sign in sign up
<<
Home , 2 World Trade Center, 330 West 42nd Street, 399 Park Avenue, 3 World Trade Center, 44 Union Square, 550 Madison Avenue

THE OFFICE MARKET REPORT

LEE NYC TREND TRACKER 4Q 2017

E

V I

DR

DR F

SUBMARKETS

Y

WA

H

G

HI

E

SID

T ES W

W 65TH ST E 65TH ST ES T W ARK

P RAL EN T 1ST AVE C 5TH AVE MIDTOWN WESWESTT SOUTH LEXINGTON AVE W 57TH ST E 57TH ST MIDTOWN PLPLAZA DIISSTTRRICICTT MIDTOWNTOWN EAEASSTT 8TH AVE 0TH AVE

1 RROCKEFELEFELLLEERR E

IV

Y E 49TH ST

A W 49TH ST BROADWAY

W CENTECENTERR H

FDR DR

G

I

H

E

D

I

S

T

S TIMESTIMES SSQQUAUARREE

E DOWNTOWN W

GRRAND CECENTTRRALL W 42ND ST E 42ND ST 1ST AVE AVENUE OF THE AMERICAS

PPENENN SSTATATIONTION || GAGARRMENT DISTDISTRRICICTT MURRAY HIILLLL W 34TH ST E 34TH ST

5TH AVE BROADWAY

LEXINGTON AVE

E

V

A

H H

2T 1 CCHEELLSESEA 1ST AVE W 23RD ST E 23RD ST GRRAMERRCYCY || FFLLATITIRORON 0TH AVE 8TH AVE 1

AVENUE OF THE AMERICAS BROADWAY

W 14TH ST E 14TH ST

E

V

E

RI

V

A

D

E

R R

H

T D

V

1

F 1 GANESEVOORT ST A EEASTT H T 5 RRIVIVIVEERR AVE A 1ST AVE

W 4TH ST HUDSON SQ.. E 4TH ST

|| TTRRIBECIBECA Y

HUDSOSON T WA S

D SSOHO || NOHO E HOUSTON ST RRIIIVEVERR RICA

W HOUSTON ST BROA HUDSON S HUDSON

ME

Y

HE A HE

R

T

W HOUSTON ST E W

OF OF DELANCEY ST E BO

Y

NU

ALLEN ST ALLEN

T A E V

W

K S K A DELANCEY ST

D

C

I

R

T

A

V

ST S ST E CANAL ST

BROA W

W

T

E S E

R CANAL ST

T Y

LIN S A

ENT

ANK W FR C WORTH ST

BROAD CITYCITY HALLL CHAMBERS ST || IINSNSUURRANCEANCE DIISSTTRRICICTT

PARK PL

VESEY ST VESEY ST

T

WORLRLD S

M TTRRADEE A

LLI I T S CECENTETERR W ER T

L A

W T

Y P Y

T Y

INI

WA WALL S TR T

OLD S

OAD FINAFINANCIACIALL R B DIISSTTRRICICTT

BEAVER ST

BATTERYPL

2 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC MARKET SUMMARY

2017 | 4Q Manhattan Office Total Total Total Direct Sublease Overall Inventory Available Under Vacancy Availability Net Asking Asking Asking Market (MSF) Total Construction Rate Rate Absorption Rent Rent Rent (Rnd.) (SF) (SF) (%) (%) (SF) ($PSF) ($PSF) ($PSF) Midtown 223 25,140,339 8.2% 11.3% 687,938 2,919,888 $84.02 $65.49 $79.53 Grand Central 72 8,280,203 9.1% 11.6% 605,330 1,732,955 $78.85 $49.68 $74.77 Midtown East 26 2,753,127 6.0% 10.7% (89,548) 290,505 $73.97 $64.89 $69.37 Midtown West 20 1,426,657 4.9% 7.0% 35,889 90,000 $86.04 $60.11 $82.42 Plaza District 38 5,375,306 11.4% 14.1% (297,990) 806,428 $117.76 $70.09 $112.27 Rockefeller Plaza 29 2,142,095 6.4% 7.5% 136,636 - $84.49 $68.07 $82.52 38 5,162,951 8.1% 13.5% 297,621 - $75.70 $66.32 $74.77

Midtown South 154 16,431,276 7.0% 10.7% 662,019 9,621,814 $67.76 $50.19 $64.49 Chelsea 18 1,842,820 7.8% 10.0% 163,399 877,867 $69.20 $51.00 $64.56 Gramercy | Flatiron 31 2,523,241 4.4% 8.2% 96,508 73,323 $73.87 $62.69 $72.06 Hudson Square | 22 3,183,569 9.4% 14.8% (6,437) 138,938 $81.73 $59.10 $78.78 Murray Hill 13 1,184,630 7.0% 8.9% 189,853 - $61.62 $43.57 $57.99 Penn Station-Garment 57 6,356,176 7.2% 11.2% 118,146 8,272,745 $58.37 $46.34 $55.59 SoHo | NoHo 13 1,340,840 6.9% 10.4% 100,550 258,941 $74.77 $62.48 $73.28

Downtown 105 11,724,262 9.1% 11.2% 93,267 2,861,402 $62.64 $42.33 $60.96 Hall | Insurance Dist. 26 1,971,193 4.9% 7.5% 70,495 - $54.40 $38.00 $52.88 Financial District 43 5,433,577 9.1% 12.5% (114,255) - $59.95 $49.48 $57.35 World Trade Center 35 4,319,492 12.5% 12.7% 137,027 2,861,402 $65.19 $49.78 $64.69

Manhattan 482 53,295,877 8.0% 11.0% 1,443,224 15,403,104 $74.32 $59.28 $61.24

1. Arrows are an indication based on quarter-over-quarter movements. 2. All rent figures are based on market and submarket weighted averages. Overall Asking Rents take Direct and Sublease rents into account. 3. Under Construction only includes buildings with expected deliveries, with a primary office use and over 50,000 square feet. Buildings under construction that include office as a secondary or tertiary use are excluded. All proposed new construction buildings were excluded.

Commenced with report, 1Q 2015, Lee & Associates utilizes new metric methods from its prior reporting methods. Lee & Associates Office Metrics are based on office buildings with a minimum rentable building area of 100,000 square feet, with the exception in the submarket of Soho/Noho, which uses metrics based on office buildings with a minimum rentable building area of 50,000 square feet. Lee & Associates Office Metrics comprise data representing existing office buildings for Classes A, B and C. Since new metric methods have been applied, the correlation of data for this report (and all reports since 1Q 2015) will have no bearing over the reports previously published by Lee & Associates (prior to 1Q 2015).

Lee & Associates NYC accepts no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document.

3 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC MIDTOWN

idtown overall asking rents gradually increased quarter-to-quarter to $79.53 SF in Q3. 250 West 57th leased the largest block of space this quarter. The Mfrom $79.09; and are down 2.4% or $1.97 year-over-year. Base rents increased availability rate decreased to 7% from 7.5% over the quarter; is down from 7.1% year- quarter-to-quarter to $77.22 from $69.55, by 11% or $7.67; and are up 4.3% or $3.20 over-year and is 1.4% below its five-year average of 8.4%; with 1345 Avenue of the year-over-year. Q4 had an average asking-to-base rent spread of 2.9%, compared to Americas leading the submarket in available space. 2017 experienced a negative 12.1% in Q3 and 9.2% in 2016Q4. Concessional discounts increased to 6.9% from net absorption of 271,537 SF; with the vacancy rate decreasing to 4.9% from 5.2% 6.5% quarter-to-quarter, and are up from 5% year-over-year; with net effective rents in Q3, up from 3.7% year-over-year and is 1.4% below its five-year average of 6.3%. increasing 10.7% to $71.93, and are up 2.3% year-over-year. Leasing activity finished Notable Deal: ASCAP signed a new 15-year lease for 85,000 SF at 250 West 57th 2017 at 12,968,761 SF. Quarter-to-quarter leasing activity decreased 5%, with Street (12th to 14th and 20th floors), with a base rent in the low $60s. 2,435,252 SF leased in Q4 compared to 2,563,981 SF leased in Q3. 390 Madison leased the largest block of space this quarter. The availability rate decreased to overall asking rents increased quarter-to-quarter to $112.27 from 11.3% from 11.7% over the quarter; is down from 12% year-over-year and is 0.4% Plaza District $109.83, by 2.2% or $2.44; and are up 2.7% or $2.90 year-over-year. Base rents below its five-year average of 11.7%; with 399 leading the market in increased quarter-to-quarter to $99.72 from $80.09, by 24.5% or $19.63; and are available space. 2017 experienced a negative net absorption of 87,865 SF; with the up 10.1% or $9.18 year-over-year. Q4 had an average asking-to-base rent spread vacancy rate decreasing to 8.2% from 8.8% in Q3, down from 8.8% year-over-year of 11.2%, compared to 27.1% in Q3 and 17.2% in 2016Q4. Concessional discounts and is 0.2% below its five-year average of 8.4%. increased to 7% from 3.8% quarter-to-quarter, and are up from 6.3% year-over-year; with net effective rents increasing 20.4% to $92.73, and are up 9.3% year-over-year. Grand Central overall asking rents decreased quarter-to-quarter to $74.77 from Leasing activity finished 2017 at 1,977,775 SF. Quarter-to-quarter leasing activity has $75.13, by 0.5% or $0.36; and are up 2.1% or $1.52 year-over-year. Base rents increased 33.9% with 512,980 SF leased in Q4, compared to 383,101 SF in Q3. 65 remained stagnant quarter-to-quarter around $66, and are up 2.5% or $1.58 year- East leased the largest block of space this quarter. The availability rate over-year. Q4 had an average asking-to-base rent spread of 11.6%, compared to 12% decreased to 14.1% from 16.3% over the quarter; is down from 15.4% year-over-year in Q3 and 2016Q4. Concessional discounts decreased to 6.7% from 8.2% quarter- and is 1.5% above its five-year average of 12.6%; with leading to-quarter, and are up from 6.5% year-over-year; with net effective rents increasing the submarket in available space. 2017 experienced a negative net absorption of 1.7% to $61.71, and are up 2.2% year-over-year. Leasing activity finished 2017 at 803,577 SF; with the vacancy rate decreasing to 11.4% from 12.5% in Q3, up from 4,982,165 SF. Quarter-to-quarter leasing activity decreased 15.4% with 868,254 SF 11% year-over-year and is 2.7% above its five-year average of 8.7%. Notable Deal: leased in Q4, compared to 1,026,449 SF in Q3. 390 leased the The Raine Group signed a new 15-year lease for 33,253 SF at 65 East 55th Street largest block of space this quarter. The availability rate decreased to 11.6% from (23rd to 24th floors). 11.8% over the quarter; is down from 13.2% year-over-year and is 2.1% below its five- year average of 13.7%; with 405 leading the submarket in available overall asking rents increased quarter-to-quarter to $82.52 space. 2017 experienced a negative net absorption of 161,576 SF; with the vacancy Rockefeller Plaza from $74.27, by 11% or $8.25; and are up 4.7% or $3.70 year-over-year. Base rents rate decreasing to 9.1% from 9.9% in Q3, up from 9% year-over-year and is 0.8% increased quarter-to-quarter to $81.36 from $72.80, by 11.8% or $8.56; and are below its five-year average of 9.9%. Notable Deal: Shiseido Americas Corporation up 14% or $9.96 year-over-year. Q4 had an average asking-to-base rent spread signed a new 15-year lease for 230,042 SF at 390 Madison Avenue (15th to 22nd of 1.4%, compared to 2% in Q3 and 9.4% in 2016Q4. Concessional discounts floors), with a base rent in the high $80s. increased to 8.4% from 8.1% quarter-to-quarter, and are up from 3% year-over-year; with net effective rents increasing 11.3% to $74.46, and are up 7.5% year-over-year. Midtown East overall asking rents increased quarter-to-quarter to $69.37 from Leasing activity finished 2017 at 1,614,499 SF. Quarter-to-quarter leasing activity has $68.33, by 1.5% or $1.04; and are down 4.6% or $3.33 year-over-year. Base rents increased 46.1% with 342,575 SF leased in Q4, compared to 234,538 SF in Q3. 1290 increased quarter-to-quarter to $62.98 from $59.23, by 6.3% or $3.75; and are down Avenue of the Americas leased the largest block of space this quarter. The availability 6.8% or $4.60 year-over-year. Q4 had an average asking-to-base rent spread of 9.2%, rate decreased to 7.5% from 7.7% over the quarter; is down from 9.7% year-over- compared to 13.3% in Q3 and 7% in 2016Q4. Concessional discounts increased to year and is 2.6% below its five-year average of 10.1%; with 2% from 1.8% quarter-to-quarter, and are down from 5.2% year-over-year; with net leading the submarket in available space. 2017 experienced a positive net absorption effective rents increasing 6.2% to $61.74, and are down 3.6% year-over-year. Leasing of 806,723 SF; with the vacancy rate decreasing to 6.4% from 6.7% in Q3, down from activity finished 2017 at 693,812 SF. Quarter-to-quarter leasing activity decreased 9.1% year-over-year and is 2.4% below its five-year average of 8.8%.Notable Deal: 22.6% with 153,403 SF leased in Q4, compared to 198,268 SF leased in Q3. 570 Bryan Cave LLP signed a 15-year renewal for 126,084 SF at 1290 Avenue of the Lexington Avenue leased the largest block of space this quarter. The availability Americas (31st, 33rd, 35th to 37th floors), with a base rent in the mid-$80s. rate increased to 10.7% from 8.8% over the quarter; is up from 9.2% year-over-year and is 2.7% above its five-year average of 8%; with 875 leading the overall asking rents increased quarter-to-quarter to $74.77 from submarket in available space. 2017 experienced a negative net absorption of 140,215 Times Square $73.15, by 2.2% or $1.62; and are down 3% or $2.27 year-over-year. Base rents SF; with the vacancy rate increasing to 6% from 5.3% in Q3, up from 4.9% year-over- increased quarter-to-quarter to $71.03 from $62.88, by 13% or $8.15; and are down year and is 1% above its five-year average of 5%. Notable Deal: Cerberus Capital 3.7% or $2.75 year-over-year. Q4 had an average asking-to-base rent spread of 5%, Management signed a new 5-year lease for 10,144 SF at 875 Third Avenue (36th compared to 14% in Q3 and 4.2% in 2016Q4. Concessional discounts increased floor), with a base rent in the high $50s. to 9.2% from 5.4% quarter-to-quarter, and are up from 5.8% year-over-year; with net effective rents increasing 8.5% to $64.51, and are down 7.1% year-over-year. Midtown West overall asking rents decreased quarter-to-quarter to $82.42 from Leasing activity finished 2017 at 2,078,130 SF. Quarter-to-quarter leasing activity has $83.08, by 0.8% or $0.66; and are up 0.6% or $0.49 year-over-year. Base rents decreased 43.9% with 339,386 SF leased in Q4, compared to 604,787 SF in Q3. increased quarter-to-quarter to $81.50 from $70.83, by 15.1% or $10.67; and are 1633 Broadway leased the largest block of space this quarter. The availability rate up 12.3% or $8.90 year-over-year. Q4 had an average asking-to-base rent spread decreased to 13.5% from 14% over the quarter; is up from 12.7% year-over-year and of 1.1%, compared to 14.8% in Q3 and 11.4% in 2016Q4. Concessional discounts is 1% above its five-year average of 12.5%; with 330 West leading the decreased to 6.3% from 7.5% quarter-to-quarter, and are up from 3.2% year-over- submarket in available space. 2017 experienced a positive net absorption of 402,389 year; with net effective rents increasing 16.5% to $76.36, and are up 8.7% year- SF; with the vacancy rate decreasing to 8.1% from 8.7% in Q3, down from 9.2% year- over-year. Leasing activity finished 2017 at 1,622,380 SF. Quarter-to-quarter leasing over-year and is 0.5% below its five-year average of 8.6%.Notable Deal: MongoDB activity has increased 87% with 218,654 SF leased in Q4, compared to 116,838 signed a new 12-year lease for 106,230 SF at 1633 Broadway (37th to 38th floors).

4 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC MIDTOWN

Midtown Vacancy and Availability 16.0% 14.0% 11.9% 12.0% 10.0% 8.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017

Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.

Midtown Leasing Activity 8,000,000 7,000,000 Ten Year Average 4,415,611 6,000,000 5,000,000 Great Recession 4,000,000 3,000,000 2,000,000 1,000,000 - 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017 Historical statistics are updated to reflect new ly released market information. SF Leased 10Y Avg.

Midtown Net Absorption 2,000,000 1,500,000 1,000,000 500,000 0 (500,000) (1,000,000) (1,500,000) (2,000,000) (2,500,000) 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017

5 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC MIDTOWN SOUTH

idtown South overall asking rents gradually increased quarter-to-quarter to block of space this quarter. The availability rate increased to 14.8% from 14.5% M $64.49 from $64.35; and are down 2.3% or $1.51 year-over-year. Base rents over the quarter; is up from 13.4% year-over-year and is 2.1% above its five-year increased quarter-to-quarter to $63.19 from $58.84, by 7.4% or $4.35; and are average of 12.7%; with 75 leading the submarket in available space. up 4.5% or $2.72 year-over-year. Q4 had an average asking-to-base rent spread 2017 experienced a positive net absorption of 250,207 SF; with the vacancy rate of 2%, compared to 8.6% in Q3 and 8.4% in 2016Q4. Concessional discounts remaining stagnant at 9.4% quarter-to-quarter, down from 10.4% year-over-year increased to 9.2% from 3.8% quarter-to-quarter, and are up from 4.3% year- and 0.4% above its five-year average of 9%. Notable Deal: Pepsi renewed for over-year; with net effective rents increasing 1.4% to $57.39, and are down 0.9% 39,176 SF at 350 Hudson Street (2nd floor), with a base rent in the low $70s (term year-over-year. Leasing activity finished 2017 at 10,957,975 SF. Quarter-to-quarter of the lease is unconfirmed). leasing activity decreased 24.4% with 2,116,416 SF leased in Q4, compared overall asking rents gradually increased quarter-to-quarter to $57.99 to 2,799,331 SF in Q3. 150 leased the largest block of space this Murray Hill from $57.83; and are down 1.7% or $1.01 year-over-year. Base rents increased quarter. The availability rate decreased to 10.7% from 10.9% over the quarter; quarter-to-quarter to $55.60 from $54.30, by 2.4% or $1.30; and are approximately is up from 10.1% year-over-year and is 1% above its five-year average of 9.7%; the same as they were a year ago. Q4 had an average asking-to-base rent spread with 1250 Broadway leading the market in available space. 2017 experienced a of 4.1%, compared to 6.1% in Q3 and 5.5% in 2016Q4. Concessional discounts negative net absorption of 89,718 SF; with the vacancy rate decreasing to 7% from increased to 8.2% from 1.7% quarter-to-quarter, and are up from 5.7% year-over- 7.5% in Q3, up from 6.7% year-over-year and is 0.5% above its five-year average year; with net effective rents decreasing 4.4% to $51.05, and are down 3% year- of 6.5%. over-year. Leasing activity finished 2017 at 613,984 SF. Quarter-to-quarter leasing Chelsea’s overall asking rents increased quarter-to-quarter to $64.56 from activity has increased 35.1% with 157,766 SF leased in Q4, compared to 116,809 $63.38, by 1.9% or $1.18; and are up 13.4% or $7.63 year-over-year. Base rents SF in Q3. 135 Madison Avenue leased the largest block of space this quarter. decreased quarter-to-quarter to $59.16 from $60.30, by 1.9% or $1.20; and are The availability rate decreased to 8.9% from 10% over the quarter; is down from up 11.1% or $5.93 year-over-year. Q4 had an average asking-to-base rent spread 9.8% year-over-year and is 0.1% above its five-year average of 8.8%; with 2 Park of 8.4%, compared to 4.9% in Q3 and 6.5% in 2016Q4. Concessional discounts Avenue leading the submarket in available space. 2017 experienced a positive increased to 7.2% from 4.4% quarter-to-quarter, and are up from 3.7% year-over- net absorption of 213,786 SF; with the vacancy rate decreasing to 7% from 9.6% year; with net effective rents decreasing 4.8% to $54.89, and are up 7.1% year- in Q3, down from 8.8% year-over-year and is 0.3% above its five-year average of over-year. Leasing activity finished 2017 at 874,738 SF. Quarter-to-quarter leasing 6.7%. Notable Deal: WeWork Companies signed a new lease for 90,228 SF at activity has decreased 24.3% with 186,074 SF leased in Q4, compared to 245,669 135 Madison Avenue (4th to 7th and 11th to 12th floors). SF in Q3. 125 West 25th Street leased the largest block of space this quarter. The overall asking rents decreased quarter-to-quarter to availability rate increased to 10% from 9.9% over the quarter; is up from 9.2% Penn Station-Garment $55.59 from $59.75, by 7% or $4.16; and are down 9.8% or $6.06 year-over-year. year-over-year and is 1.7% above its five-year average of 8.3%; with 601 West 26th Base rents decreased quarter-to-quarter to $53.92 from $54.70, by 1.4% or $0.78; Street leading the submarket in available space. 2017 experienced a negative net and are down 10.5% or $6.32 year-over-year. Q4 had an average asking-to-base absorption of 348,632 SF; with the vacancy rate decreasing to 7.8% from 8.8% in rent spread of 3%, compared to 8.5% in Q3 and 2.3% in 2016Q4. Concessional Q3, up from 5.5% year-over-year and is 1.8% above its five-year average of 6%. discounts increased to 6.9% from 2.3% quarter-to-quarter, and are up from 4.9% Notable Deal: Scholastic Corporation signed a new 10-year sublease for 44,033 year-over-year; with net effective rents decreasing 6% to $50.22, and are down SF at 601 West 26th Street (10th floor), with a base rent in the high $40s. 12.4% year-over-year. Leasing activity finished 2017 at 5,940,794 SF. Quarter- and Flatiron overall asking rents increased quarter-to-quarter to-quarter leasing activity has decreased 39.4% with 913,346 SF leased in Q4, to $72.06 from $70.90, by 1.6% or $1.16; and are up 0.8% or $0.59 year-over-year. compared to 1,507,382 SF in Q3. 500 Seventh Avenue leased the largest block Base rents increased quarter-to-quarter to $66.82 from $61.25, by 9.1% or $5.57; of space this quarter. The availability rate increased to 11.2% from 11% over the and are up 5.4% or $3.45 year-over-year. Q4 had an average asking-to-base rent quarter; is down from 11.3% year-over-year and is 1% above its five-year average spread of 7.3%, compared to 13.6% in Q3 and 11.3% in 2016Q4. Concessional of 10.2%; with 1250 Broadway leading the submarket in available space. 2017 discounts increased to 7.7% from 5.3% quarter-to-quarter, and are up from 5.2% experienced a negative net absorption of 84,088 SF; with the vacancy rate year-over-year; with net effective rents increasing 6.2% to $61.65, and are up 2.6% decreasing to 7.2% from 7.4% in Q3, up from 6.9% year-over-year and is 0.5% year-over-year. Leasing activity finished 2017 at 1,733,371 SF. Quarter-to-quarter above its five-year average of 6.7%. Notable Deal: WeWork Companies signed leasing activity has increased 17.8% with 520,09 SF leased in Q4, compared to a new 20-year lease for 280,000 SF at 500 Seventh Avenue, with a base rent in 441,545 SF in Q3. 150 Fifth Avenue leased the largest block of space the quarter. the mid-$50s. The availability rate decreased to 8.2% from 8.9% over the quarter; is up from 6.2% overall asking rents decreased quarter-to-quarter to $73.28 year-over-year and is 0.2% above its five-year average of 8%; with 63 Madison SoHo and NoHo from $74.50, by 1.6% or $1.22; and are up 1% or $0.71 year-over-year. Base rents Avenue leading the submarket in available space. 2017 experienced a negative increased quarter-to-quarter to $70.70 from $66.46, by 6.4% or $4.24; and are up net absorption of 27,375 SF; with the vacancy rate decreasing to 4.4% from 5% in 14.7% or $9.05 year-over-year. Q4 had an average asking-to-base rent spread of Q3, up from 4.2% year-over-year and is 0.9% below its five-year average of 5.3%. 3.5%, compared to 10.8% in Q3 and 15.1% in 2016Q4. Concessional discounts Notable Deal: MasterCard signed a new 15-year lease for 212,500 SF at 150 Fifth increased to 5.3% from 4.5% quarter-to-quarter, and are up from 1.2% year-over- Avenue (the entire building); with a base rent in the low $90s. year; with net effective rents increasing 5.5% to $66.94, and are up 10% year- Hudson Square and Tribeca overall asking rents decreased quarter-to-quarter over-year. Leasing activity finished 2017 at 539,456 SF. Quarter-to-quarter leasing to $78.78 from $80.23, by 1.8% or $1.45; and are down 1.4% or $1.13 year-over- activity decreased 4% with 168,569 SF leased in Q4, compared to 175,485 SF in year. Base rents decreased quarter-to-quarter to $63.50 from $68.75, by 7.6% or Q3. 575 Broadway leased the largest block of space this quarter. The availability $5.25; and are down 10.5% or $7.44 year-over-year. Q4 had an average asking- rate decreased to 10.4% from 11.6% over the quarter; is up from 9.5% year-over- to-base rent spread of 19.4%, compared to 14.3% in Q3 and 11.2% in 2016Q4. year and is 2.8% above its five-year average of 7.6%; with 100 Avenue of the Concessional discounts increased to 14.2% from 7% quarter-to-quarter, and are Americas leading the submarket in available space. 2017 experienced a positive up from 1.4% year-over-year; with net effective rents decreasing 14.8% to $54.49, net absorption of 39,848 SF; with the vacancy rate increasing to 6.9% from 6.7% in and are down 22.1% year-over-year. Leasing activity finished 2017 at 985,555 SF. Q3, up from 5.3% year-over-year and is 2.3% above its five-year average of 4.6%. Quarter-to-quarter leasing activity has decreased 53% with 108,082 SF leased Notable Deal: Codeacademy signed a new 5-year sublease for 20,987 SF at 575 in Q4, compared to 229,961 SF in Q3. 345 Hudson Street leased the largest Broadway (5th floor), with a base rent in the low $70s.

6 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC MIDTOWN SOUTH

Midtown South Vacancy and Availability 14.0% 12.0% 10.1% 10.0% 8.0% 6.0% 6.6% 4.0% 2.0% 0.0% 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017

Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.

Midtown South Leasing Activity 8,000,000 7,000,000 Ten Year Average 3,253,264 6,000,000 5,000,000 Great Recession 4,000,000 3,000,000 2,000,000 1,000,000 - 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017

Historical statistics are updated to reflect SF Leased 10Y Avg. new ly released market information.

Midtown South Net Absorption 1,500,000

1,000,000

500,000

0

(500,000)

(1,000,000)

(1,500,000) 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017

Net Absorption

7 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC DOWNTOWN

owntown overall asking rents decreased quarter-to-quarter to $51.04 from $48.88, by 4.4% or $2.16; and are up 3.2% or $1.59 year-over- D $60.96 from $61.80, by 1.4% or $0.84; and are up 3.7% or $2.19 year- year. Q4 had an average asking-to-base rent spread of 11%, compared over-year. Base rents increased quarter-to-quarter to $51.67 from $50.66, to 17.2% in Q3 and 13.8% in 2016Q4. Concessional discounts increased by 1.8% or $1.01; and are up 6.4% or $3.18 year-over-year. Q4 had an to 4.6% from 3.9% quarter-to-quarter, and are up from 3.2% year-over- average asking-to-base rent spread of 15.2%, compared to 18% in Q3 year; with net effective rents increasing 3.6% to $48.69, and are up 1.8% and 17.5% in 2016Q4. Concessional discounts increased to 4.2% from year-over-year. Leasing activity finished 2017 at 2,441,992 SF. Quarter-to- 3.8% quarter-to-quarter, and are up from 3.1% year-over-year; with net quarter leasing activity has decreased 58.3% with 371,572 SF leased in effective rents increasing 1.6% to $49.50, and are up 5.4% year-over-year. Q4, compared to 891,642 SF in Q3. 77 Water Street leased the largest Leasing activity finished 2017 at 5,730,181 SF. Quarter-to-quarter leasing block of space this quarter. The availability rate increased to 12.5% from activity has decreased 47.9% with 810,001 SF leased in Q4, compared to 12.4% over the quarter; is down from 15.3% year-over-year and is 1.1% 1,554,225 SF in Q3. 77 Water Street leased the largest block of space this below its five-year average of 13.6%; with leading the quarter. The availability rate increased to 11.2% from 11% over the quarter; submarket in available space. 2017 experienced a positive net absorption is down from 12% year-over-year and is 1.9% below its five-year average of 476,767 SF; with the vacancy rate increasing to 9.1% from 8.8% in Q3, of 13.1%; with 28 Liberty Street leading the market in available space. 2017 down from 10.5% year-over-year and is 1.3% below its five-year average of experienced a negative net absorption of 4,188,604 SF; with the vacancy 10.4%. Notable Deal: Lewis Brisbois Bisgaard & Smith LLP signed a new rate remaining stagnant at 9.1% quarter-to-quarter, down from 9.4% year- 15-year lease for 100,952 SF at 77 Water Street (18th to 21st floors), with a over-year and is 1.4% below its five-year average of 10.5%. base rent in the low $50s.

City Hall and Insurance District overall asking rents decreased quarter- World Trade Center overall asking rents decreased slightly to $64.69 to-quarter to $52.88 from $53.04, by 0.3% or $0.16; and are up 5.7% or from $64.97, and are up 3.5% or $2.21 year-over-year. Base rents $2.87 year-over-year. Base rents decreased quarter-to-quarter to $48.02 increased quarter-to-quarter to $57.44 from $54.90, by 4.6% or $2.54; and from $51, by 5.8% or $2.98, and are approximately the same as they are up 32.9% or $14.22 year-over-year. Q4 had an average asking-to-base were a year ago. Q4 had an average asking-to-base rent spread of 9.2%, rent spread of 11.2%, compared to 15.5% in Q3 and 30.8% in 2016Q4. compared to 3.9% in Q3 and 3.7% in 2016Q4. Concessional discounts Concessional discounts increased to 5.7% from 5.1% quarter-to-quarter, decreased to 1% from 1.2% quarter-to-quarter, and are down from 2.7% and are up from 1.4% year-over-year; with net effective rents increasing year-over-year; with net effective rents decreasing 5.5% to $47.58, and 4% to $54.16, and are up 27.1% year-over-year. Leasing activity finished are up 1.6% year-over-year. Leasing activity finished 2017 at 803,511 SF. 2017 at 2,484,678 SF. Quarter-to-quarter leasing activity has decreased Quarter-to-quarter leasing activity has decreased 31.2% with 162,695 SF 35.3% with 275,734 SF leased in Q4, compared to 426,179 SF in Q3. One leased in Q4, compared to 236,404 SF in Q3. 123 William Street leased World Trade Center leased the largest block of space this quarter (3 World the largest block of space this quarter. The availability rate increased to Trade Center had a larger pre-delivery deal signing). The availability rate 7.5% from 6.3% over the quarter; is up from 4.4% year-over-year and is 1% decreased to 12.7% from 12.8% over the quarter; is down from 13.9% above its five-year average of 6.5%; with One Seaport Plaza leading the year-over-year and is 4.7% below its five-year average of 17.4%; with submarket in available space. 2017 experienced a negative net absorption leading the submarket in available space. 2017 of 107,279 SF; with the vacancy rate decreasing to 4.9% from 5.1% in Q3, experienced a negative net absorption of 245,033 SF; with the vacancy up from 4.4% year-over-year and is 0.1% below its five-year average of 5%. rate increasing to 12.5% from 12.4% in Q3, up from 11.9% year-over-year Notable Deal: NYC Dept. of Youth & Community signed a new 20-year and is 2.5% below its five-year average of 15%. Notable Deal: McKinsey lease for 40,610 SF at 123 William Street (17th & 18th floors), with a base & Company signed a new 15-year lease for 184,389 SF at 3 World Trade rent in the low $50s. Center (60th to 64th floors).

Financial District overall asking rents decreased quarter-to-quarter to $57.35 from $59.03, by 2.9% or $1.68; and have an approximate average asking rent year-over-year. Base rents increased quarter-to-quarter to

8 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC DOWNTOWN

Downtown Vacancy and Availability 18.0% 16.0% 14.0% 12.6% 12.0% 10.0% 8.0% 9.2% 6.0% 4.0% 2.0% 0.0% 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017

Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.

Downtown Leasing Activity 4,000,000 3,500,000 Ten Year Average 1,571,900 3,000,000 2,500,000 2,000,000 Great Recession 1,500,000 1,000,000 500,000 - 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017 Historical statistics are updated to reflect new ly released market information. SF Leased 10Y Avg.

Downtown Net Absorption 4,000,000

3,000,000

2,000,000

1,000,000

0

(1,000,000)

(2,000,000)

(3,000,000) 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017 2017

9 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC CONSTRUCTION

Under Construction Office Property Developer Submarket Square Feet Class Est. Delivery World Trade Center 2,861,402 A 2018 Related Companies Penn Station-Garment 2,600,000 A 2019 (500 West 33rd Street)

400 West 33rd Street (One ) Penn Station-Garment 2,216,609 A 2019 (North Tower) Moinian Group Penn Station-Garment 1,900,000 A 2021 (555 West ) Avenue SL Green Realty Corp. Grand Central 1,732,955 A 2020 Related Companies Penn Station-Garment 1,556,136 A 2018 (550 West 34th Street) L&L Holding Company Plaza District 670,000 A 2019 57 Eleventh Avenue RXR Realty Chelsea 263,835 A 2018 (Pier 57) 159 East Boston Properties Midtown East 200,000 A 2019 512 West 22nd Street Albanese Organization Chelsea 174,222 A 2018 61 Aurora Capital Associates Chelsea 167,170 A 2018 412 West 15th Street LM Legacy Group Chelsea 144,273 A 2018 40 William Gottlieb Real Estate Hudson Sq. | Tribeca 138,938 A 2019 36 East Macklowe Properties Plaza District 136,428 A 2018 (432 Park Ave Office) 540 West 26th Street Savanna Chelsea 128,367 A 2018 2 Pike Street Yeung Real Estate Dev. SoHo | NoHo 93,000 A 2018 330 East 62nd Street Joy Construction Corp. Midtown East 90,505 B 2019 104-106 West 56th Street Savanna Midtown West 90,000 A 2020 300 Related Companies SoHo | NoHo 83,000 A 2018 9 DLJ Real Estate Capital SoHo | NoHo 82,941 B 2018 East Liberty Theaters Inc. Gramercy | Flatiron 73,323 B 2018

Reconstruction (Major Renovation) Office Property Owner Submarket Square Feet Class Completion 390 Madison Avenue Clarion Partners Grand Central 862,154 A 2018 Olayan America Plaza District 850,000 A 2019 787 Eleventh Avenue Pershing Square Capital Midtown West 470,000 B 2018 592 Fifth Avenue United Overseas Bank Group Rockefeller 70,135 B 2019 9 East 38th Street ClearRock Properties Grand Central 59,544 B 2018

Pre-Construction Office Property Sponsor Submarket Square Feet Class Commencing 415 Tenth Avenue Related Companies Penn Station-Garment 2,900,000 A 2019 ()

435 Tenth Avenue Penn Station-Garment 2,850,000 A N/A (66 Hudson Boulevard) Silverstein Properties World Trade Center 2,800,000 A 2019 400 West 33rd Street (Two Manhattan West) Brookfield Properties Penn Station-Garment 1,976,602 A N/A (South Tower) 511 West 35th Street Spitzer Enterprises Penn Station-Garment 950,000 A 2018

123-131 West JHG Holdings Chelsea 186,562 A 2018

Only Properties with over 50,000 Square Feet are listed.

10 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC NOTABLE INVESTMENT SALES

Office Property Submarket Class SF Buyer Seller Price $PSF 1515 Broadway Times Sq. A 1,750,000 Real Estate SL Green Realty Corp. $1,950,000,000 $1,114 (Partial Interest: 43%) 825 Eighth Avenue RXR Realty One Worldwide Plaza Times Sq. A 2,049,553 REIT $1,725,000,000 $842 SL Green Realty Corp. (Partial Interest: 48.7%) 165 Broadway World Trade A 2,346,000 Blackstone Brookfield Property Partners $1,515,000,000 $646 (Partial Interest: 49%) 1440 Broadway Times Sq. B 740,000 CIM Group New York REIT $520,000,000 $703 Future Fund 685 Third Avenue Grand Central A 651,429 Unizo Holdings $467,500,000 $718 TIAA 330 Hudson Street 6 Hudson Square Ivanhoe Cambridge Hudson Sq. A 466,000 AEW Capital $385,000,000 $826 (Pending Sale) Callahan Capital Partners (Leasehold) 245-249 West 17th Street Chelsea B 281,294 Columbia Property Trust New York REIT $339,400,000 $1,207 600 Lexington Avenue Manhattan Tower Midtown East A 303,515 (Unconfirmed) SL Green Realty Corp. $305,000,000 $1,005 (Pending Sale) 333 West 34th Street Penn/Garment B 338,409 Brookfield Property Partners New York REIT $255,000,000 $754 (Pending Sale) 80 Financial Dist. B 423,403 Invesco RXR Realty $235,000,000 $555 (Partial Interest: 95%) 19-25 West 44th Street Grand Central B 292,000 Savanna Deka Immobilien $195,000,000 $668 Berkeley Building 216 West 18th Street Chelsea B 165,670 Columbia Property Trust New York REIT $174,700,000 $1,055 300 Lafayette Street Related Companies (Pending Sale) SoHo A 80,000 Nightingale Properties $135,000,000 $1,688 LargaVista (Leasehold) 880 Broadway (Condominium) Flatiron C 217,500 Normandy RE Partners ABC Carpet $133,000,000 $611 (Sale-Leaseback) Brickman Associates 229 West 36th Street Penn/Garment C 140,747 New York REIT $93,000,000 $661 Investcorp

Properties are sorted by highest priced sale. Selective pending sales, bulk portfolio sales, leaseholds and condominium units are excluded. Pending sale prices are approximate and may be contingent on a rumor.

11 MANHATTAN TREND TRACKER 4TH QUARTER 2017 LEE & ASSOCIATES NYC Lee & Associates NYC 600 Madison Avenue, Third Floor New York, NY 10022 | 212.776.1200 www.leeassociatesnyc.com James Wacht President 212.776.1202 [email protected]

Henry Abramov Research Director [email protected] Carly Farkas Research Associate [email protected]

With offices across the nation, the Lee & Associates® group of independently owned and operated companies is the largest provider of regional commercial real estate services in the and the fourth-largest full-service commercial real estate organization overall.