ALLIANCE FOR DOWNTOWN NEW YORK LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW 2016 Photo by Mark Weinberg, for Utopia, The Agency OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE ALLIANCE FOR DOWNTOWN NEW YORK LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW 2016 LOWER MANHATTAN CATCHES ITS BREATH In 2016, Lower Manhattan continued its decade-long existing Lower Manhattan tenants seizing opportunities to transformation into one of New York’s most vibrant, stay or expand in the neighborhood. In addition, current 24/7 neighborhoods. While commercial leasing mirrored and new media, tech and advertising tenants grew their the slowdown experienced throughout Manhattan, several presence but at a slower rate than past years. Droga5, existing Lower Manhattan tenants demonstrated their a Lower Manhattan TAMI tenant since 2014, expanded commitment to the district by renewing or expanding their by more than 100,000 square feet in early 2016. Other Lower Manhattan footprints. Additionally, a pipeline of smaller TAMI deals followed throughout the year, and late upcoming deals announced in 2016 will (if completed) take November brought exciting news reports about Spotify’s several large blocks of space off the market. As commercial rumored move to a new headquarters in 4 World Trade leasing took a breather, Lower Manhattan’s dining and Center. Lower Manhattan also began to reap the benefits retail scenes took off. Internationally renowned chefs opened of prior strong years as new tenants in growing industries some of 2016’s most anticipated new restaurants in Lower completed their moves to the district. These changes Manhattan, while Westfield World Trade Center brought world- continued to diversify the tenant mix and helped drive class retail to the stunning World Trade Center Transportation private sector employment to its highest level since the Hub. The hotel market has remained robust with several end of 2001. major openings, and residential developers continue to invest in Lower Manhattan. The World Trade Center also reached another milestone with the opening of Westfield World Trade Center in 2016 Commercial leasing was relatively quiet in 2016, reflecting and its more than 100 new shops and eateries. Lower the economic and political uncertainty that dampened leasing Manhattan also welcomed nearly 80 dining establishments activity throughout Manhattan. This year’s overall activity did this year, from fast casual concepts to full-service confirm that existing Lower Manhattan tenants continue to neighborhood spots to destination restaurants by renowned see both value and quality in a Lower Manhattan address. chefs across the district. The neighborhood now boasts Activity at the World Trade Center especially illustrated this 512 total restaurants and casual eateries with the majority trend; One and 4 World Trade Center inked a combined open after dark. All of these changes led to Bloomberg 320,000 square feet of leases, many of which came from News declaring, “Manhattan’s FiDi is this year’s surprise, hot restaurant scene”. Lower Manhattan Real Estate Year in Review | 2016 1 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE ALLIANCE FOR DOWNTOWN NEW YORK LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW 2016 2016’s culinary contributions extend also to new places to through the World Trade Center complex, and Liberty Park shop with the neighborhood’s expansion of food markets opened atop the Vehicle Security Center (creating an above and grocery stores. In 2016, Eataly opened in 4 World ground connection via the Liberty Street pedestrian bridge Trade Center, joining Le District at Brookfield Place, and in across West Street to Brookfield Place). Public space 2017, City Acres Market, Dean & Deluca and a World Trade reopened in and around the World Trade Center, reconnecting Center greenmarket will join this array. In mid-2016, Whole the now active area to the rest of the neighborhood. Most Foods also announced that it would open a 44,000-square- symbolic of this change was the deconstruction of the foot store in 2018 at the base of One Wall Street, further temporary PATH station, where The Ronald O. Perelman expanding options for Lower Manhattan’s robust daytime Center for Performing Arts is slated to be built. population and residents. Lower Manhattan’s hotel offerings also expanded and diversified in 2016 as the market welcomed the eagerly anticipated Four Seasons New York Downtown, featuring CUT by Wolfgang Puck, and The Beekman, featuring restaurants by Keith McNally and Tom Colicchio. More mid-priced options such as The Four Points by Sheraton New York Downtown and The Courtyard by Marriott World Trade Center, also opened. The range of flags and price points opening south of Chambers is broadening this area’s appeal to luxury, leisure and business travelers alike. In total, Lower Manhattan’s hotel market has now reached 6,560 rooms, a 35 percent expansion in hotel room inventory from just two years ago. With all of these developments, Lower Manhattan has more to offer its population of 61,000 residents than ever before. More than 1,200 residential units were completed in 2016, including premier luxury condominium projects like 30 Park Place, 100 Barclay and 5 Beekman. Lower Manhattan’s residential market goes beyond luxury buyers; more than 43 percent of the district’s population are millennials. More than 1,500 units, the majority of them rental, are expected to come online in 2017 and will provide more housing options for young New Yorkers looking to live in Lower Manhattan. Not only are there more choices of where to eat, visit, live or shop, but it is now much easier to get around Lower Manhattan—especially around the World Trade Center complex. Most noticeably, the World Trade Center Transportation Hub opened in early March 2016, providing Pete Thompson for Utopia, The Agency access to the NJ PATH as well as a virtual river-to-river underground linkage from Brookfield Place to One and 4 World Trade Center and through to Fulton Center. In addition, Greenwich Street reopened to pedestrians passing 2 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE COMMERCIAL OFFICE MARKET LOWER MANHATTAN MIRRORS CITYWIDE LEASING SLOWDOWN After several years of intense leasing activity reshaped the significant deals announced throughout 2016 that are expected makeup of the district as new tenants took occupancy, Lower to close in early 2017 and bolster upcoming leasing totals. In Manhattan’s commercial market took a breath in 2016. Major late January 2017, the New York State Attorney General’s new leasing announcements waned, and several 100,000- closed a deal to relocate to 345,000 square feet in 28 Liberty, plus square foot deals are pending. Both Lower Manhattan opening up a 428,000-square-foot block in 120 Broadway. In and Manhattan as a whole experienced a slower commercial addition, there is a rumored pending deal with the New York market in 2016 due in part to political and economic uncertainty. City Department of Investigation at 180 Maiden Lane for While leasing totals were weaker than usual overall, the market about 300,000 square feet. 1 Liberty Plaza is also expected to nonetheless posted some solid commitments from existing finalize two deals for a combined 300,000 square feet; Aon, an tenants and charted the largest deal of the year citywide, with insurance firm, has a pending lease to move to 200,000 square McGraw Hill’s 900,000-square-foot renewal at 55 Water Street feet from 199 Water Street, and New Avon plans to relocate to in March 2016. 90,000 square feet from the company’s Midtown Headquarters. Finally, Spotify, currently located in the Flatiron district, is close Lower Manhattan logged 3.36 million square feet of new leasing to a 400,000-square-foot commitment at 4 World Trade Center, activity in 2016, according to CBRE, after capping the year according to news reports. Spotify’s deal would make 4 World with 483,000 square feet leased in the fourth quarter. This Trade Center fully leased. year-end total reflects a 27 percent drop from 2015 and is 33 percent below the five-year average. However, there were several LEASING ACTIVITY BY MANHATTAN SUBMARKET, 2012 - 2016 Source: CBRE YTD Leasing, 2012 20 Million 18 Million 16 Million 15.1 MSF 14 Million 12 Million 10 Million Square Feet 8 Million 2 Rector Street 6 Million 4.4 MSF 4 Million 3.36 MSF 2 Million 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Lower Manhattan Midtown Midtown South Lower Manhattan Real Estate Year in Review | 2016 3 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE LOWER MANHATTAN TOP LEASES, 2016 Overall, Manhattan activity was dampened throughout 2016 as Source: Downtown Alliance, CBRE, JLL, CoStar, Colliers International new leasing activity also decelerated in Midtown and Midtown Tenant Name SF Leased South. Midtown South activity slowed by 22 percent year- Sector Location Transaction Type over-year, with activity 14 percent below the five-year average. McGraw Hill Financial 900,027 Midtown recorded a less dramatic decline with activity down 1 FIRE 55 Water Street Renewal 15 percent from last year and just 3 percent under the five-year New York State Department 256,616 historical average. Manhattan’s leasing activity totaled 20.9 2 of Health Government Renewal million square feet at the end of 2016, making it the least active 90 Church Street 182,750 year since 2012. Expansion & NYC Department of Finance 3 Relocation from Government 375 Pearl Street Brooklyn offices TOP DEALS SIGNED BY EXISTING FIRE AND to LM GOVERNMENT TENANTS Zurich American 131,856 4 Insurance Company Moving Within FIRE Despite below average leasing performance, Lower Manhattan’s 4 World Trade Center LM office market still benefitted from a year of strong commitments 118,377 QBE North America 5 Moving Within FIRE from existing tenants renewing, expanding or moving within the 55 Water Street LM & Expansion district — especially to office space in the World Trade Center or Droga5 106,000 TAMI, 6 other newly repositioned buildings on the market.