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Home , 120 Wall Street, 14 Wall Street, 1 New York Plaza, 200 Liberty Street, 250 Vesey Street, 4 World Trade Center

CAPITAL IMPROVEMENTS EMPLOYMENT & OFFICE TOURISM & HOSPITALITY RESIDENTIAL RETAIL

ALLIANCE FOR DOWNTOWN LOWER REAL ESTATE YEAR IN REVIEW 2013

The historic neighborhood where George took the Presidential oath embarked on yet another bold, new chapter in 2013. $30 billion of public and private investment is coming to fruition, and major development projects that have been under way for a decade are now taking shape or nearing completion. With each new development milestone, every segment of is moving from an era of promise to an era of fulfillment. More and more businesses and residents are moving south of Chambers Street, altering the neighborhood’s commercial, social and cultural fabric. The district stands at a 21st Century crossroads, a place where grand visions and remarkable potential are now becoming reality. Key Findings • The opening of in November was the • Projected growth in tourism and an increase in office first in a series of major projects and improvements space at the World Trade Center will generate more leisure coming to completion in the next couple of years. and business travelers. That growth is creating additional demand for hotel supply, and developers are already • Commercial leasing escalated throughout the year, ending responding. Some 2,370 new rooms in 13 hotels are with a robust 4th quarter, the best-performing since 2006 currently under construction, four of which broke ground in and more than double the five-year average. Year-end 2013. The projects under construction, plus four in planning leasing activity topped out at a 39% increase over 2012 and stages, will nearly double the number of existing hotels by 29% higher than the 10-year average. Lower Manhattan’s 2016. total year-end leasing was also 48% greater than . • The next wave of marquee residential development is underway: six big projects broke ground this year that will • Commercial leasing benefited from notable relocations in add more than 1,200 units to the residential inventory. the Technology, Advertising, Media and Information (TAMI) sectors. Technology leasing in Lower Manhattan was • The combined impact of numerous factors — robust leasing particularly strong at 122% over 2012. in the office market, the arrival of a new and diverse cross section of workers in creative and technology fields, the • 2013 closed out the 4th quarter with four commercial office growth of the higher education sector, the anticipated deals over 200,000 square feet, demonstrating the market’s opening of new hotels and major tourist attractions and a strong appetite for big blocks of space in the downtown strong pipeline of high-end residential development — has market. spurred strong interest in new retail opportunities in Lower • Three of the ’s largest property sales in 2013 took place Manhattan. It also has led to the creation of some 1.5 million in Lower Manhattan, which suggests a rise in investment square feet of new or substantially improved retail space interest in the across a variety of property types. south of Chambers Street. CAPITALCAPITAL IMPROVEMENTS IMPROVEMENTS EMPLOYMENTOFFICE & OFFICERETAIL TOURISMTOURISM & HOSPITALITY & HOSPITALITYRESIDENTIALRESIDENTIALRETAIL

CAPITAL IMPROVEMENT PROGRESS

2013 was a momentous year for major projects and capital improvements, heralding another turning point in the era of 1 WORLD post-9/11 recovery. A soaring, epic vision for the redeveloped , more than a decade in the making, is TRADE CENTER finally being realized. New transit hubs, office and residential  3 MILLION SF towers, hotels, and tourist attractions, and 1.5 million square OFFICE TOWER feet of retail are scheduled to open in the next two years. The fundamental changes now coming to life are at the heart of  DESIGNATED Lower Manhattan’s rebirth and represent a pivotal point in the history of the district and as a whole. TALLEST BUILDING IN AMERICA World Trade Center (WTC) IN 2013 reached a physical and symbolic  TENANTS peak when it was officially declared the tallest building in America. The Council on Tall Buildings and Urban Habitat INCLUDE CONDÉ announced in November that One World Trade had reached NAST, VANTONE a height of 1,776 feet (541.3 meters), edging out ’s CHINA CENTER, . Both an architectural marvel and bold statement, U.S. GENERAL the 104-story, 3 million-square-foot is now the most conspicuous sight on Manhattan’s skyline. The building SERVICES is 55% leased; tenants include Condé Nast, the U.S. General ADMINISTRATION Services Administration and the Beijing-based Vantone China Center. In early January 2014, the Port Authority made space available to tenants for interior fit-out. Condé Nast is scheduled to begin moving into its space in November 2014. Additionally, 4 WORLD Legends Hospitality was selected to develop and operate the TRADE CENTER 120,000-square-foot on floors 100 through 102, which is scheduled to open in early 2015.  2.3 MILLION SF OFFICE TOWER Another major milestone came in November with the opening of 4 World Trade Center, designed by Pritzker-prize winning  COMPLETED IN architect . Fifty percent of the 72-story, 2.3 million-square-foot tower has been leased to the Port Authority OCTOBER 2013 of New York and and to the City of New York’s  TENANTS Human Resources Administration. The building’s final interior fit out will continue with tenants scheduled to begin occupying the INCLUDE PORT space by the end of 2014. AUTHORITY OF

3 World Trade Center secured media investment management NEW YORK & firm GroupM, who signed a 500,000-square-foot lease in NEW JERSEY December. This deal, which accounts for 20% of the 2.5 AND NYC HUMAN million-square-foot tower’s office space represents a significant RESOURCES milestone in the development of this project. Completion of the ADMINISTRATION tower is anticipated for 2017.

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Subgrade work progressed at , a planned 88-story, 2.8 million-square-foot tower designed by Norman Foster, and the building is being actively marketed to a host of 3 WORLD potential anchor tenants. It will include 60 floors of office space and 90,000 square feet of retail. TRADE CENTER

The dramatic, winged form of the much-anticipated World Trade  SIGNED GROUP M Center Transportation Hub, designed by Santiago Calatrava, FOR 516,000 SF emerged from the construction site in 2013, a tangible testament to the strides made toward its completion. Steel construction  2.5 MILLION SF continues on the hub’s above-ground oculus. About half of the OFFICE TOWER “ribs” have been welded into place, and the “wings” that extend from the arches will become visible by mid-2014. The West  SCHEDULED FOR Concourse pedestrian underpass opened in October, linking the COMPLETION IN PATH station with Brookfield Place. TheDey Street Concourse 2017 will become available in 2014, providing direct access from to the PATH station. Scheduled for completion in 2015, the extensive complex will house the PATH station, 350,000 square feet of retail at Westfield World Trade Center and underground connections to the Fulton Center on the and Brookfield Place on the .

Westfield World Trade Center’s expansive 350,000-square-foot shopping and dining complex will feature 150 fashion, lifestyle, and technology brands, as well as dining and entertainment. In December, Westfield agreed to purchase the remaining 50 percent stake from the Port Authority of New York and New Jersey, valuing the retail space at $1.4 billion. Construction will continue throughout 2014, with an anticipated opening in 2015.

The National September 11 Museum, a 100,000-square-foot space, is currently undergoing fit-out, and artifacts are being installed. It is scheduled to open in mid-May 2014. The National September 11 Memorial plaza welcomed 5.3 million visitors in 2013 and 11 million since it opened on September 12, 2011.

Significant progress was made on several of the development components at Site 5. Installation of the mechanical systems neared completion at the underground Vehicle Security Center (VSC), which will serve as the World Trade Center complex’s main entry point for automobiles, trucks and buses visiting the site. The VSC is slated to open by late 2014. WEST CONCOURSE Work began in 2013 on the 1.4-acre , located on  UNDERGROUND PASSAGEWAY the roof of the VSC. Expected to open by 2015, the park will add CONNECTING WTC TRANSIT HUB AND new green space to the neighborhood and serve as a landscaped pedestrian pathway between West and Greenwich Streets. BROOKFIELD PLACE

Another component of Site 5 that showed signs of progress  OPENED IN OCTOBER 2013 was the restoration of St. Nicholas Greek Orthodox Church.

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Renderings of the Church, which will be built on the east side of Liberty Park, were released by the project’s designer, WTC transit hub architect Santiago Calatrava.

The remainder of Site 5 will accommodate additional development, specific plans for which have yet to be determined by the Port Authority.

The World Trade Center site’s long-planned arts and cultural venue on the corner of Fulton and Greenwich Streets announced its official name:“World Center for the Performing Arts.” The Port Authority has been installing infrastructure for the future site below grade; steel procurement for the structure will begin soon in coordination with the Port Authority. Fulton Center FULTON CENTER A vital transportation connection in Lower Manhattan on  OPENING IN JUNE 2014 the corner of and , Fulton Center is nearing completion and is expected to open in June 2014. The  63,000 SF OF RETAIL AND 180,000-square-foot building will feature 63,000 square feet COMMERCIAL USE of retail and other commercial uses and 60,000 of circulation space. The MTA announced in December that Westfield Group will be the master lessor and will be responsible for tenanting and management of all the retail and commercial space. The MTA estimates that 300,000 people will use the Fulton Center every day. Brookfield Place Retail Formerly known as the World Financial Center, Brookfield Place is undergoing a dramatic redevelopment. The retail and public space is being transformed into a world-class shopping and dining experience, within the complex’s 8 million square feet of Class A office space. Brookfield’s 8,000-square-foot entry hall pavilion opened in October, providing a seamless connection to the area’s new state-of-the-art transportation hubs. In 2013, Brookfield announced exciting new apparel tenants, including Michael Kors, Theory, and Scoop, as well as cutting-edge eateries like Parm and Umami Burger. Waterfront dining and chef-driven restaurants will open in 2014, including Hudson Eats,” a 600-seat gallery, with 14 quick-casual eateries, and “Le BROOKFIELD PLACE District,” a European-style marketplace. All of the new retail and  WEST STREET ENTRANCE OPENED dining is scheduled to come online by early 2015. IN 2013 Connectivity   Post-Sandy investments accelerated the deployment of fiber 200,000 SF OF RETAIL OPENING optic upgrades throughout Lower Manhattan, concluding in 2014-2015 spring 2013. As a result, the district boasts the most advanced fiber optic network in the country.

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The Downtown Alliance also announced the first phase of its expansion of its free public WiFi program along the Water Street Commercial Corridor and Waterfront, made possible by a grant from the New York City Economic Development Corporation. About 80 percent complete at the end of 2013, the network will provide full coverage along the Water Street corridor between Whitehall and Fulton Streets, extending to busy neighboring side streets such as and Front Street. It will also provide coverage along the East River waterfront and piers in Lower Manhattan. Users may use personal computers or smartphones to log on to the EAST RIVER WATERFRONT network, named “#DwtwnAllianceFreeWifi.”  LOWER MANHATTAN SEGMENT COMPLETED IN 2013 Waterfront New Yorkers are set to be reintroduced to the grandeur of Lower Manhattan’s waterfront. The transformation took several big steps in 2013, from the groundbreaking of Pier 17 at the Seaport to the completion of the East River Waterfront Esplanade, which extends from the Seaport to Maritime Building. In 2013, the Howard Hughes Corporation held a groundbreaking ceremony marking the beginning of the transformation of the building on Pier 17. Plans include a reconstructed 365,000-square-foot building with new retail and dining, as well as 74,800 square feet of public space and a 1.5-acre roof deck BATTERY MARITIME BUILDING with public open space and an amphitheater for outdoor concerts  61-ROOM BOUTIQUE HOTEL and events. The project is scheduled for completion in 2016.  ROOFTOP AND RESTAURANT Just south of Pier 17, the second phase of the $165 million East River Waterfront Esplanade, from the Battery Maritime Building  COMPLETION IN 2015 to Old Slip, was finished. This project created an esplanade with landscaping, bikeways and pedestrian pathways. The final phase, under construction now, will extend north to Pier 35, just north of the . That esplanade extends to the Battery Maritime Building, a $150 million project by developers Dermot Group and Poulakakos Family, which began construction in 2013. The 61-room boutique hotel with a 10,000-square-foot rooftop bar and restaurant will sit atop the existing historic ferry terminal. The mixed-use space will also feature a public Great Hall and catering event space. As part of the Battery Conservancy’s major renovation in Battery Park, work started on the bikeway that will connect the parks to the East River Esplanade. The bikeway project will PIER A also include a comfort station and bike respite. Phase One will  40,000 SF RESTAURANT COMPLEX be finished in May 2014, with Phase Two along to be completed later in the year. The Battery Green, a three-acre  FEATURING BIERGARTEN, OYSTER public space with a quarter-mile walkway, is 65% complete. BAR & A FINE DINING RESTAURANT

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The Green will feature movable chairs and will host festivals, Broadway. Stretching from Ann Street to Rector Street, the work outdoor movies and live entertainment. Battery Park’s anticipated started this fall and will likely be 25 percent complete by the end “SeaGlass” carousel finished steel and glass installation and will of 2014. The deconstruction of the Bridge began, celebrate its opening this spring. allowing ground-level pedestrian access across West Street. On the west side of Battery Park, the Dermot Company and Finally, the last section of the Fulton Street reconstruction project Poulakakos Family teamed up on another waterfront project— will be completed in spring 2014. the long derelict Pier A building. They started construction in 2013 on a 40,000-square-foot restaurant complex named the “Harborhouse at Pier A,” which will be unveiled on Memorial Day 2014. Among the site’s many features: a biergarten, oyster bar, 100-seat fine-dining restaurant, catering, outdoor promenade, café, music venue and gallery space. The eateries will support local and regional food and a “farm-to-table and bay-to-plate” ethos. One of New York’s great outdoor experiences is being created just off Lower Manhattan’s shore, as undergoes a massive renovation that will create 40 acres of expansive new parks, rejuvenated landscapes and redeveloped cultural and commercial buildings. In 2013, acres of new parks and public spaces were completed, including Liggett Terrace, Hammock Grove, and the Play Lawn. In the fall of 2013, construction began BATTERY PARK on the next 10 acres of park and the Trust for Governors Island  BIKEWAY CONNECTING HUDSON announced three new and expanding tenants: the Urban Assembly RIVER PARKS AND EAST RIVER School, the Lower Manhattan Cultural Council’s ESPLANADE TO BE COMPLETED IN Art Center at Governors Island and a day spa. 2014 Transportation Infrastructure By boat, by bike or by foot — getting around in Lower Manhattan is becoming easier, as the area’s infrastructure expands and undergoes repairs and updates.

The East River Ferry, originally scheduled to cease operating in June 2014, got a major reprieve and will continue to provide service along the Manhattan, Brooklyn and waterfronts until at least 2019. The five-year extension was granted in response to enormous demand. The ferry exceeded initial projections, hitting its total three-year ridership goal of 1.2 million in its first 18 months of service.

The old MTA loop station was brought back into passenger service, while the newer terminal station — opened in 2009 and heavily damaged by — undergoes GOVERNORS ISLAND extensive repairs.  30 ACRES OF NEW PARKS There are more bicycles in Lower Manhattan than ever before, COMPLETED IN 2013 after CitiBike opened 25 stations in spring 2013, the largest of  10 MORE ACRES INCLUDING THE which is located at the Terminal. HILLS TO BE COMPLETED IN 2015 Other transportation projects progressed in 2013, including Broadway One, the $42 million capital reconstruction of

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MAJOR CAPITAL IMPROVEMENT PROJECTS SCHEDULED FOR COMPLETION 2013-2016

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F D R DR PIER 17 PINE ST ALBANY ST CARLISLE ST

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THE NATIONAL W RENOVATIONS SEPTEMBER 11 W

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Private

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2013 was a banner year for leasing in Lower Manhattan and Relocation Activity signified a strong and growing local economy. The area’s Tenant relocations were brisk in increasing appeal is indisputable: new businesses want to th 4 quarter leasing up 2013, comprising about 42% of start here, and existing businesses want to move here. The district’s considerable leasing volume was driven, in part, leasing activity, up from 27% in by tenants absorbing large blocks of space, a trend which is 2012. The top five relocations likely to extend into 2014 as new World Trade Center space all involved deals over 100,000 is added to the market. 2013 ended with a strong 4th quarter, square feet. The biggest were suggesting that the leasing momentum will persist and that 82%year-over-year in Creative Services, Media the economy will continue to diversify. The Financial Services and Advertising. They included Industry remains a pillar of Lower Manhattan, but leasing and GroupM Worldwide’s commitment to move from Midtown to employment trends show an economy that is growing more 515,000 square feet at ; HarperCollins and more diverse with a notable expansion in 2013 of both the Publishers’ lease of 181,000 square feet at , tech, advertising, media and education sectors. The area also relocating from Midtown; and Droga5’s move from Midtown saw robust relocation activity, which demonstrates a clear shift South to 91,000 square feet at 120 . Education in location preferences in favor of Lower Manhattan. relocations also ranked among top transactions: Nyack College Leasing Trends1 signed a deal to move to a 166,000-square-foot office at 17 Battery Place North, and the Institute of Culinary Education is The 4th quarter of 2013 was the best-performing since the 3rd moving from Midtown South to a 71,000-square-foot space it is quarter of 2006 and more than double the five-year average. leasing at Brookfield Place. Totaling 2.2 million square feet, 4th quarter leasing activity was up 46% over last quarter and 82% year-over-year. Total year-end New Office Inventory, Vacancy Rates leasing activity topped out at 6.2 million square feet, a 39% and Absorption increase over 2012 and 29% higher than the 10-year average. The opening of 4 WTC in the 4th quarter of 2013 added Lower Manhattan’s leasing activity was also 48% greater than 2.3 million square feet of new office inventory to the Lower Midtown South’s in 2013. The district continues to welcome Manhattan market, with nearly half pre-leased to the Port tenants relocating from Midtown South, which is a tight and Authority of New York and New Jersey and the NYC Human increasingly expensive market.

ANNUAL LEASING ACTIVITY, 2004-2013 Source: Downtown Alliance, CBRE

8 Million

6.9 MM 7 Million 6.2 MM 5.8 MM 5.9 MM 6 Million 5.5 MM

5 Million 4.5 MM 4.5 MM

4 Million 3.1 MM 3.3 MM 2.9 MM 3 Million

2 Million

1 Million

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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Resources Administration. The remaining 1.2 million square feet of the tower’s available space was added to the market, pushing the vacancy rate to 12.2%, a 3.4 percentage point increase over 2012. 4 DEALS OVER This jump in vacancy masks an otherwise encouraging trend: Lower Manhattan closed out the 4th quarter with four deals over 200,000 square feet. Three of these — GroupM 200,000 SF IN Worldwide, Jones Day and CME Group — were among the city’s top 10 deals in all of 2013.2 In 2013, Lower Manhattan 4th Quarter also saw 13 transactions signed for more than 100,000 square feet. Five of those were over 200,000 square feet, and 80% of that activity occurred in the 4th quarter. Other VACANCY RATE AND OFFICE INVENTORY, deals over 200,000 square feet include New York City Health Q4 2012 - Q4 2013 Source: Cushman & Wakefield and Hospitals Corporation’s lease for 221,000 square feet at and Hughes, Hubbard and Reed LLP’s 14% 87.5 Million 220,000-square-foot renewal at 1 Battery Park Plaza. 12% 87 Million

A diverse set of tenants rounded out other large deals 86.5 Million 10% this year, two of which were at Brookfield Place. The 86 Million aforementioned Jones Day signed a 330,000-square-foot 8% lease to relocate from Midtown to the expanding space 85.5 Million 6% at , and the College Board, an educational 85 Million services firm, signed a lease there for 145,000 square feet. 4% 84.5 Million WeWork expanded its footprint south of Chambers Street by more than 200,000 square feet, with leases for two new 2% 84 Million

locations including 121,000 square feet at 222 Broadway and 0% 83.5 Million 86,000 square feet at 25 Broadway. Q4 Q2 Q3 Q4 2012 2013 Office Inventory (SF) Vacancy rate (%)

TOP RELOCATION DEALS, 2013 Source: Downtown Alliance, CBRE, CoStar

Tenant Name SF Leased Quarter Signed Tenant Name SF Leased Quarter Signed Location Previous Location Sector Location Previous Location Sector GroupM Worldwide 515,457 Q4 Census Bureau 39,406 Q1 1 12 3 World Trade Center Midtown Creative Services, Advertising Midtown South Government Jones Day 330,210 Q4 2 The WeissComm Group 35,454 Q2 250 Vesey Street Midtown Professional Services, Law 13 199 Water Street Midtown South Professional Services, Other HarperCollins Publishers 180,748 Q1 3 Epsilon Data Management 34,792 Q3 195 Broadway Midtown Creatives Services, Media 14 199 Water Street Midtown South Nyack College 166,385 Q2 Professional Services, Other 4 17 Battery Place North Midtown Education NYS Society of Certified Public 34,577 Q1 15 Accountants Midtown South Other College Board 145,446 Q4 5 250 Vesey Street Midtown Education Institute for Career Development 26,459 Q4 Liberty Mutual 130,449 Q1 16 123 William Street Midtown South Nonprofit 6 55 Water Street Expansion FIRE Catholic Charities of NY 26,438 Q1 Droga5 75,020 Q3 17 7 80 Midtown Nonprofit Midtown South Creative Services, Advertising Davis Brody Bond 26,354 Q4 The GfK Group 86,322 Q4 18 8 Midtown South Creative Services, Other Midtown South Education FUNDtech 26,206 Q3 Institute of Culinary Education 71,000 Q1 19 9 Jersey City, NJ Midtown South Creative Services, Media Technology Exponents 23,343 Q3 Success Academy Charter Schools 53,908 Q3 10 20 120 Wall Street Education 17 Battery Place North Midtown South Nonprofit Pacific College of Oriental Medicine 41,900 Q3 PulsePoint 23,170 Q3 11 21 110 William Street Midtown South Education 20 Midtown South Creative Services, Advertising

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Rent Industry Relocation and Employment The addition of higher-priced, Class A space in 2013 triggered There are nearly 310,000 employees in Lower Manhattan, a a sizable bump in asking rents in Lower Manhattan. The number that has remained stable year-over-year. 3 Finance, overall average rent was $48 per square foot in the 4th Insurance and Real Estate (FIRE) is still the dominant private quarter, 5% greater than the prior quarter and a notable 22% sector employer in the district, and companies such as increase year-over-year. The addition of 4 World Trade Center , and Moody’s are among bumped Class A rents up to $53 per square foot, an 18% the FIRE sector firms that together account for 40% of the top rise year-over-year. Despite these increases, pricing in Lower 30 largest tenants in the local market. However, FIRE has been Manhattan remains attractive relative to alternative locations, declining in its share of total district employment, dropping with overall average asking rent $14 per square foot less than from 31% in 2005 to 26% in 2013. Meanwhile, employment Midtown South and $21 per square foot below Midtown. in Lower Manhattan is up over that time period, thanks to the

TOP LEASES, 2013 Source: Downtown Alliance, CBRE, CoStar

Tenant Name SF Leased Quarter Signed Tenant Name SF Leased Quarter Signed Location Transaction Type Sector Location Transaction Type Sector GroupM Worldwide 515,457 Q4 Moody's Investors Service 129,024 Q4 1 3 World Trade Center Relocation Creative Services, Advertising 11 Expansion FIRE

CME Group, Inc. 449,000 Q4 WeWork 120,537 Q1 2 1 North End Ave Sale-Leaseback FIRE 12 222 Broadway Relocation Professional Services, Other Jones Day 330,210 Q4 3 The Port Authority of NY & NJ 118,518 Q3 250 Vesey Street Relocation Professional Services, Law 13 115 Broadway Renewal Government Health & Hospitals Corporation 221,180 Q3 4 55 Water Street Consolidation of Government Bank of Nova Scotia 99,311 Q3 14 NYC offices 250 Vesey Street Moving within LM FIRE Hughes Hubbard & Reed LLP 219,643 Q4 5 Droga5 91,442 Q3 1 Battery Park Plaza Renewal Professional Services, Law 15 120 Wall Street Relocation Creative Services, Advertising HarperCollins Publishers 180,748 Q1 6 195 Broadway Relocation Creatives Services, Media 16 WeWork 86,322 Q3 Borough of Manhattan 167,072 Q4 25 Broadway Expansion Professional Services, Other 7 Community College Renewal Education 17 Conde Nast 80,000 Q1 255 222 Broadway Relocation Creative Services, Media Nyack College 166,385 Q2 18 American Arbitration Association 79,688 Q1 8 17 Battery Place North Relocation Education 120 Broadway Relocation Other College Board 145,446 Q4 19 Green Ivy Schools 75,675 Q1 9 250 Vesey Street Relocation Education New School Education Liberty Mutual 130,449 Q1 20 The GfK Group 75,020 Q1 10 55 Water Street Expansion FIRE 200 Liberty Street Relocation Professional Services, Other

OVERALL AVERAGE ASKING RENTS, Q4 2012 - Q4 2013 Source: Cushman & Wakefield

$80 Lower Manhattan Midtown South Midtown $70 $70 $63 $60 s t n e $50 $48 R

g n i

s $40 A

l a l r

e $30 v O $20

$10

$0 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2012 2013 2012 2013 2012 2013

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growth of a variety of other sectors. The Professional Services EMPLOYMENT BY INDUSTRY, 2013 sector, which employed approximately 40,000 employees Source: New York State Department of Labor in 2013, has grown by almost 6,500 employees, increasing its share of local employment from 11% to 13% since 2005. Other private sector industries have added over 16,000 employees in Lower Manhattan during this time. 4% 7% The diversification of the Lower Manhattan economy is driven 13% by relocations—a trend that was particularly strong in 2013 9% and shows momentum. While FIRE accounted for 27% of 30% leasing activity in 2013, Professional Services and Media generated a combined 33% of 2013 leases signed.4 This represents a major change. In 2005, the FIRE sector had 56% accounted for more than five times the leasing activity logged 26%

31%

310,000 FIRE Other employees Professional Government Services

LEASING BY INDUSTRY, 2013 Source: CBRE 2005 2013

4% 7% 18%

9% 27%

8% 15% 56% 3%

3% 6% 3% 6% 12% 10%

FIRE Professional Media Government Education Services Nonprofit Tech Healthcare Other

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by Media and Professional Services, then 63% and 12% Overall, technology leasing6 in Lower Manhattan was up 122% respectively. Media and Advertising, in particular, accounted over 20127. The district’s proportion of all citywide technology for some of the year’s biggest deals, including HarperCollins leasing also rose, jumping from 11% in 2012 to 17% in 2013, lease of 181,000 square feet and GroupM’s lease of 515,000 as more and more technology tenants set up shop in or square feet, two of many new tenants to the district. relocated to Lower Manhattan.

The arrival of Media and Advertising companies and Sizable relocation deals by Nyack College and the Institute Technology and Information companies (together referred to of Culinary Education capped off a strong year of leasing by as “TAMI”) has sparked the creation of a cluster of creative the education sector in Lower Manhattan. Education tenants firms in Lower Manhattan. A recent count by the Downtown accounted for 12% of leasing activity in the district this year, Alliance revealed that there are nearly 800 TAMI5 companies and a notable increase in total activity over the last located in the district, many of which joined the ranks in 2013. several years.

LOWER MANHATTAN’S LARGEST TENANTS, 2013 Source: CBRE

Tenant Name SF Occupied Sector 1 City of New York 6,149,000 Government 2 AIG 2,500,000 FIRE 3 Bank of New York Mellon Corporation 2,470,000 Government 4 Goldman Sachs 2,360,000 FIRE 5 New York State 2,340,000 Government 6 JP Morgan Chase 1,860,000 FIRE 7 Verizon 1,820,000 Technology 8 1,530,000 FIRE 9 Metropolitan Transportation Authority 1,470,000 Government 10 Bank of America (including Lynch) 1,350,000 FIRE 11 American Express 1,340,000 FIRE 12 Federal Reserve Bank of New York 1,270,000 Government 13 Smith Barney 1,120,000 FIRE 14 Government 1,105,000 Government 15 Mcgraw-Hill (includes Standard & Poor's) 1,040,000 Professional Services 16 950,000 FIRE 17 Sullivan & Cromwell 700,000 Professional Services 18 Moody's Investor Services 680,000 FIRE 19 Guardian Life Insurance Company of America 610,000 FIRE 20 Royal Bank of Canada 590,000 FIRE 21 570,000 FIRE 22 Cleary, Gottlieb, Steen & Hamilton 560,000 Professional Services 23 Thomson Reuters Financial 550,000 Technology 24 Cadwalader, Wickersham & Taft 530,000 Professional Services 25 CME Group, Inc. 510,000 FIRE 26 R.R. Donnelley & Sons Company 490,000 Other 27 Fried, Frank, Harris, Shriver & Jacobson 380,000 Professional Services 28 Corporation 360,000 Professional Services 29 Milbank, Tweed, Hadley & McCloy 350,000 Professional Services 30 United Federation of Teachers 350,000 Other

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Commercial Sales8 2013 was an active year for the sale of commercial assets, 195 BROADWAY as nearly 10% of Lower Manhattan’s office inventory traded hands. The larger deals demonstrated a vote of confidence in  SOLD IN 4TH the market. QUARTER • In December, L&L Holding Company and Beacon Capital Partners sold the majority interest in 195 Broadway, a 1  PROPERTY million-square-foot office building, to institutional investors. While the purchase price was not disclosed, the building is VALUE estimated to be worth $500 million or about $475 per square DOUBLED IN 8 foot9. Valuation and investment interest is rising in Lower YEARS Manhattan, and this property’s valuation is nearly double the $266 million (or about $253 per square foot) paid in   2005. Since then, the owners rebranded the building and 1 MILLION SF attracted a diverse set of tenants. They include: XO Group, a media technology company; HarperCollins Publishers; and Omnicom, an advertising company. L&L Holding Company 1 CHASE will retain a minority stake in the building, which is currently 100% leased. MANHATTAN PLAZA • In October, Fosun International Ltd., a Chinese investment group, beat out numerous rival buyers to purchase 1 Chase  SOLD IN 4TH Manhattan Plaza from JP Morgan Chase & Co. for $725 QUARTER million. JP Morgan Chase will retain some operations in the 2.2-million-square-foot building and consolidate about 4,000 employees in other office locations. Fosun  $725 MILLION International has not announced any official plans for the building.  2.2 MILLION SF • In November, Brookfield Office Properties purchased 1 North End Avenue from the CME Group for $200 million, or about $398 per square foot. The seller has signed a lease to remain in 449,000 square feet, or about 81%, of the property for 24 months. After that time, they will downsize to 222,000 square feet for a period of 13 years. 1 NORTH END This property is adjacent to Brookfield Place, and the AVENUE purchase increased ’ control over office properties in .  SOLD IN 4TH QUARTER

 $200 MILLION

 500,000 SF

 HOME TO NYMEX

13 CAPITALCAPITAL IMPROVEMENTS IMPROVEMENTS EMPLOYMENTOFFICE & OFFICERETAIL TOURISMTOURISM & HOSPITALITY & HOSPITALITYRESIDENTIALRESIDENTIALRETAIL TOURISM & HOSPITALITY

An increasing number of visitors are coming to New York City and Lower Manhattan for business and leisure travel. In 2013, 54.3 million people visited New York City10. As a result, the city’s hospitality industry is flourishing with an anticipated 11% increase in hotel rooms by 2016. The projected growth in hospitality is particularly striking in Lower 9.6 MILLION Manhattan, where the number of hotel rooms is expected to estimated number of visitors in 2013 double in just two years. Tourism

Tourism numbers dipped in 2013, but this represented a temporary depression in an otherwise positive trend.

The primary culprit was Hurricane Sandy, which caused the prolonged closure of several major tourism destinations, including and the . The federal government shutdown also nudged visitor numbers downward. The estimated number of visitors in 2013 was 9.6 million, a 16% drop from 11.5 million in 201211.

Tourism is already recovering, and many sites regained their footing by the end of 2013. Even with a two-week government shut down, major tourism attractions drew nearly 3 million NATIONAL SEPTEMBER 11 visitors in the 4th quarter of 2013, up 9% from the 4th quarter MUSEUM of 2011. The Statue of Liberty and Ellis Island have recorded strong activity since they reopened in July and October. The  OPENING IN MAY 2014 number of visitors between December 23 and January 5 was 20% greater than in any year since 2008, according to Statue Cruises. The National September 11 Memorial, the first Lower Manhattan tourism attraction to reopen following Hurricane Sandy, recorded 5.3 million visitors in 2013, up from 5 million in 2012. These milestones foreshadow a strong year for tourism in 2014 and a dramatic surge in the years ahead, as several major attractions open and new hotels sprout up.

Additional attractions are opening soon: • The National September 11 Museum is slated to begin welcoming visitors in mid-May 2014. • Pier A, a 127-year-old, landmarked pier at the southern tip of Manhattan now undergoing redevelopment, will offer a catering and event facility and a restaurant complex that features an oyster bar, biergarten and fine dining restaurant. The pier will also host a venue for live STATUE OF LIBERTY & ELLIS music and art exhibitions. The “Harberhouse at Pier A,” ISLAND operated by the Poulakakos family, has a planned opening for Memorial Day 2014.  REOPENED IN 2013

14 CAPITALCAPITAL IMPROVEMENTS IMPROVEMENTS EMPLOYMENTOFFICE & OFFICERETAIL TOURISMTOURISM & HOSPITALITY & HOSPITALITYRESIDENTIALRESIDENTIALRETAIL

• The 120,000-square-foot observation deck at 1 World AVERAGE DAILY ROOM RATE (ADR), Q4 2012 - Q4 2013 Trade Center, to be operated by Legends Hospitality, will Source: Downtown Alliance offer dining options, a gift shop, special events and a theater. It is projected to draw 3.8 million tourists annually $330 when it opens in 2015. $320 $314 $310

Hotel Occupancy and Room Rates $290 $293 $295 Current and upcoming attractions, coupled with new tenants at $270 the World Trade Center, have created an attractive environment for hotels in Lower Manhattan. The hotel market ended $250

the year on a solid note, as hotel fundamentals returned to $230 their traditional strength during the holiday tourism season $210 following disruption a year ago caused by Hurricane Sandy. Occupancy reached 86% in 4th quarter 2013, up 13% from $190 4th quarter 2012 (when the market was impacted by the $170 hurricane), and 2% from 4th quarter in 2011, the most recent pre-Sandy holiday season. For the first time in two years, $150 Q4 Q1 Q2 Q3 Q4 Lower Manhattan’s occupancy rate outperformed the citywide average of 85%. The district’s average daily room rate (ADR) 2012 2013 remained stable over 2012 at $314. Though it dropped a slight Lower Manhattan New York City 2% over 2012, it topped the citywide ADR of $295. The hotel industry’s resilience in Lower Manhattan augurs well for the year ahead.

increase in AVERAGE OCCUPANCY RATE, Q4 2012 - Q4 2013 hotel rooms Source: Downtown Alliance in 2014 34% 100% 95% Development 90% 87% Projected growth in tourism and an increase in office space at 86%

the World Trade Center will generate more leisure and business 85% travelers. As a result, developers are eagerly adding new 85% supply. Hotel projects under construction and in the planning 80% stages will nearly double the number of existing hotels by 2016. 75% Lower Manhattan currently has 4,100 rooms in 18 hotels. Some 74% 2,370 new rooms in 13 hotels are currently under construction, 70% three of which broke ground in 2013: 65% • Four Seasons at 30 Park Place, 189 rooms

• A boutique hotel at the Battery Maritime Building, 60% 61 rooms Q4 Q1 Q2 Q3 Q4 2012 2013 • Thompson Hotel at , 287 rooms Lower Manhattan New York City

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Four additional projects are in the planning stages, for a total 17 hotels with 3,270 rooms in the development pipeline. Of these, seven hotels with 1,380 rooms are scheduled for completion in FOUR SEASONS 2014. They are: DOWNTOWN • Hampton Inn at 32 , 80 rooms  30 PARK PLACE • Holiday Inn at 99 Washington Street, 350 rooms  189 ROOMS • Aloft Hotel at 49 Ann Street, 113 rooms  • Fairfield Inn & Suites at 161 Front Street, 200 rooms 82 STORIES • Extended Stay Apartments at , 132 rooms  HOTEL & • Marriott Residence Inn at 170 Broadway, 243 rooms CONDOMINIUM • Four Points by Sheraton at 217 Pearl Street/6 Platt  COMPLETION IN 2016 Street, 262 rooms

HOTEL DEVELOPMENT PIPELINE Source: Downtown Alliance

Source: Downtown Alliance Owner/ Rooms/ Owner/ Rooms/ Hotel & Address Open Date Hotel & Address Open Date Developer Floors Developer Floors

Hampton Inn 1 Hersha Hospitality 80/8 2014 Boutique 32 Pearl Street Trust 10 Battery Maritime Building The Dermot Group 61 2015 Holiday Inn 2 McSam Hotel 350/50 2014 Thompson Hotels 99 Washington Street Group 11 5 Beekman Street/115 GB Lodging Group 287 2015 Nassau Street 9/46 Aloft Hotel 107 3 49 Ann Street Realty Corp 113/18 2014 Courtyard by Marriott 12 133 Greenwich Street Hidrock Realty 317/31 2015 Fairfield Inn & Suites 4 Lam Group 200/32 2014 161 Front Street Hilton McSam Hotel 13 6 Water Street Group 249/29 2015 Marriott Residence Inn Highgate, Crown, 5 170 Broadway Carlyle Group 243/18 2014 AKA Four Points by Sheraton 14 84 William Street Networks 141/19 2015 6 217 Pearl Street/ 6 Platt Lam Group 262/30 2014 Street Four Seasons 15 Silverstein 189 2016 Extended Stay 30 Park Place Properties 21 (of 82) 7 70 Pine Street Rose Associates 132 2014 Residence Inn Boutique 8 Jiten Hotel 200/26 2014 16 (upper floors) 100 Greenwich Street Management 215 Pearl Street Lam Group 322/40 2016 Courtyard by Marriott Independent hotel 9 Westbury Realty 128/21 2015 17 (lower floors) 24-26 John Street Associates 215 Pearl Street

HOTEL INVENTORY & DEVELOPMENT Source: Downtown Alliance

8,000 Projected

7,000

6,000

5,000

4,000

Number of Hotel Rooms Hotel of Number 3,000

2,000

1,000

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 16 CAPITALCAPITAL IMPROVEMENTS IMPROVEMENTS EMPLOYMENTOFFICE & OFFICERETAIL TOURISMTOURISM & HOSPITALITY & HOSPITALITYRESIDENTIALRESIDENTIALRETAIL

RESIDENTIAL MARKET

Lower Manhattan’s residential population has doubled over the past decade and continues to grow, fueling a strong market and expanding demand for residential sales. Several major residential 70 PINE STREET projects were completed in 2013, and many others broke ground. These include new dormitory facilities, as more higher education  CONVERSION students become residents in the district.  644 RENTAL Development and Population Growth UNITS An estimated 61,000 residents called Lower Manhattan home in  COMPLETION IN 2013.12 This number is expected to increase steadily over the next two years, reaching 63,000 in 2014 and 64,000 in 2015. With the 2014 anticipated completion of 13 residential projects in development  INCLUDES and under construction, there will be more than 2,500 residential 35,000 SF OF units added to the market by 2017. RETAIL AND Three residential projects with nearly 200 units were completed in RESTAURANT 2013: SPACE • 67 Liberty Street, 12 condo units • 113 Nassau Street (The Lara), 168 rental units  INCLUDES • 37 Warren Street (Warren Lofts), 18 condo units 132-ROOM EXTENDED STAY Six projects comprising more than 1,200 units broke ground in 2013: HOTEL • 70 Pine Street, comprising 644 rental units, is scheduled for completion in 2014. •  secured financing and broke ground on 50 WEST the Four Seasons Residences at 30 Park Place. In addition STREET to 157 condos, the 82-story tower will feature a 189-room Four Seasons Hotel. Silverstein expects to finish in 2016.  CONDOMINIUM • GFI Development began construction on 5 Beekman Street. DEVELOPMENT The adjacent historic building will be connected to the 47-story tower, with 287 hotel rooms and 68 residential  BROKE GROUND units, scheduled for completion in 2015. AND SECURED • Time Equities secured $400 million in debt and equity FINANCING IN financing for50 West Street and began construction in 2013 October. The condominium development will include retail  COMPLETION IN space at street-level and residential space above. It is expected to be finished in summer 2016. 2016 61,000 residents

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• Fisher Brothers broke ground on a new, 350-unit rental Student housing is also on the rise in Lower Manhattan. Two new building at 22 Thames Street that it plans to complete in facilities will bring the district’s student housing 2017. inventory to 1,527 units in six buildings, a 46% jump since 2012. • 19 Park Place, including 21 condo units, broke ground in The student population will grow to an estimated 3,100 by the end 2013 and is scheduled to be finished in 2014. of 2015. The two Pace facilities are: Four more projects made significant headway in the planning • A residence hall at 182 Broadway with 196 dormitory units stages in 2013: that was completed in 2013. • Alchemy Properties’ Woolworth Tower Residences, at • 385 dormitory units at 33 Beekman Street that are under 233 Broadway, received approval for the addition of construction and scheduled to open by fall of 2015. two pavilions that will sit on top of the two wings of the 29th floor. Occupying the top 30 floors, the conversion is Several properties traded hands in 2013, with new owners scheduled for completion in 2015; sales of 40 condos are announcing plans for residential development. As a result, the expected to commence in the second quarter of 2014. residential development pipeline will remain robust for years • 24 condo units at 12 Warren Street are expected to to come. be finished in 2015. • In May, St. John’s University sold 101 Murray Street for • The Lighthouse Group announced plans for a 59-story, $223 million to a partnership between Witkoff Group, the 460-rental-unit tower with street-level retail at 112-120 Vector Group and the Fisher Brothers. The sale equaled Fulton Street $600 per buildable square foot, near record pricing . The company anticipates completing the Address & Lease & Date for ground-up development sites in Lower Manhattan.Units project in 2017. Building Name Building Type Open 67 DevelopmentLiberty Stree planst includeC oan 200-unitdo residential • Trinity Church announced plans to demolish its parish office 12 2013 condominium tower. St. John’sConv Universityersion will vacate the site building at 74 Trinity Place and build a 25-story, mixed-use 182after Bro theadw 2013-2014ay academicDorm iyeartory and has announced 196 2013 tower. Church offices will occupy lower floors, and luxury Paceplans Resi dtoen relocatece Hall to 51 AstorNe Place.w Construction condominiums will be on the upper floors. Anticipated 113 Nassau Street Rental 168 2013 groundbreaking is set for fall 2014 with completion in 2017. T•he InLa rSeptember,a Verizon soldN theew topCon 22stru floorsction of 140 West 37 StreetWarre,n including Street 372,000 Csquareondo feet, for $274 million 18 2013 • The Brauser Group, one of the top garage owners Warr(oren roughlyLofts $726 per squareCo foot)nvers toio nMagnum Real Estate in Manhattan, announced plans for a 23-story residential 70 Pine Street Rental Group. Verizon will maintain operations in 60% of6 4the4 2014 building with 120 units and ground floor retail at 54 AIG Btoweruildin andg will relocate roughlyConv 1,000ersion employees to other Fulton Street 19 Park Place Condo . locations. Other major changes in the building include21 the201 4 Royale New Construction addition of 85,000 square feet of retail at the base that is 33 Beekman Street Dormitory 385 2015 Pacescheduled Residence to H aopenll in the 4thNe wquarter Const rofuc t2014.ion HIGHLIGHTS OF RESIDENTIAL DEVELOPMENT 87 Chambers Street Condo Source: Downtown Alliance 17 2015 New Construction Address & Lease & Date 5A Bdedereksms a&n Street HLoetaesl/eC o&n do Date Units U6n8its 2015 Building Name Building Type Open Building Name CBounivldeirnsigo nType Open 67 Liberty Street Condo 3607 PLiabrekr tPyl aSctereet HCotnedl/oCondo 12 2013 11527 20163 Conversion Four Seasons Residences NCoenwv Cerosniosntruction 182 Broadway Dormitory 5108 2W Bersota Sdtwreaeyt TDBoDrmitory 196 2013 1TB9D6 20136 Pace Residence Hall New Construction Pace Residence Hall New Constructiion 113 Nassau Street Rental 2121 3T hNaamsseasu S Strtereet t Rentall 168 2013 136580 20137 The Lara New Construction The Lara New Constructiion 37 Warren Street Condo 23373 W Barroreand wSatryeet Condo 18 2013 1480 20153 Warren Lofts Conversion Woaorrlewno Lrtohf tTsower Residences Conversion 70 Pine Street Rental 1720 WPianrer eSntr Seterteet CRoendtaol 644 2014 62444 20154 AIG Building Conversion AIG Building NCoenwv Cerosniosntruction 19 Park Place Condo 1091 P aMrukr Pralay cSetreet Condo 21 2014 22010 2T0B1D4 Tribeca Royale New Construction Tribeca Royale New Constructiion 33 Beekman Street Dormitory 13132 B-1ee2k0m Faunlt oSntr eSetrteet CDonrmdoitory 385 2015 348650 20157 Pace Residence Hall New Construction Pace Residence Hall New Constructiion 87 Chambers Street Condo 7847 TCrhinaimtyb Pelrasc Setreet Condo 17 2015 T1B7D 20157 New Construction New Constructiion 5 Beekman Street Hotel/Condo 5 Beekman Street Hotel/Condo 68 2015 68 2015 Conversion Conversion 30 Park Place Hotel/Condo 30 Park Place Hotel/Condo 157 2016 157 2016 Four Seasons Residences New Construction Four Seasons Residences New Construction 50 West Street TBD 50 West Street TBD TBD 2016 TBD 2016 New Construction New Construction 18 22 Thames Street Rental 22 Thames Street Rental 350 2017 350 2017 New Construction New Construction 233 Broadway Condo 233 Broadway Condo 40 2015 40 2015 Woolworth Tower Residences Conversion Woolworth Tower Residences Conversion 12 Warren Street Condo 12 Warren Street Condo 24 2015 24 2015 New Construction New Construction 101 Murray Street Condo 101 Murray Street Condo 200 TBD 200 TBD New Construction New Construction 112-120 Fulton Street Condo 112-120 Fulton Street Condo 460 2017 460 2017 New Construction New Construction 74 Trinity Place Condo 74 Trinity Place Condo TBD 2017 TBD 2017 New Construction New Construction CAPITALCAPITAL IMPROVEMENTS IMPROVEMENTS EMPLOYMENTOFFICE & OFFICERETAIL TOURISMTOURISM & HOSPITALITY & HOSPITALITYRESIDENTIALRESIDENTIALRETAIL

• Fortis Property Group purchased 151-161 Maiden echoed a citywide trend, as the Manhattan-wide median rent Lane, a vacant development site located between Front also went down slightly year-over-year by 2% to settle at $3,116. and South Streets, for $64 million or about $256 per Lower Manhattan’s median rent ended the year 18% higher than buildable square foot. Proposed development plans Manhattan’s median rent. Demand remained vigorous for both include a 250,000 square-foot tower with 175 residential units, a hotel and retail space. Lower Manhattan and Manhattan as a whole, with rentals in both areas spending an average of 50 days on the market; this is on • San Diego-based Mavrix Group raised $8 million through crowd funding to buy six parcels at 90-94 Fulton Street par with the average number of days spent on market one and announced plans to develop a 75-story residential tower. year ago. Sales Market (Co-ops and Condos)13 MEDIAN RENTAL PRICE, Q4 2012 - Q4 2013 Lower Manhattan’s residential sales market is flourishing, as Source: Miller Samuel/Douglas Elliman the demand for units exceeds supply. Mirroring many of the strong fundamentals seen Manhattan-wide, the market was $3,800 defined by a quickening sales pace and rising prices. $3,700 2.2 MM

Lower Manhattan residential units are selling more than $3,600 twice as fast compared to one year ago. Units in the district spent an average of 71 days on the market, significantly less $3,500 than the Manhattan average of 95 days. Lower Manhattan’s $3,400 median sales price of $937,500 is also up 10% year-over-year. The district’s premium over Manhattan’s median sales price $3,300 0 0 continued to increase throughout 2013; Lower Manhattan 0 $3,200 0 5 , 0 0 ,

recorded a 10% premium in the 4th quarter, compared to a 1% 8 5 $ 8 5

price differential one year ago. $3,100 $ Rental Market 14 $3,000

Lower Manhattan’s rental market is stable with continued $2,900 Q4 Q1 Q2 Q3 Q4 demand and pricing above the Manhattan-wide average. Rents 2012 2013 were on par with 2012, down just 1%, but still reached their Lower Manhattan Manhattan second highest median in at least three years, at $3,669. This

LOWER MANHATTAN MEDIAN SALES PRICE AND SALES PACE, MANHATTAN MEDIAN SALES PRICE AND SALES PACE, Q4 2012 - Q4 2013 Q4 2012 - Q4 2013 Source: Miller Samuel/Douglas Elliman Source: Miller Samuel/Douglas Elliman

$950,000 200 $950,000 200 183 days 177 days $930,000 180 $930,000 180 $910,000 160 $910,000 160 0 $890,000 0 140 $890,000 140 7 , 5 3

9 $870,000 120 $870,000 $ 120 95 days $850,000 100 $850,000 100 $830,000 71 days 80 $830,000 80 0 0 0 0 0 0 $810,000 60 $810,000 5 , 0 60 0 , 8 5 7 , 5 $ 3

$790,000 8 5 40 $790,000 40 8 $ $ $770,000 20 $770,000 20 $750,000 0 $750,000 0 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2012 2013 2012 2013 Median Sales Price Days on Market Median Sales Price Days on Market

19 CAPITALCAPITAL IMPROVEMENTS IMPROVEMENTS EMPLOYMENTOFFICE & OFFICERETAIL TOURISMTOURISM & HOSPITALITY & HOSPITALITYRESIDENTIALRESIDENTIALRETAIL RETAIL MARKET

Lower Manhattan’s burgeoning residential population, surging student enrollment, strong tourism and an increasingly diverse group of office tenants has created significant new demand for retail. The major retail developments underway at Westfield World Trade Center, Brookfield Place and the will dramatically remake the retail landscape south of Chambers Street, but the market is expanding in other notable ways – as several hundred thousand square feet of new and repositioned retail space takes shape throughout the district. The evidence of this retail transformation is in plain view with the many major openings and announcements of 2013.

Lower Manhattan saw a flurry of activity in 2013: 83 new stores and restaurants opened in 2013, an 8 percent increase over 2012. At the year’s end, the district had a total of 965 stores and restaurants; this represented a 10 percent drop from WESTFIELD WORLD TRADE CENTER 2012, but the decrease was an anomaly, caused primarily by  350,000 SF OF RETAIL OPENING the closing of Pier 17 for redevelopment. That slight loss will be IN 2015 overwhelmingly eclipsed within the next two years when more than 1.5 million square feet of new or repositioned retail space  150 STORES comes online and firmly establishes Lower Manhattan as a premier shopping and dining destination.

3 WORLD $5.2 BILLION TRADE CENTER in annual spending

As new supply accumulates and retail leasing accelerates, the consumer base south of Chambers Street is growing and changing. Buoyed by a concentration of high-wage earners, the profile of a typical Lower Manhattan consumer is already strong. The average annual salary of the 310,000 workers is $118,000; average household income of 61,000 residents 180 BROADWAY hovers at $204,000. All told, the district’s residents, workers  URBAN OUTFITTERS LEASED 21,000 and tourists generate an estimated $5.2 billion in annual spending power. SF

These numbers will likely go up with the transformation  SCHEDULED TO OPEN IN 2014 unfolding across the district and with 7.8 million square feet of new commercial office space underway at towers 1, 3 and 4 at

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the World Trade Center. The face of consumer spending is also being altered by the diversification of the economy — with new media and creative tenants like Condé Nast, TheKnot.com, and Droga5 — and a 45 percent increase in student enrollment AVERAGE HOUSEHOLD INCOME: in higher learning institutions since 2006 (a total of 49,000 students are now enrolled in Lower Manhattan). Another resident: $204,000 catalyst is Lower Manhattan’s swelling tourist population; the area had 9.6 million visitors in 2013, a number which will AVERAGE ANNUAL WAGE: undoubtedly rise with the upcoming openings of the Legends Hospitality-run Observation Deck at 1 World Trade Center and the National September 11 Memorial Museum. employee: $118,000 Many retailers rebounded energetically after Hurricane Sandy, including thirteen businesses on Front Street at the South Street Seaport. The Seaport’s recovery was also bolstered by the Howard Hughes Corporation’s SEE/CHANGE cultural and entertainment program, which featured an outdoor film 1.5 MILLION SF series, a spin-off of the Brooklyn Flea called Smorgasbar, a of new and repositioned retail by 2016 German biergarten and an ice skating rink. SEE/CHANGE and the recent signing of IPic Theaters — an eight-screen, 505- seat luxury movie theater (opening spring 2015 at the Fulton Market Building) — set the stage for the company’s major redevelopment plans for Pier 17.

Plans for 63,000 new square feet of retail and commercial space at Fulton Center advanced in 2013, and the MTA announced that Westfield will be the master lessor of the retail space. The site will open in June 2014. Westfield World Trade’s 350,000-square-foot shopping and dining complex in Manhattan’s iconic World Trade Center is set to open in 2015 and will feature 150 stores on multiple levels.

Brookfield Place’s extensive renovation and reimagining of its retail and public space will culminate in 200,000 square feet of curated retail and restaurant options. Brookfield made big headlines in 2013, when it announced the addition of major brands in apparel, food and fitness (many completely new to Lower Manhattan). Among them: • “Hudson Eats”, a 12,000-square-foot, 600-seat gallery with 14 quick-casual eateries, is set to open 2014. SEE/CHANGE Eateries will include Num Pang, Sprinkles, Chop’t, Little  PROGRAMMING INCLUDING Muenster, Mighty Quinn’s, Tartinery, Dos Toros, Umami SMORGASBAR, FILM SERIES & ICE RINK Burger, Dig Inn, Skinny Pizza and Olive’s.  BEGAN AT THE SOUTH STREET SEAPORT • “Le District”, a 25,000-square-foot European-style marketplace, operated by the Poulakakos family. IN SUMMER 2013

21 CAPITALCAPITAL IMPROVEMENTS IMPROVEMENTS EMPLOYMENTOFFICE & OFFICERETAIL TOURISMTOURISM & HOSPITALITY & HOSPITALITYRESIDENTIALRESIDENTIALRETAIL

• Parm, known for Italian-American comfort food and a sandwich shop, is one of four sit-down restaurants. • An Equinox fitness center to open in 2014. • 40 luxury shops, including Michael Kors, Hermès, Judith & Charles, Scoop, Salvatore Ferragamo, Ermenegildo Zegna, Calypso St. Barth, Theory, Diane von Furstenberg and Bonobos.

In the midst of the retail market’s gathering excitement, there were several major announcements in 2013 concerning retail renovation and repositioning projects throughout the district. A 33,550-square-foot building at 100 Broad Street came to market in 2013 with a new façade and improved floor plan. The former at140 West Street is being converted into a mixed-use building — the result will be 10 floors of commercial office space, 22 floors of residential space and 85,000 square feet of retail space. Adjacent to Fulton Center, 195 Broadway and 222 Broadway are being repositioned to create 70,000 square BROOKFIELD PLACE feet of new and repositioned retail space in 2014. The  200,000 SF OF RESTAURANTS AND project is generating buzz, in part, because of one of the retail tenants: Zara recently signed on for 30,000 square RETAIL OPENING 2014-2015 feet at the site. Another 47,000 square feet of repositioned retail will appear at Brookfield’s1 New York Plaza, which is set to open in 2014. At 70 Pine Street, which is undergoing extensive renovations to convert the building into luxury residential, there will be 35,000 square feet of renovated retail and restaurant space in 2014 and 2015.

Together these large and small projects will expand both the quantity and quality of the shopping and dining offerings in the Lower Manhattan market. 222 BROADWAY

 ZARA SIGNED A LEASE FOR 30,000 SF

 SCHEDULED TO OPEN IN LATE 2014

22 Visit WWW.DOWNTOWNNY.COM/RESEARCH for additional publications on the Lower Manhattan real estate

market and economy. Documents include a complete list of residential and hotel developments, available

retail spaces, a summary of leasing incentives and other research reports including:

Going to the Head of the Class: The Growth of Higher Education in Lower Manhattan, a report on the growth

of higher education in Lower Manhattan, A Surge of Bits and Bytes: The State of Tech and Innovation in Lower

Manhattan, a report on Lower Manhattan’s growing technology industry and The Brain Gain, a report on how

the region’s shifting demographics are favoring the Lower Manhattan business district.

If you have questions or require additional information, please contact [email protected].

END NOTES:

1. Source: Leasing totals from CBRE and the Downtown Alliance. 2. Source: CoStar.  3. Source: Employment data from the NYS Department of Labor. The second quarter of 2013 is the most recent data available for Lower Manhattan. 4. Source: CBRE. 5. Source: TAMI includes Technology, Advertising, Media and Information sectors. This count was compiled using data from Jones Lang LaSalle and CBRE. 6. The Information sector is a part of Technology leasing totals. 7. Source: Technology leasing totals from Jones Lang LaSalle. 8. Source: Transactional information from Massey Knakal. 9. Source: “Landmark 195 Broadway Sold,” NY Post, http://nypost.com/2013/12/02/landmark-195-broadway-sold. 10. Source: Citywide tourism figures provided by NYC & Company. 11. Source: Visitor survey and estimate by Audience Research & Analysis, on behalf of ADNY. 12. Population estimate includes part-time residents. 13 Source: Sales market data provided by Miller Samuel/Douglas Elliman. 14. Source: Rental market data provided by Miller Samuel/Douglas Elliman.

IMAGE CREDITS:

Courtesy of Silverstein Properties - pages 1, 2 Courtesy of Silverstein Properties, credit RSHP and Team Macarie - page 3 (3 World Trade Center) Courtesy of Lower Manhattan Construction Command Center - page 3 (West Concourse) Courtesy of Brookfield Properties - page 4 (Brookfield Place entrance), page 22 (Brookfield Place dining) Courtesy of Westfield Group - page 20 (WTC Transportation Hub) Courtesy of NY Metropolitan Transportation Authority - page 4 (Fulton Center) Courtesy of The Trust for Governors Island, credit Timothy Schenck Photography- page 6 (Liggett Terrace) Courtesy of National September 11 Memorial & Museum, credit Squared Design Lab National - page 14 (National September 11 Museum) Courtesy of Time Equities, credit DBOX - page 17 (50 West Street)

Alliance for Downtown New York 120 Broadway Suite 3340 New York, NY 10271 212.566.6700 DowntownNY.com Telephone: 212-835-2787 Email: [email protected]