCTURE AND AMENITIES 7 8

7 Train Extension East Platform : : 3 9 to 34th Street Over Rail Yards Residential Residential, Hotel, Retail 4 5 Completed 2018 TBD TBD 2 Mixed-use Under Construction Under Construction Planned 6 development possible

1 Source: Newmark Grubb Knight Frank Research

25 DEVELOPMENT OVERVIEW Midtown East

59th Street MIDTOWN EAST

3

L&L HOLDING BANK OF CHINA L&L HOLDING, RREEF SL GREEN COMPANY 7 Bryant 390 Madison 425 Park One Vanderbilt 1 2 3 4 Park Avenue Avenue Avenue 473,000 SF 843,710 SF 670,000 SF 1,800,000 SF 2015 2017 2018 2020 Completed Under Renovation Under Construction Planned 28 stories 32 stories 47 stories 65 stories L&L will restack the Signed TD Bank. Signed Bank of China Signed Citadel building to alter height and Demolition has and Schroeders 2

bulk commenced Avenue Fifth SecondAvenue

EAST MIDTOWN REZONING

The Vanderbilt Greater Corridor East Midtown 4 The City approved rezoning of the Vanderbilt Corridor The City is also exploring a more comprehensive including zoning applications for One Vanderbilt. The rezoning of Greater East Midtown. A stakeholder initiative will increase the potential for office committee developed a set of principles that will shape development in exchange for public improvements and the rezoning effort. TDRs. 1 Stakeholder committee recommendations The City approved zoning applications released in 2015. Rezoning expected to (ULURP) in May 2015. begin in 2016.

Source: Newmark Grubb Knight Frank Research, NYC Department of City Planning 37th Street

26 DEVELOPMENT OVERVIEW Boutique Development

BOUTIQUE DEVELOPMENT

Rendering Rendering not yet not yet available available

VORNADO REALTY THE RELATED ROMANOFF EQUITIES CIM GROUP WING FUNG GROUP HFZ CAPITAL TRUST, ALBANESE COMPANIES ORGANIZATION 860 Washington 432 Park 76 Eleventh 300 Lafayette 512 West 89 Bowery Street Avenue Avenue Street 22nd Street Midtown South Midtown Midtown South Midtown South Midtown South Midtown South 120,413 SF 71,000 SF 23,831 SF 242,750 SF 81,000 SF 170,000 SF 2016 2016 2016 2017 2017 2017 Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction 10 stories 6 stories 9 stories 3 stories 7 stories 11 stories BOUTIQUE DEVELOPMENT

Rendering not yet available

AURORA, WILLIAM SAVANNA YEUNG REAL ESTATE VORNADO REALTY TRUST LM LEGACY GROUP SAVANNA, ATOM ASSETS GOTTLIEB REAL ESTATE 540 West 414 West 2 Pike Street 61 Ninth Avenue 40 Tenth Avenue 106 West 56th Street 26th Street 15th Street Midtown South Midtown South Midtown South Midtown South Midtown South Midtown 128,367 SF 93,000 SF 167,170 SF 144,273 SF 116,205 SF 90,000 SF 2017 2017 2018 2018 2018 2019 Planned Planned Planned Under Construction Planned Planned 9 stories 14 stories 10 stories 18 stories 12 stories 26 stories

Source: Newmark Grubb Knight Frank Research

27 2Q16 BROOKLYN AND LONG ISLAND CITY OFFICE MARKET ANALYSIS

28 BROOKLYN OFFICE DEVELOPMENT PIPELINE New Construction and Repositioned Buildings

Submarket DUMBO DOWNTOWN BROOKLYN NAVY YARDS

Rendering not yet available Boston Triangle Cibrano Jehovah JEMB Realty Tishman Quinian Dev Brooklyn Navy Yard Development Westbrook Madison Owner/ Prop, Rudin Assets Family Witnesses Corp Speyer Group, BLT Corp. Partners, RXR Realty Capital Developer Mgt 25-30 10 Jay 80 Hudson 420 Albee 422 Fulton 41 Flatbush GMC Building Building Dock 47 Hall 29 Ryerson Building Columbia Street Avenue Square Street Avenue Building 128 77 3 72 Street Street Address Heights Size (SF) 206,000 90,285 750,000 400,000 TBD 270,910 215,000 1,100,000 700,000 675,000 650,000 215,000

Year Open 2016 2016 2018 2018 TBD 2016 2016 2017 2017 2018 TBD TBD New New New Project Type Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Construction Construction Construction Status Underway Underway Planned Proposed Planned Underway Underway Underway Planned Proposed Planned Proposed

Submarket SUNSET PARK RED HOOK WILLIAMSBURG BUSHWICK

Rendering not yet available

Jamestown, Madison Normandy, Savanna, Lincoln Owner/ Thor Estate Heritage Two Trees Cayuga Heritage Belvedere Cap, Realty PWR Royalton, Hornig Property Developer Equities Four Equity Management Capital Equity Angelo Gordon Capital Sciame Capital Group Building Domino Sugar Industry City Whale Square 280 Richards 160 Van 68 Ferris 25 Kent 87 Wythe 333 Johnson 215 N. Moore 95 Evergreen 455 Jefferson Address Factory 32nd - 41st St. 14 53rd St. Street Brunt Street Street Avenue Avenue Avenue Street Avenue Street Phase 1 Size (SF) 6,000,000 405,416 300,000 111,565 1,200,000 400,000 380,000 100,000 285,000 170,000 165,000 122,700

Year Open In phases 2016 TBD 2016 2020 2018 TBD 2017 2017 2017 2016 2016 starting 2015 New New New New Project Type Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Construction Construction Construction Construction Status Underway Underway Proposed Completed Proposed Proposed Planned Planned Planned Planned Completed Underway

Source: Newmark Grubb Knight Frank Research

29 BROOKLYN’S CHANGING INVENTORY Impact of New Construction and Repositioned Buildings

DOWNTOWN SUNSET WILLIAMSBURG/ DUMBO NAVY YARD BROOKLYN PARK BUSHWICK

2013 Inventory (SF) 15,985,404 6,000,000 3,254,111 1,532,155 1,698,330

Current Inventory (SF) 16,104,268 6,405,416 3,908,181 1,615,245 2,875,330

Projected Inventory (SF) 16,504,268 6,405,416 4,658,181 3,270,245 4,415,330 Through 2018

Inventory Differential (SF) 518,864 405,416 1,404,070 1,738,090 2,717,000 2013-2018

3.2% 6.8% 43.1% 113.4% 160.0% SF DIFFERENCE SF DIFFERENCE SF DIFFERENCE SF DIFFERENCE SF DIFFERENCE 2013-2018 2013-2018 2013-2018 2013-2018 2013-2018

Source: Newmark Grubb Knight Frank Research

30 BROOKLYN MARKET TRENDS Overall Average Asking Rent and Availability

Key Across Brooklyn, new inventory continued to Takeaway push asking rents and availability up.

$45 16%  Average asking rents ended 2Q16 at $39.95/SF, up 14.3% year-over-year. $40 14% This growth was driven by the addition of newly repositioned prime $35 12% buildings over the last 12 months,

$30 including 55 Water Street, 10 Jay 10% Street, and 95 Evergreen Avenue. $25  The spike in availability since the 8% start of 2013 is due to the $20 introduction of office supply in Sunset 6% Park and the Navy Yards, along with $15 newly repositioned buildings in 4% $10 Downtown Brooklyn, Dumbo, and Williamsburg/ Bushwick. $5 2%

$0 0% 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16

Average Asking Rent (Price/SF) Availability (%)

Source: Newmark Grubb Knight Frank Research

31 BROOKLYN MARKET TRENDS Prime Assets Average Asking Rent and Availability

Key Brooklyn Prime assets saw much steeper increases in average asking rent and availability Takeaway than the overall market.

$60 16%  Average asking rents for Brooklyn Prime assets rose to $54.21/SF in 14% 2Q16, up 27% year-over-year. $50  The availability rate jumped 710 12% basis points over the last 24 months, $40 driven by new construction and 10% repositioned buildings introduced as new office inventory. $30 8%

6% $20

4%

$10 2%

$0 0% 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16

Average Asking Rent (Price/SF) Availability (%)

Source: Newmark Grubb Knight Frank Research

32 BROOKLYN SUBMARKET SNAPSHOT

Greenpoint DOWNTOWN BROOKLYN SUNSET PARK  Total Inventory: 16,104,268 SF  Total Inventory: 6,405,416 SF Williamsburg  Availability Rate: 4.8%  Direct Average Asking Rent: DUMBO Navy Bushwick $27.50/SF BK Yard  Average Asking Rent, Prime Assets: Heights Clinton $48.26/SF Cobble Fort Hill Bedford  Average Asking Rent, Standard Hill Greene Stuyvesant Assets: $40.98/SF BROOKLYN NAVY YARD Red Prospect Cypress  YTD Absorption: -146,166 SF Crown Hills Hook Park Heights  Total Inventory: 2,875,330 SF Heights Upper Slope  Direct Average Asking Rent: East New York Prospect Lefferts Brownsville $37.00/SF Bay Park Gardens New York Sunset Park DUMBO  Developers of Dock 72 (new supply Windsor due in 2018) are asking top Brooklyn Terrace  Total Inventory: 3,908,181 SF Prospect East rents, which will push the submarket Flatbush Park  Availability Rate: 25.5% average up when added to the Kensington South Canarsie  Average Asking Rent, Prime Assets: market. Borough Bay Flatbush $57.62/SF Ridge Park Dyker Flatlands  Average Asking Rent, Standard Heights Assets: $34.74/SF WILLIAMSBURG / BUSHWICK Midwood Bergen Marine Beach  YTD Absorption: -171,227 SF  Total Inventory: 1,615,245 SF Fort Mill Bensonhurst Park  Availability Rate: 23.8% Hamilton Basin Jamaica Bay  Direct Average Asking Rent, Prime Bath BK Beach Sheepshead Marine Park Assets: $52.67/SF Bay Gerritsen Barren  YTD Absorption: -5,700 SF Lower Gravesend Island New York Beach Bay Manhattan Sea Brighton Beach Gate Coney Beach Island

Prime Assets are Class A and newly repositioned space. Standard Assets are all other office Source: Newmark Grubb Knight Frank Research inventory.

33 ASKING RENT COMPARISON Average Asking Rents ($/SF)

Key Prime assets in Dumbo and Williamsburg continue to compete with Manhattan, while Takeaway Sunset Park remains the most affordable option.

$90 $82.54 $80 $71.98 $70 $61.85 $60 $57.62 $52.67

$50 $48.26

$40 $37.00 $38.15

$30 $27.50

$20

$10

$0 Sunset Park Brooklyn Navy Yard Long Island City Downtown Brooklyn Williamsburg / Dumbo Downtown Midtown South Midtown Prime Prime Prime Prime Bushwick Prime Manhattan Overall Overall Prime Overall Prime Assets are Class A and newly repositioned space. Source: Newmark Grubb Knight Frank Research

34 LONG ISLAND CITY TRENDS Overall Average Asking Rent and Availability

Key Despite Long Island City’s relative affordability to Manhattan and most of Brooklyn, asking rents Takeaway reached a new all-time high in 2Q16.

$40 20%  Asking rents reached new heights in 2Q16, rising to $37.66/SF, a 2.6% increase from last quarter. $35 16%  Fashion tenants drove 2Q16 leasing;

Madewell took 59,680 SF at the $30 Factory Building, and Eloquii took 12% 10,807 SF at 37-18 Northern Boulevard. $25  The availability rate rose to 13.9%, 8% driven by space hitting the market at $20 30-30 Northern Boulevard, 47-37

Austell Place, and the Falchi

4% Building. $15

$10 0% 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16

Average Asking Rent (Price/SF) Availability (%)

Source: Newmark Grubb Knight Frank Research

35 LONG ISLAND CITY SUBMARKET SNAPSHOT

ASTORIA  Total Inventory: 3,438,213 SF  Availability Rate: 20.0%  Average Asking Rent, Prime Assets: $35.86/SF  Average Asking Rent, Standard Assets: Astoria $26.42/SF  YTD Absorption: -211,571 SF

HUNTERS POINT/LIC WATERFRONT  Total Inventory: 3,733,385 SF Hunter’s Point/  Availability Rate: 4.9% LIC Waterfront  Average Asking Rent, Prime Assets: $40.33/SF  Average Asking Rent, Standard Assets: $29.55/SF  YTD Absorption: -28,731 SF

THE FACTORY DISTRICT  Total Inventory: 4,501,132 SF  Availability Rate: 16.7%  Average Asking Rent, Prime Assets: $39.59/SF Factory District  Average Asking Rent, Standard Assets: $30.00/SF  YTD Absorption: -125,231 SF

Prime Assets are Class A and newly repositioned space. Standard Assets are all other office inventory.

Source: Newmark Grubb Knight Frank Research

36 North America Latin America Africa New York City Canada Argentina Botswana HEADQUARTERS Brazil Kenya 125 Park Avenue Chile Malawi New York, NY 10017 Europe Colombia Nigeria 212.372.2000 Austria Costa Rica South Africa Belgium Dominican Republic Tanzania

Jonathan Mazur Czech Republic Mexico Uganda Managing Director, Research France Peru Zambia 212.372.2154 Germany Puerto Rico Zimbabwe [email protected] Ireland Stephanie Jennings Italy Asia-Pacific Middle East Tri-State Director, Research Netherlands Australia Saudi Arabia 212.372.2099 Poland Cambodia United Arab Emirates [email protected] Portugal China David Chase Romania Hong Kong Senior Research Analyst Russia India Alex Schwartz Spain Indonesia Research Analyst Switzerland Japan United Kingdom Malaysia Edward Son Senior Research Analyst New Zealand Singapore Ronnie Wagner South Korea Director, Research Taiwan Robert Zindman Thailand Research Analyst

Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents.

Newmark Grubb Knight Frank Research Reports are also available at www.ngkf.com/research

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