3Q16 NYC Office Market Overview

3Q16 NEW YORK CITY OFFICE MARKET OVERVIEW TABLE OF CONTENTS

3 Executive Summary 22 Manhattan Development Overview

23 Commercial Development Pipeline 4 Manhattan Office Market Overview 24 Commercial Development Horizon Map 25 Manhattan Development Overview 5 Leasing Activity by Market 26 Boutique Development Overview 6 Key Leasing Activity Metrics 7 Industries Driving Demand: Employment and Leasing Trends Industries Driving Demand: 3Q16 Leasing and Tenants in the Brooklyn and Long Island City 8 Market 27 Office Market Overview 9 Composition of Tech Leasing 28 Brooklyn Office Development Map 10 Manhattan Submarket Comparison 29 Brooklyn Office Development Overview 11 Asking Rent Trends 30 Brooklyn’s Changing Inventory 12 Taking and Net Effective Rent Trends 31 Brooklyn Market Trends 13 Taking Rent Corridor and Submarket Comparisons 32 Brooklyn Submarket Snapshot 14 Concessions Analysis: Work Amount 33 Asking Rent Comparison 15 Concessions Analysis: Free Rent 34 Long Island City Trends 16 Triple-Digit Taking Rent Assets 35 Long Island City Submarket Snapshot 17 Manhattan Top-Tier Trends 18 Midtown South Top-Tier Trends

19 Midtown Deal Composition 20 Midtown South Deal Composition 21 Downtown Deal Composition

2 EXECUTIVE SUMMARY

Leasing A drop in relocation activity was balanced by an uptick in renewals, particularly among large deals in Midtown. Overall leasing activity in Midtown South fell below the prior Activity year and ten-year averages.

Industry FIRE activity increased in the third quarter and TAMI activity declined for the third consecutive quarter, while the types of tech tenants that were active continued to Growth diversify from recent years.

Asking and Asking rents continued to increase, though at a slower rate than the annual average during this market cycle. The slow-down was generally more pronounced in taking Taking Rents rents.

Net Effective Net effective rental rates have flattened as landlords are giving more substantial Rents concession packages including an increased amount of work allowance.

Premier Despite overall drops in rent growth, activity at the top end of the market remained on Space par with 2015 in Midtown, while dropping in Midtown South.

New Approximately 29 million square feet of development projects are in the development pipeline in Manhattan. Of this total, 15 million square feet is scheduled for delivery by Supply 2020.

Borough Brooklyn and Long Island City market conditions remained unchanged in the third quarter with rents holding steady, a slight drop in availability, and consistency in the Trends development pipeline.

3 3Q16 MANHATTAN OFFICE MARKET OVERVIEW LEASING ACTIVITY BY MARKET

Key Renewals compensated for a dip in relocation activity, resulting in stable leasing for overall Takeaway Manhattan.

Manhattan (MSF) Midtown (MSF) 35 21 30 18 27.7 MSF 25 15 14.9 MSF 20 12 15 9 10 6 5 3

0 0

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

Relocations Renewals Average First 3 Quarters Velocity Relocations Renewals Average First 3 Quarters Velocity

Midtown South (MSF) Downtown (MSF) 11 8 10 7 9 6 8 7.9 MSF 7 5 4.9 MSF 6 4 5 4 3 3 2 2 1 1

0 0

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

Relocations Renewals Average First 3 Quarters Velocity Relocations Renewals Average First 3 Quarters Velocity Source: Newmark Grubb Knight Frank Research

5 KEY LEASING ACTIVITY METRICS 2015 versus 2016

Key Renewal activity is on the rise, while space is Takeaway sitting on the market longer compared to 2015.

Renewals versus Relocations Average Time on Market for Space Available (Months)

Renewals Renewals & & Expansions 1Q-3Q Expansions 1Q-3Q 36% 43% 2015 2016 27.4 Relocations Relocations 64% 57%

10 20.9

0 2015 2016 YTD

Source: Newmark Grubb Knight Frank Research

6 INDUSTRIES DRIVING DEMAND

Key Employment growth has flattened in 2016. This translated to leasing for TAMI and Professional Takeaway Services while FIRE increased.

Industries Driving Employment Leasing by Industry

650,000 50%

600,000

40% 44%

550,000

500,000 35%

30% 34%

450,000

30%

29% 27%

400,000 23%

20%

350,000 20%

20%

18%

17% 16% 300,000 10%

250,000

200,000 0% 2010 2011 2012 2013 2014 2015 2016 2013 2014 2015 2016 YTD

Professional Services FIRE TAMI Professional Services FIRE TAMI

Source: Newmark Grubb Knight Frank Research, New York State Department of Labor

7 INDUSTRIES DRIVING DEMAND

Key TAMI leasing has declined in recent quarters, while leasing among FIRE tenants continued Takeaway with an increase in renewals.

3Q16 Leasing by Industry Tenants in the Market

100% Other 9% Other Other Nonprofits 15% 90% Other 16% 3% 24% TAMI 80% Nonprofits 26% TAMI 10% Retail & 27% 70% TAMI Apparel TAMI 13% 7% 24% 60% Prof Svcs 9% TOTAL SF Prof Svcs IN THE MARKET 50% 20% Prof Svcs 40% 20% Prof Svcs 20%

30% FIRE 52% FIRE FIRE 20% 41% FIRE 32% 32% 10%

0% Midtown Midtown South Downtown

Source: Newmark Grubb Knight Frank Research

8 COMPOSITION OF TECH LEASING

Key While overall tech and creative leasing dropped in 2016, the composition of tech industries active Takeaway in the market has shifted.

2014 2015 2016

Activity Highlights: Marketing dominated with 18% Activity Highlights: Digital media led leasing in Activity Highlights: Infotech surged in 2016, ahead of its of leasing in 2014, but dropped to 11% in 2015 and 2015 at 18%, up from 2014 and 2016. share in the prior two years and all other tech 3% in 2016. subindustries in 2016.

Major Transactions Include: Major Transactions Include: Major Transactions Include:

Google Sony Amazon Bloomberg AOL PayPal Salesforce Gilt Groupe Bleacher Report Twitter Buzzfeed Yelp Pandora TED Grovo Side Walk Labs

1% 1% 2% 2% 3% 3% 1% 5% 5% 6% 12% 7% 12% 12% 7% 13% 4% 5% 9% 18% 5% 1% 11% 32% 8% 23% 18% 1% 9% 14% 15% 5% 2% 3% 9% 7% 3% 2% 3% 1%

Biotech Cloud Computing Digital Media E-Commerce Edtech Fintech Gaming Health Tech Infotech Marketing Search Engine Social Media Telecommunications Transportation

Source: Newmark Grubb Knight Frank Research

9 MANHATTAN SUBMARKET COMPARISON

Key Rental rate growth has begun to slow across Takeaway nearly all of Manhattan’s submarkets.

Availability Average Asking Submarket Rent Growth Comparison Rate (%) Rent ($/SF) Manhattan 11.3% $ 76.74 8% Eastside 5% Midtown 11.9% $ 82.84 13% Far West Side 4% Eastside 9.9% $ 74.79 7% Far West Side 17.5% $ 85.19 Grand Central 4% 7% Grand Central 14.8% $ 78.13 Murray Hill 1% 8% Murray Hill 10.1% $ 61.75 Park Avenue 13% Park Avenue 12.7% $ 104.75 10% Penn Station 5% Penn Station 8.3% $ 64.93 9% Plaza District -8% Plaza District 13.3% $ 110.91 7% Sixth Ave/Rock Ctr. 13.2% $ 87.60 Sixth Ave/Rock Ctr. 0% 6% Times Square 10.0% $ 80.55 Times Square 0% Times Square South 10.4% $ 61.64 9% Times Square South 1% Westside 9.1% $ 70.28 9% Westside 2% Midtown South 8.0% $ 72.60 12% Chelsea 7.6% $ 66.23 Chelsea 7% 10% East Village 0.6% $ 48.00 East Village -1% Flatiron/Union Square 8.0% $ 71.22 9% Flatiron/Union Square 5% Hudson Square/Meatpacking 11.7% $ 84.02 15% Hudson Square/Meatpacking 1% Soho/Noho 5.2% $ 72.64 9% Soho/Noho 6% Downtown 12.3% $ 62.40 8% Downtown East 11% Downtown East 11.8% $ 57.70 8% Downtown West 12.7% $ 67.84 Downtown West 8% 8% Tribeca/City Hall 14.1% $ 65.43 Tribeca/City Hall 25%

Growth Per Annum Since 2010 (%) Growth Past 12 Months (%) Source: Newmark Grubb Knight Frank Research

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

Key Year-over-year asking rent growth pulled back from the 6-year average in Midtown and Midtown Takeaway South. Downtown pushed slightly ahead.

Average Annual Change Change since Since Trough (2010) 2015

$95 MT 6.4% 3.9% $89.02 MTS 10.3% 3.7% $82.84 $85 DT 8.1% 9.7%

$75 $72.60

$65 $62.40 $58.93 $57.02

$55

$45 $51.56 $40.33

$35 $39.09

$25 3Q05 3Q06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16

Midtown Midtown South Downtown

Source: Newmark Grubb Knight Frank Research

11 TAKING AND NET EFFECTIVE RENT TRENDS Average net effective rents for direct deals with >5-year terms

Key Taking rent growth has slowed with the exception of Midtown, while net effective rents Takeaway have flattened year-over-year.

Base Taking Rent Trends NER Rent Trends

$80 $80

$75 $76.03 $75

$70 $70 $67.19 $65 $65 $65.23

$60 $60 $60.24

$55 $55 $52.61 $50 $50

$45 $45 $42.65 $40 $40

$35 $35

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

Midtown Midtown South Downtown Midtown Midtown South Downtown

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

MT 6.1% 7.6% MT 5.1% 1.6%

MTS 9.8% 1.0% MTS 8.4% 1.6%

DT 7.2% 3.7% DT 4.9% 1.1%

*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 $79.40/SF and average NER is pushed to $67.96/SF.

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

Average Base Average Base Submarket Market Corridor Market Taking Rent ($/SF) Taking Rent ($/SF) Park Avenue* MT $124.56 Park Avenue* MT $107.91 Upper Fifth Avenue MT $93.36 Plaza District MT $89.23 (47th - 65th Streets) Hudson Square/ East 50s MT $78.54 MTS $84.65 Meatpacking Avenue of the MT $77.16 Far West Side MT $84.13 Americas West 50s MT $76.57 Sixth Ave/Rock Ctr. MT $78.22 Broadway MTS $76.37 NoHo/SoHo MTS $76.05 Lexington Avenue MT $76.01

Westside MT $75.48 Madison Avenue MT $74.49 Park Avenue South MTS $73.55 Eastside MT $73.22 Broadway MT $71.25 Grand Central MT $66.94 Eighth Avenue MTS $68.57

Chelsea MTS $65.89 West 40s MT $68.20 Fifth Avenue MTS $67.95 Times Square MT $65.20 Third Avenue MT $65.66 Flatiron/Union Square MTS $63.75 West 20s MTS $65.28 Penn Station MT $62.20 East 40s MT $63.17 Lower Fifth Avenue MT $61.85 Times Square South MT $60.81 (32nd - 47th Streets) Downtown West DT $60.38 East 20s MTS $58.02 Madison Avenue MTS $53.37 Murray Hill MT $52.64 Water Street DT $51.83 Downtown East DT $49.67 Broadway DT $51.08

*Park Avenue Submarket and Corridor averages are impacted on a weighted basis by Citadel deal at 425 Park.

Source: Newmark Grubb Knight Frank Research

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

Key Landlords are spending more on build-outs Takeaway through prebuild programs or work allowances.

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

Plaza District $93.50 Grand Central 26%

Park Avenue $86.46 Plaza District 18%

Grand Central $83.32 Park Avenue 18%

Sixth Ave/Rock Ctr. $76.90 Penn Station 17%

Westside $72.31 Chelsea 16%

Penn Station $70.00 Sixth Ave/Rock Ctr. 11%

Times Square South $68.18 Flatiron/Union Square 8%

Hudson Square/Meatpacking $66.86 Hudson Square/Meatpacking 4%

Downtown East $65.80 Eastside 0%

Eastside $65.73 Downtown East -2%

Flatiron/Union Square $62.78 Westside -5%

Chelsea $61.67 Times Square South -8%

Downtown Midtown South Midtown Downtown Midtown South Midtown

Source: Newmark Grubb Knight Frank Research

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

Key Free rent has increased in about one-third of Manhattan’s submarkets, but remained flat or Takeaway dropped in all others.

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

Park Avenue 11 Chelsea 14%

Sixth Ave/Rock Ctr. 11 Flatiron/Union Square 13%

Penn Station 10 Plaza District 13%

Times Square South 9 Penn Station 11%

Hudson Square/Meatpacking 9 Sixth Ave/Rock Ctr. 11%

Plaza District 9 Park Avenue 10% Downtown West 0% Grand Central 9 Grand Central 0% Westside 9 Downtown East 0% Downtown West 9 Eastside 0% Flatiron/Union Square 9 Westside 0% Chelsea 8 Hudson Square/Meatpacking -11% Eastside 8 Times Square South -13% Downtown East 8 Times Square -13% Times Square 7

Downtown Midtown South Midtown Downtown Midtown South Midtown

Source: Newmark Grubb Knight Frank Research

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

Buildings with $100+ Taking Rents In 2016 YTD Key Despite an overall slow-down in rent growth, demand remains for premier space. Manhattan is Takeaway Midtown set to match 2015 in +$100/SF rent buildings. 30 Hudson Yards 888 Seventh Avenue 250 West 55th Street 152 West 57th Street 7 Bryant Park 60 1095 Avenue of the Americas 1114 Avenue of the Americas 1330 Avenue of the Americas 8 712 Fifth Avenue 50 717 Fifth Avenue 5 745 Fifth Avenue 767 Fifth Avenue 9 West 57th Street 40 5 10 East 53rd Street 437 Madison Avenue 510 Madison Avenue 650 Madison Avenue 30 7 660 Madison Avenue 5 667 Madison Avenue 48 277 Park Avenue 7 44 4 8 280 Park Avenue 20 36 350 Park Avenue 33 375 Park Avenue 399 Park Avenue 2 25 24 425 Park Avenue 10 19 4 19 17 450 Park Avenue 12 499 Park Avenue 8 601 Lexington Avenue Midtown South 0 111 Eighth Avenue 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 404 West 14th Street 860 Washington Street 1Q-3Q 4Q 770 Broadway Source: Newmark Grubb Knight Frank Research 315 Park Avenue South

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

Key The volume of triple-digit deals is consistent with Takeaway 2015 totals.

100

75 26

50 22 9 16 19 7 74 12 17 58 13 25 8 9 46 38 38 34 31 4 29 6 27 24 11 4 18 17 13 11 2 4 6 10 3 8 7 9 0 3 1 1 1 3 3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD

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

Source: Newmark Grubb Knight Frank Research

17 MIDTOWN SOUTH TOP-TIER TRENDS Transactions with taking rents over $75/SF

Key Deal-making at the top end of the market in Number of Deals by Price Midtown South has slowed in 2016 from the past Takeaway two years.

$100+ Number of Deals Signed Over $75/SF 2016 YTD MTS Taking Rents Over $75/SF By Industry 27%

40 $75-$79.99 42%

$95-99.99 5% $80-$84.99 Other $90-$94.99 21% 30 TAMI 16% 5% 21%

34 30 Business Services 31% 10 19 FIRE 32%

7 7

2 0 1 2010 2011 2012 2013 2014 2015 2016 YTD

Source: Newmark Grubb Knight Frank Research

18 MIDTOWN DEAL COMPOSITION Direct deals with five-year terms and longer

Key Despite strong leasing over 100,000 square feet, the overwhelming majority of Midtown deals are Takeaway small and mid-sized deals in commodity space.

Number of Deals by Taking Rent Number of Deals by Size Over 25% 50K-100K SF 100,000 SF 2% 3% 25K-50K SF 8%

20%

10K-25K SF 23% Under 10,000 SF 15% 64%

10% Company Address SF Lease Type Industry Extension & Random House 1745 Broadway 605,000 TAMI Expansion Renewal & C.V. Starr 399 Park Avenue 210,963 FIRE Expansion 5% Legal Dentons 1221 Avenue of the Americas 207,371 Renewal Services Bloomberg 919 Third Avenue 204,000 Expansion FIRE Morgan Stanley 399 Park Avenue 110,000 Direct New FIRE 0% $40s $50s $60s $70s $80s $90s $100s $110s $120s $130s $140+

Source: Newmark Grubb Knight Frank Research

19 MIDTOWN SOUTH DEAL COMPOSITION Direct deals with five-year terms and longer

Key Few high-priced deals and a lack of large transactions during 3Q16 underscore the recent Takeaway slow-down in activity in Midtown South

Number of Deals by Taking Rent Number of Deals by Size 45%

40% 25K-50K SF 10%

35% 10K-25K SF 25% Under 10K SF 30% 65%

25%

20%

Company Address SF Lease Type Industry 15% Taboola 1115 Broadway 48,010 Direct New TAMI Deloitte 330 Hudson Street 47,222 Sublease FIRE 10% Winton Capital 315 Park Avenue South 34,400 Direct New FIRE

Lieff Cabraser Heimann Legal 5% 250 Hudson Street 27,778 Renewal & Bernstein LLP Services Ernst & Young 218 West 18th Street 27,008 Sublease FIRE 0% $40s $50s $60s $70s $80s $90s $100+

Source: Newmark Grubb Knight Frank Research

20 DOWNTOWN DEAL COMPOSITION Direct deals with five-year terms and longer

Key Downtown saw stability in the range of pricing Takeaway and a healthy mix in size of transactions.

Number of Deals by Taking Rent Number of Deals by Size 35% Over 100K SF 3%

30% 25K-50K SF 15%

Under 10K SF 25% 49% 10K-25K SF 33% 20%

15% Company Address SF Lease Type Industry 4 World Trade Zurich Insurance 131,876 Direct New FIRE 10% Center QBE 55 Water Street 97,228 Sublease FIRE

American Express 200 Vesey Street 80,000 Direct New FIRE 5% Port Authority of NY & NJ 80 Pine Street 57,245 Sublease Gov’t The Solomon R. 1 Liberty Plaza 46,588 Direct New Nonprofit Guggenheim Foundation 0% $30s $40s $50s $60s $70s $80s

Source: Newmark Grubb Knight Frank Research

21 3Q16 MANHATTAN DEVELOPMENT OVERVIEW COMMERCIAL DEVELOPMENT PIPELINE MANHATTAN (MSF)

Key About 29 million square feet of new office product is under construction or in the Takeaway planning stages in Manhattan. 2014 837 Washington Street 2018 300 Lafayette Street 1 World Trade Center 3 World Trade Center 16 425 Park Avenue 2015 7 Bryant Park 55 Hudson Yards 430 West 15th Street 61 Ninth Avenue 40 Tenth Avenue 14 2016 10 Hudson Yards 860 Washington Street 2019 1 Manhattan West 855 Avenue of the Americas 30 Hudson Yards 89 Bowery 3 Hudson Boulevard 12 106 West 56th Street 2017 432 Park Avenue 390 Madison Avenue 2020 One Vanderbilt Avenue 540 West 26th Street 10 510-512 West 22nd Street TBD 50 Hudson Yards 2 Pike Street 2 World Trade Center 412-414 West 15th Street 2 Manhattan West 66 Hudson Boulevard 15 Penn Plaza 8 438 Eleventh Avenue 75 Ninth Avenue 44 Union Square East New Expected Potential 6 Construction Delivery Delivery 86.9 MSF 15.0 MSF 13.7 MSF

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

23 3Q14 MANHATTAN DEVELOPMENT UPDATE

FAR WEST SIDE 7 6 7 MIDTOWN EAST

4b 5 6 4a 66 & 99 7 BRYANT PARK HUDSON 1 3d MANHATTAN WEST BOULEVARD 3b ONE 3c 4a VANDERBILT 3 HUDSON 2 AVENUE 3a 4b 425 PARK BOULEVARD AVENUE 5 450 WEST 33rd STREET 390 MADISON 2 AVENUE

55 HUDSON 3b YARDS 3a 1

3c Retail space 10, 30 & 50 HUDSON YARDS

WORLD TRADE CENTER AND DOWNTOWN

2 WTC 1 2

Memorial 3 1 WTC 4 WTC Transportation Hub

3 WTC 4 WTC 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 1.8M SF

2014 TBD 2018 2013 2015 2017 2018 2020 Completed Planned Under Construction Completed Completed Under Renovation 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 2.85M SF 1.3M SF 2016 2018 2019 2019 TBD TBD TBD TBD TBD Completed Under Construction Under Construction Under Construction Planned Planned Under Construction Planned Planned Source: Newmark Grubb Knight Frank Research

25 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 2016 2017 2017 Completed Under Construction Under Construction Under Construction Under Construction

Rendering not yet available

THE RELATED AURORA, WILLIAM YEUNG REAL ESTATE VORNADO REALTY TRUST LM LEGACY GROUP SAVANNA, ATOM ASSETS COMPANIES GOTTLIEB REAL ESTATE

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 2017 2018 2018 2017 2018 2019 Planned Under Construction Under Construction Under Construction Planned Planned

Source: Newmark Grubb Knight Frank Research

26 3Q16 BROOKLYN AND LONG ISLAND CITY OFFICE MARKET OVERVIEW BROOKLYN OFFICE DEVELOPMENT New Construction and Repositioned Buildings

25 Kent Avenue

Domino Sugar Factory 87 Wythe Ave Williamsburg 80 Hudson Avenue 10 Jay Street Bushwick Building 3 Navy Yard 314 Scholes Street Dock 72 25-30 Columbia Heights Dumbo 121 Morgan Avenue 47 Hall Street 333 Johnson Avenue Building 29 Ryerson Street Downtown 77 Redhook 215 Moore Street GMC Building 128 422 Fulton 95 Evergreen Avenue 160 Van Brunt Street 41 Flatbush Street Avenue 455 Jefferson Street 68 Ferris Street 420 Albee Square 280 Richards Street

Industry City Sunset Park

Whale Square

28 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 Building 10 Jay 80 Hudson 41 Flatbush 420 Albee 422 Fulton GMC Building Building 29 Ryerson Dock 47 Hall Columbia Address Street Avenue Avenue Square Street Building 128 77 3 Street 72 Street Heights Size (SF) 206,000 90,285 750,000 270,910 400,000 TBD 215,000 1,100,000 700,000 215,000 675,000 650,000

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

Submarket SUNSET PARK RED HOOK WILLIAMSBURG BUSHWICK

Rendering Rendering Rendering not yet not yet not yet available available available Jamestown, Madison Savanna, Lincoln Normandy, Owner/ Belvedere Estate Thor Heritage Cayuga Two Trees Hudson Princeton Heritage Realty PWR Hornig Property Royalton, Developer Cap, Angelo Four Equities Equity Capital Mgt Co. Holdings Equity Capital Capital Group Sciame Gordon 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) 6,000,000 405,416 111,565 1,200,000 622,103 400,000 100,000 380,000 165,000 122,700 80,000 100,000 285,000 170,000

In phases Year Open 2016 2016 2020 TBD 2018 2018 TBD 2016 2016 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

Status Underway Completed Completed Proposed Proposed Proposed Underway Planned Completed Underway Proposed Planned Planned Planned

Source: Newmark Grubb Knight Frank Research

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

Key Redevelopment and projects under construction Takeaway are creating new submarkets in Brooklyn.

DOWNTOWN SUNSET WILLIAMSBURG/ DUMBO NAVY YARD BROOKLYN PARK BUSHWICK

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

Current Inventory (SF) 16,027,693 6,500,000 3,908,181 1,592,745 3,155,330

Projected Inventory (SF) 16,427,693 6,500,000 4,658,181 3,356,196 4,480,330 Through 2018

Inventory Differential (SF) 442,289 500,000 1,404,070 1,824,041 2,782,000 2013-2018

2.8% 8.3% 43.1% 119.1% 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

30 BROOKLYN MARKET TRENDS

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

Overall Average Asking Rent and Availability Prime Assets Average Asking Rent and Availability

$45 16% $60 16%

$40 14% 14% $50 $35 12% 12%

$30 $40 10% 10%

$25 8% $30 8% $20

6% 6% $15 $20

4% 4% $10 $10 2% $5 2%

$0 0% $0 0% 3Q06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16 3Q06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16

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

Source: Newmark Grubb Knight Frank Research

31 BROOKLYN SUBMARKET SNAPSHOT

Greenpoint

DOWNTOWN BROOKLYN BROOKLYN NAVY YARD

Williamsburg  Total Inventory: 16,027,693 SF  Total Inventory: 3,155,330 SF DUMBO Navy Yard Bushwick BK  Availability Rate: 4.6%  Average Asking Rent: $39.75/SF Heights Clinton   The addition of 29 Ryerson Street Cobble Fort Hill Bedford Average Asking Rent, Prime Assets: Hill caused a jump in rent in 3Q16. Greene Stuyvesant $48.30/SF Red Prospect Cypress  Average Asking Rent, Standard Crown Hills Hook Park Heights Assets: $41.22/SF Heights SUNSET PARK Upper Slope New York Prospect East  YTD Absorption: -117,085 SF Lefferts Brownsville  Total Inventory: 6,500,000 SF Bay Park Gardens New York Sunset Park Windsor  Average Asking Rent: $27.73/SF Terrace Prospect East Park Flatbush DUMBO WILLIAMSBURG / BUSHWICK Kensington South Canarsie Borough  Total Inventory: 3,908,181 SF  Total Inventory: 1,592,745 SF Bay Flatbush Park Ridge Dyker Flatlands  Availability Rate: 24.6%  Availability Rate: 23.2% Heights Midwood Bergen  Average Asking Rent, Prime Assets:  Average Asking Rent, Prime Assets: Marine Beach $58.00/SF $52.76/SF Fort Bensonhurst Park Mill Hamilton Basin Jamaica Bay  Average Asking Rent, Standard  Average Asking Rent, Standard Bath BK Assets: $34.75/SF Assets: $29.59/SF Beach Sheepshead Marine Park  YTD Absorption: -145,067 SF  YTD Absorption: 1,300 SF Bay Gerritsen Barren Lower Gravesend Island New York Beach Bay Manhattan Sea Brighton Beach Gate Coney Beach Island

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

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

Key Dumbo and Williamsburg’s prime assets Takeaway compete with Downtown Manhattan.

$90 $82.84

$80 $72.60 $70 $62.40 $60 $58.00 $52.76

$50 $48.30

$39.75 $40 $38.35

$30 $27.73

$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

33 LONG ISLAND CITY TRENDS Overall Average Asking Rent and Availability

Key Despite Long Island City’s asking rents reached a new all time high level as new and improved Takeaway inventory droves rents up.

$40 20%  Asking rents reached new heights in 3Q16, rising to $37.78/SF, a 14.8% increase year-over-year. $35 16%  The Factory District drove leasing this quarter. Media and Internet $30 company IAC signed for 8,000 12% square feet at 47 Austell Place. Lyft and Uber both expanded in the Falchi $25 Building.

8%  Availability declined 70 basis points $20 to 13.2% this quarter, however current availability is still significantly

4% higher than it was 12 months ago. $15

$10 0% 3Q06 3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16

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

Source: Newmark Grubb Knight Frank Research

34 LONG ISLAND CITY SUBMARKET SNAPSHOT

ASTORIA  Total Inventory: 3,438,213 SF

 Availability Rate: 20.2%

 Average Asking Rent, Prime Assets: $35.48/SF

Astoria  Average Asking Rent, Standard Assets: $29.04/SF

 YTD Absorption: -252,046 SF

HUNTERS POINT/LIC WATERFRONT

 Total Inventory: 3,733,385 SF Hunter’s Point/  Availability Rate: 4.4% LIC Waterfront  Average Asking Rent, Prime Assets: $40.00/SF

 Average Asking Rent, Standard Assets: $31.64/SF

 YTD Absorption: -27,531 SF

THE FACTORY DISTRICT  Total Inventory: 4,524,742 SF

 Availability Rate: 15.1% Factory District  Average Asking Rent, Prime Assets: $40.47/SF  Average Asking Rent, Standard Assets: $30.00/SF

 YTD Absorption: -57,022 SF

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

Source: Newmark Grubb Knight Frank Research

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Jonathan Mazur Czech Republic Mexico Uganda Managing Director, Research France Peru Zambia 212.372.2154 Germany Puerto Rico Zimbabwe [email protected] Ireland

Stephanie Jennings Italy Asia-Pacific Middle East Tri-State Director, Research Netherlands Australia Saudi Arabia 212.372.2099 Poland Cambodia United Arab Emirates [email protected] Portugal China 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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