4Q16 NYC Office Market Overview
4Q16 NEW YORK CITY OFFICE MARKET OVERVIEW TABLE OF CONTENTS
3 Executive Summary
4 Manhattan Office Market Overview
5 Leasing Activity by Market 20 Relocations and New Construction 6 Renewals versus Relocations 21 Manhattan Supply Forecast 7 Industries Driving Demand 22 Commercial Development Pipeline 8 Manhattan Submarket Comparison 23 Manhattan Development Overview 9 Asking Rent Trends 24 Manhattan Boutique Development Overview 10 Taking and Net Effective Rent Trends 11 Concessions Analysis: Work Amount Brooklyn and Long Island City 12 Concessions Analysis: Free Rent 25 Office Market Overview
13 Manhattan Trophy Trends 26 Brooklyn Office Development Overview 14 Triple-Digit Taking Rent Assets 27 Brooklyn’s Changing Inventory 15 Manhattan Top-Tier Trends 28 Brooklyn Market Trends 16 Midtown South Top-Tier Trends 29 Brooklyn Submarket Snapshot 17 Midtown Deal Composition 30 Asking Rent Comparison 18 Midtown South Deal Composition 31 Long Island City Trends 19 Downtown Deal Composition 32 Long Island City Submarket Snapshot
2 EXECUTIVE SUMMARY
Manhattan total leasing in 2016 dropped 3% from 2015. Activity varied among the Leasing major markets with Midtown showing an overall increase. Midtown South activity Activity dropped dramatically from 2015. Downtown increased from 2015, but both years were off significantly from 2014.
Industry FIRE tenants drove relocation activity while TAMI activity slowed for the second year in a row. Growth
Asking and Growth in asking rents slowed in comparison to the prior five years. Taking rent growth also slowed in Midtown South and Downtown, while Midtown outpaced recent Taking Rents years.
Net Effective Net effective rental rates flattened during 2016 as landlords increased work Rents allowances and prebuilt units to enhance competitiveness and protect face rents.
Premier Deal-making for triple-digit space slowed in the second half of the year. Year-end Space levels remained ahead of five-year averages, but below 2015.
New Approximately 15 million square feet of development projects are scheduled for completion by 2020 with another 14 million square feet in the planning stages. Supply
Borough Brooklyn and Long Island City rents stabilized in 2016. Availability dropped in Long Island City as new product was absorbed, but Brooklyn showed an increase as Trends new inventory was introduced to the market.
3 4Q16 MANHATTAN OFFICE MARKET OVERVIEW LEASING ACTIVITY BY MARKET
Key Total leasing rose in Midtown, but dropped dramatically in Midtown South. Downtown Takeaway leasing remains off from the 2013 peak.
Midtown (MSF) Midtown South (MSF) Downtown (MSF)
27 14 11
10 24 12 9 21 19.9 MSF 10.4 MSF 8 10 18 7 6.7 MSF 15 8 6
12 5 6 4 9 4 3 6 2 2 3 1
0 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Renewals Renewals Renewals Relocations Relocations Relocations Average Annual Velocity Average Annual Velocity Average Annual Velocity
Source: Newmark Grubb Knight Frank Research
5 RENEWALS VERSUS RELOCATIONS Manhattan
Key Renewal activity rose in 2016 after three Takeaway consecutive years of decreases.
Renewals & Renewals & Renewals & Renewals & Expansions, Expansions, Expansions, Expansions, 36% 25% 23% 30%
2013 2014 2015 2016
Relocations, Relocations, Relocations, Relocations, 64% 75% 77% 70%
Source: Newmark Grubb Knight Frank Research
6 INDUSTRIES DRIVING DEMAND
Key Relocation activity among FIRE tenants has increased while TAMI tenant activity has Takeaway dropped.
Relocation Activity by Industry 4Q16 Leasing by Industry 60% 100% Other, 10% Other, 16% 90% Other, 24% 50% 55%
80%
48% Leisure, 21% Leisure, 3%
40% 45% 70% Healthcare, 44% 41% 41% 40% 60% TAMI 8% 30% TAMI 50% 44% 32% Prof Svcs 19% 29% 40% TAMI 20% 16% 23% 23% 30% Prof Svcs 19% 10% Prof Svcs 20% FIRE 15% 10% 36% 10% FIRE 19% FIRE 15% 4% 0% 0% 2013 2014 2015 2016 Midtown Midtown South Downtown
Professional Services FIRE TAMI
Source: Newmark Grubb Knight Frank Research, New York State Department of Labor
7 MANHATTAN SUBMARKET COMPARISON
Key Rental rate growth has begun to slow across nearly all of Manhattan’s submarkets and Takeaway decline in several Midtown submarkets.
Average Availability Submarket Rent Growth Comparison Asking Rent Rate (%) ($/SF) 7% Eastside Manhattan 11.9% $76.14 7% 13% Midtown 12.4% $82.19 Far West Side 13% 6% Eastside 9.5% $76.19 Grand Central 3% 7% Far West Side 17.9% $85.27 Murray Hill -1% Grand Central 14.2% $77.25 7% Park Avenue 2% Murray Hill 8.6% $60.57 9% Penn Station Park Avenue 13.4% $104.07 -2% 8% Penn Station 8.3% $62.10 Plaza District -3% 7% Plaza District 15.9% $110.42 Sixth Ave/Rock Ctr. -2% 5% Sixth Ave/Rock Ctr. 13.5% $86.15 Times Square -1% Times Square 10.1% $80.66 10% Times Square South 3% Times Square South 12.5% $63.58 8% Westside 9.4% $70.16 Westside 3% 13% Midtown South 8.5% $72.99 Chelsea 8% 10% Chelsea 9.1% $69.03 East Village 5% East Village 6.9% $48.00 8% Flatiron/Union Square -0.4% Flatiron/Union Square 6.9% $70.05 15% Hudson Square/Meatpacking -3% Hudson Square/Meatpacking 13.1% $82.27 8% Noho/Soho Noho/Soho 5.8% $72.16 11% 8% Downtown 13.2% $62.25 Downtown East 8% 9% Downtown East 12.5% $57.42 Downtown West -0.2% 8% Downtown West 14.0% $67.68 Tribeca/City Hall 7% Tribeca/City Hall 14.4% $65.70 Growth Per Annum Since 2010 (%) Growth Past 12 Months (%) Source: Newmark Grubb Knight Frank Research
8 ASKING RENT TRENDS Average Asking Rent by Market ($/SF)
Key Year-over-year asking rent growth slowed in Takeaway 2016 in comparison to the last six years.
Average Annual Change since Change Since Trough 4Q15 $95 (2010) $89.02 MT 5.6% 1.4%
MTS 9.2% 2.2% $85 $82.19 DT 7.4% 2.7%
$75 $72.99
$65 $62.25 $58.93 $57.02
$55
$51.56 $45 $40.33
$35 $39.09
$25 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16
Midtown Midtown South Downtown
Source: Newmark Grubb Knight Frank Research
9 TAKING AND NET EFFECTIVE RENT TRENDS Average net effective rents for direct deals with >5-year terms
Key Taking rent growth grew in Midtown, but dropped in Midtown South and Downtown. Increased Takeaway concessions caused net effective rents to flatten.
Base Taking Rent Trends Net Effective Rent Trends
$80 $80 $76.47 $75 $75
$70 $70 $68.26 $65 $65 $63.85 $60 $60 $59.48
$55 $55 $51.93 $50 $50
$45 $45 $42.26 $40 $40
$35 $35
$30 $30 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016
Midtown Midtown South Downtown Midtown Midtown South Downtown
Average Annual Change Change Since 2015 Average Annual Change Change Since 2015 Since Trough (2009-2010) Since Trough (2009-2010)
MT 6.2% 8.2% MT 4.7% -0.5%
MTS 10.0% 2.5% MTS 8.2% 0.3%
DT 7.0% 2.4% DT 4.7% 0.2%
*Midtown 2016 YTD averages are impacted on a weighted basis by the Citadel deal at 425 Park. Including Source: Newmark Grubb Knight Frank Research that deal, the average taking rent is pushed to $79.56/SF and average NER is pushed to $65.89/SF.
10 CONCESSIONS ANALYSIS Work Alklowance for direct deals with >10-year terms, +10K SF
Key Work amount is on the rise as landlords protect face rents and compete to attract tenants in a Takeaway market that has a surplus of options.
2016 Average Work Allowance ($/SF) Percent Change Year-Over-Year
Plaza District $90.00 Park Avenue 30%
Park Avenue $87.92 Penn Station 29%
Grand Central $82.92 Plaza District 28%
Sixth Ave/Rock Ctr. $80.69 Grand Central 28%
Westside $76.07 Westside 21%
Penn Station $75.00 Downtown West 19%
Downtown West $67.97 Sixth Avenue/Rockefeller Center 12%
Times Square South $66.85 Times Square South 11%
Eastside $65.69 Flatiron/Union Square 6%
Downtown East $60.78 Eastside 2%
Flatiron/Union Square $59.29 Downtown East 0%
Hudson Square/Meatpacking $58.49 Hudson Square/Meatpacking -3%
Downtown Midtown South Midtown Downtown Midtown South Midtown
Source: Newmark Grubb Knight Frank Research
11 CONCESSIONS ANALYSIS Free rent for direct deals with >10-year terms, +10K SF
Key Manhattan-wide, free rent held steady at 8.9 months while there was some variation within Takeaway the submarkets.
2016 Free Rent (Months) Percent Change Year-Over-Year
Park Avenue 12 Park Avenue 33%
Sixth Ave/Rock Ctr. 10 Downtown West 29%
Penn Station 10 Penn Station 25%
Hudson Square/Meatpacking 9 Westside 13%
Grand Central 9 Flatiron/Union Square 13%
Westside 9 Grand Central 0%
Sixth Avenue/Rockefeller Center 0% Flatiron/Union Square 9
Plaza District 0% Downtown West 9 Eastside 0% Times Square South 8 Hudson Square/Meatpacking -10% Plaza District 8 Times Square South -11% Eastside 8 Times Square -11% Times Square 8 Downtown East -13% Downtown East 7
Downtown Midtown South Midtown Downtown Midtown South Midtown
Source: Newmark Grubb Knight Frank Research
12 MANHATTAN TROPHY TRENDS DIRECT ASKING RENTS – TROPHY VS NON TROPHY CLASS A
Asking rent spreads between Trophy and Class A Key assets have grown across all three Manhattan Takeaway markets since the last cycle peak.
Midtown Midtown South Downtown Asking Rent ($/SF) Asking Rent ($/SF) Asking Rent ($/SF) $150 $110 $90
$130 $90 $75
$110 $70 $60
$90 39% spread $50 42% 36% 52% 26% $45 31% $70 spread spread spread spread spread
$50 $30 $30
Trophy Rent Non-Trophy Class A Rent Trophy Rent Non-Trophy Class A Rent Trophy Rent Non-Trophy Class A Rent
Asking Rent Growth Asking Rent Growth Asking Rent Growth
Change 11.6% Change 21.9% Change 12.1% Since 2015 6.0% Since 2015 5.4% Since 2015 13.5%
Avg. Annual 7.0% Avg. Annual 10.6% Avg. Annual 7.7% Since 2010 4.2% Since 2010 8.0% Since 2010 5.4%
0.0% 5.0% 10.0% 15.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 0.0% 5.0% 10.0% 15.0%
Trophy Non-Trophy Class A Trophy Non-Trophy Class A Trophy Non-Trophy Class A Source: Newmark Grubb Knight Frank Research
13 TRIPLE-DIGIT TAKING RENT ASSETS Number of buildings that signed $100+ taking rents each year
Key Eight of 37 buildings that achieved triple-digit Takeaway rents in 2016 were new construction.
Buildings with $100+ Taking Rents in 2016 YTD
60 Midtown 30 Hudson Yards 437 Madison Avenue 888 Seventh Avenue 510 Madison Avenue 55 West 46th Street 650 Madison Avenue 50 250 West 55th Street 660 Madison Avenue 152 West 57th Street 667 Madison Avenue 1095 Avenue of the Americas 277 Park Avenue 40 1114 Avenue of the Americas 280 Park Avenue 1251 Avenue of the Americas 350 Park Avenue 1330 Avenue of the Americas 375 Park Avenue
30 712 Fifth Avenue 399 Park Avenue 56 717 Fifth Avenue 425 Park Avenue 49 745 Fifth Avenue 450 Park Avenue 767 Fifth Avenue 499 Park Avenue 20 41 37 9 West 57th Street 450 Lexington Avenue 32 10 East 53rd Street 601 Lexington Avenue 29 26 25 65 East 55th Street 7 Bryant Park 23 10 Midtown South 14 111 Eighth Avenue 770 Broadway 12 404 West 14th Street 315 Park Avenue South 860 Washington Street 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number of Triple-Digit Assets
Source: Newmark Grubb Knight Frank Research
14 MANHATTAN TOP-TIER TRENDS Transactions with taking rents over $100/SF
Key Ten relocations over 20K SF were recorded in Takeaway 2016, the highest this market cycle.
100
16
75 26
50 22 9 16
19 21 7 74 12 58 13 25 8 9 46 38 38 34 29 31 29 4 6 24 11 6 18 17 13 11 2 4 6 10 3 8 7 10 0 3 1 1 1 3 3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Transactions Under 20K SF: Relocations Renewals and Expansions Transactions Over 20K SF: Relocations Renewals and Expansions
Source: Newmark Grubb Knight Frank Research
15 MIDTOWN SOUTH TOP-TIER TRENDS Transactions with taking rents over $75/SF
Key Deal-making at the top end of the market in Midtown South slowed in 2016 from the past two Takeaway years.
Number of Deals Signed Over $75/SF 2016 MTS Taking Rents Over $75/SF By Industry
40 In 2016…
57.1% of deals were renewals and relocations from within Midtown South. 30 23.8% of deals were relocations from Midtown.
14.3% of deals were relocations from outside Manhattan. TAMI Other 32% 32% 20 4.8% of deals were relocations from Downtown. 34 30
10 21 FIRE Business 18% Services 18%
7 7
2 0 1 2010 2011 2012 2013 2014 2015 2016
Source: Newmark Grubb Knight Frank Research
16 MIDTOWN DEAL COMPOSITION Direct deals with five-year terms and longer
Key Commodity spaces drove Midtown leasing in 4Q16. Six transactions were signed over 100K Takeaway SF, while the majority were small and midsized.
Number of Deals by Taking Rent Number of Deals by Size Over 30% 50K-100K SF 100,000 SF 5% 5%
25% 25K-50K SF 12%
Under 10,000 SF 20% 10K-25K SF 48% 30%
15%
Top Deals Address SF Lease Type Industry 1271 Avenue of the Major League Baseball 400,000 Direct New Leisure 10% Americas Legal Hogan Lovells 390 Madison Avenue 206,720 Direct New Services
5% Point72 Asset Management 55 Hudson Yards 182,447 Direct New FIRE National Basketball 645 Fifth Avenue 175,000 Renewal Leisure Association National Hockey League 1 Manhattan West 160,631 Direct New Leisure 0% $40s $50s $60s $70s $80s $90s $100s $110s $120s $130+
Source: Newmark Grubb Knight Frank Research
17 MIDTOWN SOUTH DEAL COMPOSITION Direct deals with five-year terms and longer
Key 4Q16 deals ranged from the $40s per square foot to the $80s with the majority signed in the Takeaway $60s, while 85% of deals were under 25K SF.
Number of Deals by Taking Rent Number of Deals by Size
45% Over 50K SF, 6%
40% 25K-50K SF 9%
35%
10K-25K SF Under 10K SF 30% 29% 56%
25%
20% Top Deals Address SF Lease Type Industry
15% ZocDoc 568 Broadway 85,000 Renewal TAMI
Capital One 11 West 19th Street 78,000 Sublease TAMI 10% NYU Langone Medical 360 Park Avenue South 67,500 Sublease Healthcare Center 636 Avenue of the 5% Pivotal Labs 49,691 Sublease TAMI Americas Deloitte Digital 330 Hudson Street 37,358 Sublease TAMI 0% $40s $50s $60s $70s $80s
Source: Newmark Grubb Knight Frank Research
18 DOWNTOWN DEAL COMPOSITION Direct deals with five-year terms and longer
Key Nearly 80% of Downtown deals signed during 4Q16 were priced in the $40s and $50s per Takeaway square foot. Almost 90% were below 25K SF.
Number of Deals by Taking Rent Number of Deals by Size Over 100K SF 50% 25K-50K SF 4% 8%
45%
40% Under 10K SF 50% 35% 10K-25K SF 38% 30%
25%
20% Top Deals Address SF Lease Type Industry New York State 90 Church Street 256,000 Renewal Government Department of Health 15% Abrams Books 195 Broadway 41,982 Direct New TAMI Continental Stock Financial 10% 1 State Street Plaza 37,773 Direct New Transfer & Trust Co. Services Business Maximus 30 Broad Street 28,080 Renewal 5% Services Business Microtek 85 Broad Street 20,768 Direct New Services 0% $30s $40s $50s $60s
Source: Newmark Grubb Knight Frank Research
19 RELOCATIONS AND NEW CONSTRUCTION
Key The majority of tenants relocating to new construction will vacate space from core Takeaway Midtown submarkets.
2016 Relocations to New Construction Tenants Relocating to New Construction from Other Markets versus Existing Inventory
Outside Midtown Submarket Breakdown NYC, 3% Westside, 4% Times Square South, 9% New Construction Times Square, Downtown, 9% 13% 13% Sixth Ave/ Rock Ctr., 17%
Midtown South, 10% Plaza District, 17%
Park Ave, 17%
Midtown, Far West Side, 4% Existing 74% Construction Grand Central, 4% 87% Eastside, 17%
Source: Newmark Grubb Knight Frank Research
20 MANHATTAN SUPPLY FORECAST
Key Manhattan will see a potential influx of 25.1M SF of new construction and large block Takeaway availabilities over the next five years.
Between 2017 and 2020… New Construction (SF) and Availability (%) 7.9M SF (1.8% of the market) is 8,000,000 expected to be available from 20% tenants that signed relocations.
6,000,000 New construction would increase 15% the market’s inventory by 3.4%.
4,000,000 10%
2,000,000 5%
0 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
New Construction New Construction Future Deliveries Manhattan Availability
Select Anticipated Large Block Availabilities by Year
2017 2018 2019 2020
620 Eighth Avenue 1271 Avenue of the Americas 60 Columbus Circle 4 Times Square
1 Liberty Street 1114 Avenue of the Americas 245 Park Avenue 9 West 57th Street
875 Third Avenue 1110 Avenue of the Americas 875 Third Avenue 375 Park Avenue
Source: Newmark Grubb Knight Frank Research
21 COMMERCIAL DEVELOPMENT PIPELINE Manhattan (MSF)
Key About 29 million square feet of new office product is under construction and in the Takeaway planning stages in Manhattan. 2014 837 Washington Street 2018 2 Pike Street 1 World Trade Center 300 Lafayette Street 16 3 World Trade Center 2015 7 Bryant Park 425 Park Avenue 430 West 15th Street 55 Hudson Yards 61 Ninth Avenue 14 2016 10 Hudson Yards 40 Tenth Avenue 860 Washington Street 2019 1 Manhattan West 2017 89 Bowery 30 Hudson Yards 12 855 Avenue of the Americas 3 Hudson Boulevard 432 Park Avenue 106 West 56th Street 390 Madison Avenue 540 West 26th Street 2021 One Vanderbilt Avenue 10 510-512 West 22nd Street 412-414 West 15th Street TBD 50 Hudson Yards 9 Orchard Street 2 World Trade Center 2 Manhattan West 66 Hudson Boulevard 8 15 Penn Plaza 99 Hudson Boulevard 75 Ninth Avenue New 44 Union Square East Expected Potential 6 Construction Delivery Delivery 86.9 MSF 15.1 MSF 13.7 MSF
4
2
0 TBD 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Newmark Grubb Knight Frank Research
22 MANHATTAN DEVELOPMENT OVERVIEW
WORLD TRADE CENTER MIDTOWN EAST
PORT AUTHORITY L&L HOLDING, L&L HOLDING SILVERSTEIN PROPERTIES BANK OF CHINA SL GREEN OF NY/NJ, DURST RREEF COMPANY 1 World 2 World 3 World 4 World 7 Bryant 390 Madison 425 Park One Vanderbilt Trade Center Trade Center Trade Center Trade Center Park Avenue Avenue Avenue 3.0M SF 2.8M SF 2.5M SF 2.3M SF 473,000 SF 843,710 SF 670,000 SF 1.9M SF
2014 TBD 2018 2013 2015 2017 2018 2021 Completed Planned Under Construction Completed Completed Under Construction Under Construction Planned
FAR WEST SIDE
THE RELATED MITSUI FUDOSAN, THE RELATED THE RELATED MOINIAN BROOKFIELD PROPERTIES, QIA TISHMAN SPEYER COMPANIES RELATED COMPANIES COMPANIES GROUP 10 Hudson 55 Hudson 30 Hudson 1 Manhattan 2 Manhattan 50 Hudson 3 Hudson 66 Hudson 99 Hudson Yards Yards Yards West West Yards Boulevard Boulevard Boulevard 1.7M SF 1.3M SF 2.6M SF 2.1M SF 2.1M SF 2.3M SF 1.8M SF 2.9M SF 1.3M SF 2016 2018 2019 2019 TBD TBD 2019 TBD TBD Completed Under Construction Under Construction Under Construction Planned Planned Under Construction Planned Planned Source: Newmark Grubb Knight Frank Research
23 MANHATTAN BOUTIQUE DEVELOPMENT OVERVIEW
Rendering not yet available
VORNADO REALTY ROMANOFF EQUITIES CIM GROUP WING FUNG GROUP SAVANNA TRUST, ALBANESE ORGANIZATION 860 Washington Street 432 Park Avenue 89 Bowery 540 West 26th Street 512 West 22nd Street Midtown South Midtown Midtown South Midtown South Midtown South 120,413 SF 71,000 SF 23,831 SF 128,367 SF 170,000 SF 2016 2017 2017 2017 2017 Completed Under Construction Under Construction Under Construction Under Construction
THE RELATED ROCKPOINT, AURORA, WILLIAM SAVANNA, YEUNG REAL ESTATE VORNADO REALTY TRUST COMPANIES LM LEGACY GROUP GOTTLIEB REAL ESTATE ATOM ASSETS
2 Pike Street 300 Lafayette Street 61 Ninth Avenue 412 West 15th Street 40 Tenth Avenue 106 West 56th Street Midtown South Midtown South Midtown South Midtown South Midtown South Midtown 93,000 SF 81,000 SF 167,170 SF 144,273 SF 116,205 SF 90,000 SF 2018 2018 2018 2017 2018 2019 Under Construction Under Construction Under Construction Under Construction Planned Planned
Source: Newmark Grubb Knight Frank Research
24 4Q16 BROOKLYN AND LONG ISLAND CITY OFFICE MARKET OVERVIEW BROOKLYN OFFICE DEVELOPMENT New Construction and Repositioned Buildings
Submarket DUMBO DOWNTOWN BROOKLYN NAVY YARD
Kushner Co., Madison Boston Triangle Cibrano Quinian Dev JEMB Realty Tishman Brooklyn Navy Yard Westbrook Owner/ CIM Group, Realty Properties, Assets Family Group, BLT Corp. Speyer Development Corp. Partners, RXR Developer LIVWRK Capital Rudin Mgt 25-30 10 Jay 80 Hudson 41 Flatbush 420 Albee 422 Fulton GMC Building Building 29 Ryerson Dock 47 Hall Building Columbia Street Avenue Avenue Square Street Building 128 77 3 Street 72 Street Address Heights Size (SF) 220,311 96,347 750,000 270,910 400,000 TBD 250,000 1,177,000 700,000 280,000 675,000 650,000 2017 2017 2018 2017 2018 TBD 2016 2017 2017 2017 2018 2018 Year Open New New Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Project Type Construction Construction Under Under Under Under Under Planned Planned Planned Completed Planned Planned Planned Status Construction Construction Construction Construction Construction
Submarket SUNSET PARK RED HOOK WILLIAMSBURG BUSHWICK
Rendering Rendering Rendering not yet not yet not yet available available available Jamestown, Normandy Madison Savanna, Lincoln Owner/ Belvedere Estate Thor Heritage Cayuga Two Trees Hudson Princeton , Heritage Realty PWR Hornig Property Developer Cap, Angelo Four Equities Equity Capital Mgt Co. Holdings Royalton, Equity Capital Capital Group Gordon Sciame 160 Van 68 280 25 87 Domino 95 455 314 121 333 215 Building Industry Whale Brunt Ferris Richards Kent Wythe Sugar Evergreen Jefferson Scholes Morgan Johnson Moore Address City Square Street Street Street Avenue Avenue Factory Avenue Street Street Avenue Avenue Street
Size (SF) 6,000,000 500,000 111,565 1,200,000 622,103 480,000 100,000 380,000 165,000 122,700 80,000 100,000 285,000 170,000
In phases Year Open 2016 2016 2020 TBD 2018 2018 TBD 2016 2017 2018 TBD TBD TBD starting 2015 New New New New Project Type Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Redevelop Construction Construction Construction Construction Under Under Under Under Completed Completed Planned Planned Planned Completed Planned Planned Planned Planned Status Construction Construction Construction Construction
Source: Newmark Grubb Knight Frank Research
26 BROOKLYN’S CHANGING INVENTORY Impact of New Construction and Repositioned Buildings
Key Downtown Brooklyn is capturing little of the borough’s development boom. Construction Takeaway projects are creating new submarkets.
DOWNTOWN SUNSET WILLIAMSBURG/ DUMBO NAVY YARD BROOKLYN PARK BUSHWICK
2013 Inventory (SF) 15,985,404 6,000,000 3,254,111 1,532,155 1,698,330
Current Inventory (SF) 15,992,948 6,500,000 3,908,181 1,589,878 3,155,330
Projected Inventory (SF) 16,392,948 6,500,000 4,658,181 3,433,329 4,480,330 Through 2018
Inventory Differential (SF) 407,544 500,000 1,404,070 1,901,174 2,782,000 2013-2018
2.8% 8.3% 43.1% 124.1% 163.8% SF DIFFERENCE SF DIFFERENCE SF DIFFERENCE SF DIFFERENCE SF DIFFERENCE 2013-2018 2013-2018 2013-2018 2013-2018 2013-2018
Source: Newmark Grubb Knight Frank Research
27 BROOKLYN MARKET TRENDS
Key New inventory pushed average asking rents to a new historic high during 4Q16 while Takeaway availability continued to climb.
Overall Average Asking Rent and Availability Prime Assets Average Asking Rent and Availability
$45 18% $60 18%
$40 16% 16% $50 $35 14% 14%
$30 12% $40 12%
$25 10% 10% $30 $20 8% 8%
$15 6% $20 6%
$10 4% 4% $10 $5 2% 2%
$0 0% $0 0% 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16
Average Asking Rent (Price/SF) Availability (%) Average Asking Rent (Price/SF) Availability (%)
Source: Newmark Grubb Knight Frank Research
28 BROOKLYN SUBMARKET SNAPSHOT
Greenpoint
DOWNTOWN BROOKLYN BROOKLYN NAVY YARD
Williamsburg w Total Inventory: 15,992,948 SF w Total Inventory: 3,155,330 SF DUMBO Navy Yard Bushwick BK w Availability Rate: 5.7% w Average Asking Rent: $39.59/SF Heights Clinton w Average Asking Rent, Prime Assets: w Building 77 added 226,426 SF of Cobble Fort Hill Bedford Hill available space in 4Q16. Greene Stuyvesant $47.88/SF Red Prospect Cypress w Average Asking Rent, Standard Crown Hills Hook Park Heights Assets: $42.67/SF Heights Upper Slope SUNSET PARK New York East w 2016 Absorption: -292,227 SF Prospect Lefferts Brownsville w Total Inventory: 6,500,000 SF Bay Park Gardens New York Sunset Park Windsor w Average Asking Rent: $30.15/SF Terrace Prospect East Park Flatbush DUMBO WILLIAMSBURG / BUSHWICK Kensington South Canarsie Borough w Total Inventory: 3,908,181 SF w Total Inventory: 1,589,878 SF Bay Flatbush Park Ridge Dyker Flatlands w Availability Rate: 25.8% w Availability Rate: 22.6% Heights Midwood Bergen w Average Asking Rent, Prime Assets: w Average Asking Rent, Prime Assets: Marine Beach $57.30/SF $52.51/SF Fort Bensonhurst Park Mill Hamilton Basin Jamaica Bay w Average Asking Rent, Standard w Average Asking Rent, Standard Bath BK Assets: $33.75/SF Assets: $23.90/SF Beach Sheepshead Marine Park w 2016 Absorption: -63,200 SF w 2016 Absorption: 4,900 SF Bay Gerritsen Barren Lower Gravesend Island New York Beach Bay Brighton Manhattan Sea Beach Gate Coney Beach Island
Prime Assets are Class A and newly repositioned space. Standard Assets are all other office inventory. Source: Newmark Grubb Knight Frank Research
29 ASKING RENT COMPARISON Average Asking Rents ($/SF)
Key Prime assets in Dumbo and Williamsburg are Takeaway priced competitively with buildings in Manhattan.
$90 $82.19 $80 $72.99
$70 $62.25
$60 $57.30 $52.51
$50 $47.88
$38.36 $39.59 $40
$30.15 $30
$20
$10
$0 Sunset Park Long Island City Brooklyn Navy Downtown Williamsburg / Dumbo Downtown Midtown South Midtown Prime Prime Yard - Prime Brooklyn - Prime Bushwick Prime Manhattan Overall Overall Prime Overall
Prime Assets are Class A and newly repositioned space. Source: Newmark Grubb Knight Frank Research
30 LONG ISLAND CITY TRENDS Overall Average Asking Rent and Availability
Rental rate increases flattened in 2016 and Key availability decreased as new product was Takeaway absorbed and no new projects were announced.
$40 20% w Asking rents remained stable in 4Q16, averaging $37.77/SF, a 10.2% increase year-over-year. $35 16% w Availability declined 120 basis points to 12.0% this quarter, however $30 current availability is still higher than 12% it was 12 months prior.
$25 w The Factory District drove the drop in availability in 2016 due to leasing 8% activity and the space withdrawn from $20 the market.
4% $15
$10 0% 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16
Average Asking Rent (Price/SF) Availability (%)
Source: Newmark Grubb Knight Frank Research
31 LONG ISLAND CITY SUBMARKET SNAPSHOT
ASTORIA
w Total Inventory: 3,438,381 SF
w Availability Rate: 18.5%
w Average Asking Rent, Prime Assets: $35.51/SF Astoria w Average Asking Rent, Standard Assets: $29.15/SF
w 2016 Absorption: -230,200 SF
HUNTERS POINT/LIC WATERFRONT
w Total Inventory: 3,733,385 SF Hunter’s Point/ w Availability Rate: 4.0% LIC Waterfront w Average Asking Rent, Prime Assets: $36.52SF
w Average Asking Rent, Standard Assets: $31.77/SF
w 2016 Absorption: -31,531 SF
THE FACTORY DISTRICT w Total Inventory: 4,577,999 SF
w Availability Rate: 13.5% Factory District w Average Asking Rent, Prime Assets: $41.28/SF w Average Asking Rent, Standard Assets: $30.00/SF
w 2016 Absorption: -52,407 SF
Prime Assets are Class A and newly repositioned space. Standard Assets are all other office inventory.
Source: Newmark Grubb Knight Frank Research
32 North America Latin America Africa New York City Canada Argentina Botswana HEADQUARTERS United States Brazil Kenya 125 Park Avenue Chile Malawi New York, NY 10017 Europe Colombia Nigeria 212.372.2000 Austria Costa Rica South Africa Belgium Dominican Republic Tanzania Czech Republic Mexico Uganda Jonathan Mazur Managing Director, Research France Peru Zambia 212.372.2154 Germany Puerto Rico Zimbabwe [email protected] Ireland Stephanie Jennings Italy Asia-Pacific Middle East Tri-State Director, Research Netherlands Australia Saudi Arabia 212.372.2099 Poland Cambodia United Arab Emirates [email protected] Portugal China Matthew Lesnik Romania Hong Kong Research Analyst Russia India Alex Schwartz Spain Indonesia Research Analyst Switzerland Japan United Kingdom Malaysia Edward Son Senior Research Analyst New Zealand Singapore Ronnie Wagner South Korea Director, Research Taiwan Robert Zindman Thailand Research Analyst
Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents.
Newmark Grubb Knight Frank Research Reports are also available at www.ngkf.com/research
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