1Q16 Office Market Overview Table of Contents
1Q16 NEW YORK CITY OFFICE MARKET OVERVIEW 1Q16 Office Market Overview Table of Contents
3 Executive Summary
4 Manhattan Office Market Analysis 23 Manhattan Development Overview
5 Leasing Activity by Market 24 Commercial Development Pipeline 6 Top Transactions 1Q16 25 Commercial Development Horizon Map 7 Industries Driving Leasing 26 World Trade Center Development Overview 8 TAMI Taking Rent Comparison 27 Far West Side Development Overview
9 TAMI Deals by Submarket 28 Midtown East Development Overview 10 Manhattan Submarket Matrix 29 Boutique Development Overview 11 Asking Rent Trends 12 Taking Rent Trends Brooklyn and Long Island City 13 Taking Rent Corridor and Submarket Comparisons 30 Office Market Analysis
14 Net Effective Rent Trends 31 Brooklyn Office Developments in the Pipeline Map 15 Concessions for Select Submarkets 32 Brooklyn Office Development in the Pipeline Overview 16 Midtown Deal Composition 33 Brooklyn Inventory Pipeline 17 Midtown South Deal Composition 34 Dumbo and Downtown Brooklyn Trends 18 Downtown Deal Composition 35 Asking Rent Comparison 19 Triple-Digit Taking Assets 36 Long Island City Trends 20 Manhattan Top-Tier Trends 37 Long Island City Submarket Snapshot
21 Midtown South Top-Tier Trends 38 Long Island City Transformation Statistics 22 Midtown and Downtown Height Analysis
| 2 1Q16 Office Market Overview Executive Summary
Prime assets and new construction continued to attract high-profile tenants during the first quarter of 2016.
Increased renewal activity made up for a drop in relocations causing overall Manhattan leasing to be stable year-over-year and with the ten-year quarterly average. Midtown and Downtown outperformed below-average leasing in Midtown South.
Despite subdued overall leasing figures, activity remained strong for high-end space under 10,000 square feet.
The spread in asking and taking rents between Midtown and Midtown South has closed considerably from the prior peak of 2008. Midtown South submarkets are now priced competitively with Midtown.
Downtown asking and taking rents reached a new historic high during first quarter 2016 as FIRE and TAMI sectors solidified their presence in the market.
Over 15 million square feet of development projects in Manhattan are scheduled for completion by 2020. Another 15 million square feet is in the pipeline.
In Brooklyn, new and newly repositioned assets in Dumbo and Williamsburg have pushed submarket average asking rents close to Downtown Manhattan.
| 3 1Q16 MANHATTAN OFFICE MARKET ANALYSIS Leasing Activity by Market First Quarter Leasing (MSF)
Key Manhattan leasing activity was stable as an increase in renewal activity propped up a Takeaway drop in relocations in 1Q16.
Manhattan Midtown 14 7 12 6 5.3 10 9.2 5 9.2 MSF 4.9 MSF 8 4 6 3 4 2 2 1
0 0
2013 2005 2006 2007 2008 2009 2010 2011 2012 2014 2015 2016
2010 2005 2006 2007 2008 2009 2011 2012 2013 2014 2015 2016 First Quarter Average Quarterly Velocity First Quarter Average Quarterly Velocity
Midtown South Downtown 4 2.5 2.3
2.0 3 2.7 MSF 1.7 MSF 1.5 2 1.6 1.0
1 0.5
0 0.0
2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016
2012 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 First Quarter Average Quarterly Velocity First Quarter Average Quarterly Velocity
Source: Newmark Grubb Knight Frank Research
| 5 Top Transactions 1Q16 Manhattan
The quarter’s top deals consisted of Company Address Market SF Lease Type Industry more renewals and expansions than
McGraw Hill Financial 55 Water Street Downtown 900,027 Renewal FIRE recent quarters.
All of the top deals were tenants in Salesforce.com 1095 Avenue of the Americas Midtown 202,678 Sublease TAMI either the TAMI or FIRE sectors, with
Citadel Investment Group 425 Park Avenue Midtown 200,000 New FIRE a 50/50 split between the two.
The McGraw Hill Financial deal Facebook 225 Park Avenue South Midtown South 198,000 New TAMI marked the largest lease signed in Manhattan since Time Warner’s GroupM 3 World Trade Center Downtown 173,436 Expansion TAMI sale-leaseback at 60 Columbus
Omnicom 220 East 42nd Street Midtown 167,000 Renewal TAMI Circle in early 2014.
ING 1133 Avenue of the Americas Midtown 132,000 New FIRE
UBS 299 Park Avenue Midtown 120,000 Renewal FIRE
Droga5 120 Wall Street Downtown 110,000 Expansion TAMI
Mitsui & Co. 200 Park Avenue Midtown 91,210 Renewal & Expansion FIRE
FIRE = Finance, Insurance, and Real Estate TAMI = Tech, Advertising, Media, and Information
Source: Newmark Grubb Knight Frank Research
| 6 Industries Driving Leasing
Key TAMI and FIRE drove 1Q16 leasing. The make-up of tenants in the market suggests Takeaway this will continue.
1Q16 Leasing by Industry Tenants in the Market in Manhattan
100% Other, 6% Other, 13% Other, 11% Apparel & Retail, 4% Apparel & Retail, Apparel & Retail, 7% Other 5% 18%
75% TAMI, 30% TAMI TAMI, 28% 31%
Apparel & Retail Prof Svcs, 10% 8% 50% Prof Svcs, 12% TAMI, 68% TOTAL SF IN THE MARKET
Professional Services 16% 25% FIRE, 50% FIRE, 42%
Prof Svcs, 9% FIRE 28% FIRE, 5% 0% Midtown Midtown South Downtown
Source: Newmark Grubb Knight Frank Research
| 7 TAMI Taking Rent Comparison TAMI taking rents by price range
Key The majority of TAMI deals now start in the $50s and $60s, up significantly from 2010 when the Takeaway majority were in the $20s and $30s.
2010 1Q16
45% 45% 41%
40% 40%
35% 35% 33%
30% 30%
25% 24% 25% 24%
19% 20% 20% 17%
15% 15% 13%
10% 9% 10% 6%
5% 3% 5% 3% 2% 2% 1% 1% 1% 1% 0% 0% 0% $20's $30's $40's $50's $60's $70's $80's $90's $100's $20's $30's $40's $50's $60's $70's $80's $90's $100's
Source: Newmark Grubb Knight Frank Research
| 8 TAMI Deals by Submarket 1Q16 Deals signed by Submarket
Key TAMI tenants showed a preference for the traditional Midtown South submarkets, as well as Takeaway Downtown East, Grand Central, and Penn Station.
16%
14%
12%
10%
8%
6%
4%
2%
0%
Chelsea
Eastside
Rock Ctr. Rock
South
Sixth Ave/ Sixth
Murray Hill Murray
Flatiron/
Soho/Noho
Park Avenue Park
Penn Station Penn
Union Square Union
Times Square Times Square Times
Grand Central Grand
Far West Side West Far
Meatpacking
Downtown East Downtown
Downtown West Downtown
Hudson Square/ Hudson Tribeca/City Hall Tribeca/City
MIDTOWN MIDTOWN SOUTH DOWNTOWN
Source: Newmark Grubb Knight Frank Research
| 9 Manhattan Submarket Matrix Total Availability Rate versus Overall Average Asking Rent
Key The Plaza District and Park Avenue outperformed all other submarkets. The East Village has the Takeaway lowest availability rate.
$115.69 Plaza District MANHATTAN 11.1% $75.69 Midtown 11.6% $81.68 Park Avenue Eastside 8.8% $71.78 Far West Side 15.1% $81.88 Grand Central 17.1% $76.28
Sixth Avenue/ Murray Hill 10.4% $60.75 Rock Ctr. Park Avenue 8.9% $102.13 Hudson Penn Station 8.5% $63.77 ($/SF) Square/Meatpacking Far West Side Plaza District 13.1% $112.01 Grand Central Times Square Sixth Ave/Rock Ctr. 11.7% $88.87 $75.69 Flatiron/Union Eastside Times Square 11.2% $80.99 Square Westside Times Square South 10.8% $64.04 Downtown West Soho/Noho Westside 8.9% $70.49 Chelsea Average Rent Asking Average Times Square South Tribeca/City Hall Midtown South 7.8% $72.00 Penn Station Murray Hill Chelsea 7.4% $65.46 East Village East Village 2.2% $54.03 Downtown East Flatiron/Union Square 7.7% $70.31 Hudson Square/Meatpacking 11.8% $84.31 Soho/Noho 4.6% $66.22 Downtown 12.2% $61.24 $35.69 Downtown East 10.4% $55.09 0% 11.1% 22.2% Downtown West 13.7% $67.86 Availability Tribeca/City Hall 16.5% $61.64
Source: Newmark Grubb Knight Frank Research
| 10 Asking Rent Trends Overall Average Asking Rent by Market
Key The spread in asking rents between Midtown and Midtown South has shrunk considerably Takeaway since the prior peak. Prior Peak (2008) to 1Q16 Trough (2010) to 1Q16 $95 Percent Change Percent Change
MT -8% MT +43%
MTS +22% MTS +79% $85 DT +19% DT +57% $81.68
13% spread between $75 51% spread MT and MTS between MT and MTS $72.00 $65
$61.24 $55 41% spread between MT and MTS $45
$35
$25 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Midtown Midtown South Downtown
Source: Newmark Grubb Knight Frank Research
| 11 Taking Rent Trends Average Annual Taking Rents ($/SF)
Key Average base taking rents reach new historic Takeaway highs in all three Manhattan markets. Prior Peak (2008) to 1Q16 Trough (2010) to 1Q16 $95 Percent Change Percent Change
MT 14% MT 62%
MTS 30% MTS 80% $85.89* $85 DT 15% DT 47%
24% spread between MT $75 and MTS
$69.25 $65
42% spread between $55 MT and MTS $50.92
$45
$35
$25 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
Midtown Midtown South Downtown
Source: Newmark Grubb Knight Frank Research *Midtown 1Q16 average impacted on a weighted basis by Citadel deal at 425 Park.
| 12 Taking Rent Corridor and Submarket Comparisons 1Q16 Average taking rents for direct deals with five-year terms and longer
Key Midtown South submarkets and avenues Takeaway compete directly with those in Midtown.
CENTRAL Average Base PARK Average Base By Submarket By Corridor Taking Rent ($/SF) Taking Rent ($/SF) PLAZA DISTRICT MIDTOWN WESTSIDE EASTSIDE MIDTOWN PARK SIXTH AVE $112.29 AVE/ Upper Fifth Avenue Plaza District ROCK $110.72 TIMES CTR (47th - 65th Streets) G.C. Park Avenue $94.86 SQUARE STATION 41ST ST PORT AUTHORITY GRAND CENTRAL Sixth Ave/Rock Ctr. $78.51 Park Avenue $89.21 FAR TIMES SQUARE WEST SOUTH Far West Side $77.65 SIDE PENN MURRAY HILL PENN 32ND ST STATIONSTATION Avenue of the Americas $78.12 30TH ST Grand Central $69.43 FLATIRON/ Madison Avenue $77.83 Eastside $65.06 UNION CHELSEA AVRE FIFTH SQUARE Penn Station $63.80 UNION Lexington Avenue $73.15 14TH ST SQUARE Times Square $62.98
6TH AVE 6TH Lower Fifth Avenue $61.39 HUDSON $66.31 Westside SQUARE/ (32nd - 47th Streets) MEATPACKING Times Square South $57.57 EAST Broadway $64.18 NOHO/ VILLAGE Murray Hill $51.62 SOHO MIDTOWN SOUTH Third Avenue $63.25
Soho/Noho $80.58 MIDTOWN SOUTH Hudson Square/ Meatpacking $72.51 TRIBECA/ CITY HALL Broadway $79.79 CITY Chelsea $65.02 HALL DOWNTOWN WEST Flatiron/Union Square $64.69 DOWNTOWN Fifth Avenue $72.78 EAST DOWNTOWN Midtown Midtown South Park Avenue South $69.60 Downtown West $58.21 Downtown Downtown East $49.36 West 20s $62.90
Source: Newmark Grubb Knight Frank Research
| 13 Net Effective Rent Trends Average net effective rents for direct deals with five-year terms and longer
Key Net effective rents jumped from year-end 2015 in Midtown and Midtown South but trailed Downtown, Takeaway resulting in marginal growth for Manhattan.
$43.89 $46.61 $52.81 Manhattan $51.21 $54.40 $60.43 $60.61
$48.47 $50.31 $52.02 Midtown $58.34 $64.74 $64.18 $72.12 *
$37.13 $41.61 $43.54 Midtown South $49.14 $61.27 $59.31 $63.80
$32.09 $38.50 $35.90 Downtown $33.07 $38.44 $42.19 $40.68
$0 $10 $20 $30 $40 $50 $60 $70 $80
2010 2011 2012 2013 2014 2015 2016 YTD
Source: Newmark Grubb Knight Frank Research *Midtown 1Q16 average impacted on a weighted basis by Citadel deal at 425 Park.
| 14 Concessions for Select Submarkets 1Q16 Average concessions for long-term deals, 10K SF and larger
Key Concession packages for prime Midtown submarkets prioritized work allowances Takeaway over free rent.
Average Work Amount ($/SF) Free Rent (Months)
Park Avenue $81.76 Far West Side 13
Penn Station $80.55 Sixth Ave/Rock Ctr. 10
Hudson Square/Meatpacking 9 Plaza District $79.69
Times Square South 9 Sixth Ave/Rock Ctr. $76.01 Westside 9 Times Square $76.00 Downtown West 9 Far West Side $75.63 Park Avenue 8 Westside $71.84 Plaza District 8 Grand Central $69.99 Grand Central 8 Downtown East $63.39 Flatiron/Union Square 8 Eastside $63.33 Eastside 8
Hudson Square/Meatpacking $60.00 Downtown East 8
Times Square South $59.94 Penn Station 7
Downtown West $59.58 Times Square 5
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 0 2 4 6 8 10 12 14
Downtown Midtown South Midtown Downtown Midtown South Midtown
Source: Newmark Grubb Knight Frank Research
| 15 Midtown Deal Composition 1Q16 Direct deals with five-year terms and longer
Key About half of Midtown deals signed during 1Q16 had taking rents in the $60s and $70s, with 83% of Takeaway deals under 25,000 square feet.
Number of Deals by Taking Rent Number of Deals by Size
30% 100,000 SF and Over 3%
25% 50,000- 99,999 SF 25,00- 5% 20% 49,999 SF 9% Under 10,000 SF 15% 43%
10% 10,000- 24,999 SF 40% 5%
0% $40s $50s $60s $70s $80s $90s $100s $110s $120s $130s $140+
Source: Newmark Grubb Knight Frank Research
| 16 Midtown South Deal Composition 1Q16 Direct deals with five-year terms and longer
Key 37% of Midtown South deals were signed with taking rents in the $60s, while 75% of deals were Takeaway smaller than 25,000 square feet.
Number of Deals by Taking Rent Number of Deals by Size
40% 100,000 SF and Over 3% 35%
30% 50,000- 99,999 SF 7% 25% 25,00- Under 49,999 10,000 SF 18% 39% 20%
15%
10%
10,000- 5% 24,999 SF 36%
0% $40s $50s $60s $70s $80s $90s $100+
Source: Newmark Grubb Knight Frank Research
| 17 Downtown Deal Composition 1Q16 Direct deals with five-year terms and longer
Key Downtown had the smallest range in taking rents of the three Manhattan markets, but the greatest Takeaway proportion of deals over 25,000 square feet.
Number of Deals by Taking Rent Number of Deals by Size
60%
50,000- 50% 99,999 SF 4% 100,00 SF and Over 7%
40%
Under 25,000- 10,000 SF 49,999 SF 39% 30% 21%
20%
10% 10,000- 24,999 SF 29%
0% $30s $40s $50s $60s
Source: Newmark Grubb Knight Frank Research
| 18 Triple-Digit Taking Assets Number of buildings that signed $100+ taking rents each year
Key Fifteen Manhattan buildings signed deals with Takeaway taking rents over $100 per square foot in 1Q16.
60 Buildings with $100+ Taking Rents In 2016 YTD
10 East 53rd Street 50 1095 Avenue of the Americas
111 Eighth Avenue
1114 Avenue of the Americas 40 1330 Avenue of the Americas 38 250 West 55th Street 32 350 Park Avenue 30 21 375 Park Avenue
425 Park Avenue 19 20 19 450 Park Avenue 16 15 650 Madison Avenue 17 667 Madison Avenue 10 19 18 17 10 712 Fifth Avenue 9 15 13 10 10 10 767 Fifth Avenue 6 4 3 770 Broadway 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
1Q 2Q-4Q
Source: Newmark Grubb Knight Frank Research
| 19 Manhattan Top-Tier Trends Number of deals signed with taking rents over $75/SF
Key The number of deals signed in 1Q16 with taking rents above $75/SF exceeded that of Takeaway 1Q15 by 13 deals.
250 • In 1Q16, about 50% of deals over $100/SF were relocations. These 225 relocation deals averaged 8,330 31 22 square feet. 200 • The remaining 50% were renewals
175 34 and expansions, which averaged 42 52 47 16,478 square feet. 21 150
125 51 12 48 16 42 17 2016 YTD Taking Rents Over 24 $75/SF by Industry 100 26 142 30 159 TAMI Other 75 2 1 Prof 13 18 16 Svcs 50 99 97 98 13 86 92 76
25 47 49 41 FIRE
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
$75.00 - $99.99 $100.00 - $124.99 + $125
Source: Newmark Grubb Knight Frank Research
| 20 Midtown South Top-Tier Trends Number of deals signed with taking rents over $60/SF
Key 1Q16 saw the highest volume of top-tier rents Takeaway than any other first quarter.
125 In Midtown South, 1Q16 saw more
top-tier deals than any other first quarter with 26 deals signed with taking rents over $60/SF. 100 • Deals signed over $60/SF in 1Q16 average 26,801 square feet. About 77% were relocations, while 23%
75 were renewals and/or expansions.
89 68
50
25 39
23 16 25 26 19 14 8 1 5 3 4 7 0 3 3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
1Q 2Q-4Q
Source: Newmark Grubb Knight Frank Research
| 21 Midtown and Downtown Height Analysis 1Q16 Average Taking Rent by Floor Height
Downtown MIDTOWN MIDTOWN TROPHY
Tower Tower Tower Floors 30+: $52.82/SF Floors 30+: $97.27/SF Floors 30+: $121.21/SF
Mid-Rise Mid-Rise Mid-Rise Floors 16-30: $50.25/SF Floors 16-30: $78.84/SF Floors 16-30: $109.60/SF
Base Base Base Floors 2-15: $50.24/SF Floors 2-15: $60.24/SF Floors 2-15: $93.26/SF
Source: Newmark Grubb Knight Frank Research
| 22 1Q16 MANHATTAN DEVELOPMENT OVERVIEW Commercial Development Pipeline Manhattan (MSF)
Key About 30 million square feet of new office product is under construction and in the Takeaway planning stages in Manhattan.
16 2014 837 Washington Street 2018 3 WTC 1 WTC 425 Park Avenue 55 Hudson Yards 2015 7 Bryant Park 61 Ninth Avenue 14 430 West 15th Street 40 Tenth Avenue 414 West 15th Street 2016 10 Hudson Yards 860 Washington Street 2019 1 Manhattan West 855 Avenue of the Americas 30 Hudson Yards 12 432 Park Avenue 106 West 56th Street 89 Bowery 2020 One Vanderbilt Avenue 2017 390 Madison Avenue 10 300 Lafayette Street TBD 50 Hudson Yards 540 West 26th Street 2 WTC 512 West 22nd Street 2 Manhattan West 76 Eleventh Avenue 3 Hudson Boulevard 8 2 Pike Street 66 Hudson Boulevard 15 Penn Plaza 438 Eleventh Avenue New Expected Potential 6 Construction Delivery Delivery 85.0 MSF 15.3 MSF 15.2 MSF
4
2
0
TBD
1987 2011 1980 1981 1982 1983 1984 1985 1986 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Newmark Grubb Knight Frank Research
| 24 3Q14 Manhattan Development Update
FAR WEST SIDE MIDTOWN EAST
4b 66 HUDSON 6 5 6 4a BOULEVARD 7 BRYANT PARK 1 3d MANHATTAN WEST 3b ONE VANDERBILT 3c 4a 3 HUDSON 2 AVENUE 425 PARK BOULEVARD 3a 4b AVENUE 5 450 WEST 33rd STREET 390 MADISON 2 AVENUE
55 HUDSON 3b YARDS 3a 1
3d
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 Development Overview World Trade Center
WORLD TRADE CENTER
PORT AUTHORITY SILVERSTEIN PROPERTIES OF NY/NJ, DURST 1 World 2 World 3 World 4 World 2 1 Trade Center 2 Trade Center 3 Trade Center 4 Trade Center 1
3,000,000 SF 2,800,000 SF 2,500,000 SF 2,300,000 SF 5
TBD (2020 pending 8 4Q 2014 2018 4Q 2013 completed deal with anchor) 7 Completed Planned Under Construction Completed 104 stories 88 stories 80 stories 72 stories 6 Signed Condé Nast, Signed MediaMath, 3 Seeking an Moody’s, High 5 Games, Signed GroupM Morningstar, IEX, and anchor tenant xAd, and others public sector tenants
INFRASTRUCTURE AND AMENITIES 4 WTC Retail at Westfield World 5 Fulton Center 6 7 Transportation 8 Brookfield Place Trade Retail Hub 2014 2015 2016 2016
Completed Completed Completed Under Construction
Transit hub for nine Calatrava-designed 365,000 SF of retail 200,000 SF of shopping subway lines serving transit hub for the NJ throughout the World and dining 300,000 daily riders PATH and retail Trade Center site
Source: Newmark Grubb Knight Frank Research
| 26 Manhattan Development Overview Far West Side
FAR WEST SIDE
MITSUI FUDOSAN, THE RELATED BROOKFIELD THE RELATED BROOKFIELD BROOKFIELD MOINIAN TISHMAN THE RELATED OXFORD, COMPANIES PROPERTIES, QIA COMPANIES PROPERTIES, QIA PROPERTIES, QIA GROUP SPEYER COMPANIES RELATED 10 Hudson 5 Manhattan West 55 Hudson 30 Hudson 1 Manhattan 2 Manhattan 3 Hudson 66 Hudson 50 Hudson 1 Yards 2 450 West 33rd St 3 Yards 4 Yards 5 West 6 West 7 Boulevard 8 Boulevard 9 Yards
1,700,000 SF 1,800,000 SF 1,300,000 SF 2,600,000 SF 2,100,000 SF 2,100,000 SF 1,800,000 SF 2,850,000 SF 2,300,000 SF TBD (2019 pending TBD (2020 pending 2016 2016 (Renovation) 2018 2019 2019 TBD TBD anchor tenant) anchor tenant) Under Construction Planned Under Construction Under Construction Under Construction Planned Planned Planned Planned
52 stories 16 stories 50 stories 90 stories 67 stories 67 stories 66 stories 70 stories 62 stories Tenants include Tenants include Tenants include Time Mixed-use Mixed-use Signed Boies, Schiller Signed Project in early Project in early Coach, L’Oréal, BCG, Chase Digital Media, Warner, HBO, CNN, development development & Flexner Skadden Arps stages of planning stages of planning SAP, Vayner Media Markit Group Warner Bros., KKR possible possible
INFRASTRUCTURE AND AMENITIES 7 8
7 Train Extension East Platform 15 Hudson Yards: 35 Hudson Yards: to 34th Street Over Rail Yards Residential Residential, Hotel, Retail 3 9
Completed 2018 TBD TBD 4 5 Mixed-use development Under Construction Under Construction Planned possible 2 6
1 Source: Newmark Grubb Knight Frank Research
| 27 Manhattan Development Overview Midtown East
59th Street MIDTOWN EAST
3
L&L HOLDING BANK OF CHINA L&L HOLDING, RREEF SL GREEN COMPANY 7 Bryant 390 Madison 425 Park One Vanderbilt 1 Park 2 Avenue 3 Avenue 4 Avenue 473,000 SF 843,710 SF 670,000 SF 1,800,000 SF 2015 2017 2018 2020
Completed Renovation Under Construction Planned
28 stories 32 stories 47 stories 65 stories
Bank of China occupies 40% L&L will restack the building to Signed Citadel Signed TD Bank. Demolition
of the building alter height and bulk has commenced 2
Fifth Avenue Fifth Second Avenue Second
EAST MIDTOWN REZONING INFRASTRUCTURE
The Vanderbilt Greater Second Avenue LIRR East Side Corridor East Midtown Subway- Phase I Access The City approved rezoning of the The City is also exploring a more 4 Vanderbilt Corridor including zoning comprehensive rezoning of Greater 2017 2022 applications for One Vanderbilt. The East Midtown. A stakeholder initiative will increase the potential for committee developed a set of principles office development in exchange for that will shape the rezoning effort. Under Under public improvements and TDRs. Construction Construction Stakeholder committee recommendations 1 The City approved zoning applications Phase I runs from Connects the LIRR released in 2015. Rezoning expected to (ULURP) in May 2015. 96th to 63rd Street to Grand Central begin in 2016.
Source: Newmark Grubb Knight Frank Research, NYC Department of City Planning 37th Street
| 28 Manhattan Development Overview Boutique Development
BOUTIQUE DEVELOPMENT
Rendering Rendering not yet not yet available available
VORNADO REALTY THE RELATED ROMANOFF EQUITIES CIM GROUP WING FUNG GROUP HFZ CAPITAL TRUST, ALBANESE COMPANIES ORGANIZATION 860 Washington 432 Park 76 Eleventh 300 Lafayette 512 West 89 Bowery Street Avenue Avenue Street 22nd Street Midtown South Midtown Midtown South Midtown South Midtown South Midtown South 120,413 SF 71,000 SF 23,831 SF 242,750 SF 72,000 SF 170,000 SF 2016 2016 2016 2017 2017 2017 Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction 10 stories 6 stories 9 stories 3 stories 7 stories 11 stories
BOUTIQUE DEVELOPMENT
Rendering not yet available
AURORA, WILLIAM SAVANNA YEUNG REAL ESTATE VORNADO REALTY TRUST LM LEGACY GROUP SAVANNA, ATOM ASSETS GOTTLIEB REAL ESTATE
540 West 414 West 2 Pike Street 61 Ninth Avenue 40 Tenth Avenue 106 West 56th Street 26th Street 15th Street Midtown South Midtown South Midtown South Midtown South Midtown South Midtown 128,367 SF 93,000 SF 167,170 SF 144,273 SF 116,205 SF 90,000 SF 2017 2017 2018 2018 2018 2019 Planned Planned Planned Under Construction Planned Planned 9 stories 14 stories 10 stories 18 stories 12 stories 26 stories
Source: Newmark Grubb Knight Frank Research
| 29 1Q16 BROOKLYN AND LONG ISLAND CITY OFFICE MARKET ANALYSIS Brooklyn Office Developments in the Pipeline 14 MSF of New Construction and Repositioned Buildings
25 Kent Avenue
Domino Sugar Factory 87 Wythe Ave Williamsburg
80 Hudson Avenue 10 Jay Street Navy Yard Bushwick Building 3 Dumbo Dock 72 333 Johnson Avenue 422 Fulton 47 Hall Street Street 29 Ryerson Street 215 North 95 Evergreen Downtown GMC Building 128 Moore Street Avenue 60 Van Brunt Street 420 Albee 41 Flatbush Building 77 68 Ferris Street Square Avenue 455 Jefferson Street Red Hook
280 Richards Street
Industry City Sunset Park
Whale Square
| 31 Brooklyn Office Developments in the Pipeline New Construction and Repositioned Buildings
Submarket DUMBO DOWNTOWN BROOKLYN NAVY YARDS
Rendering not yet available Triangle Cibrano JEMB Realty Tishman Quinian Dev Boston Prop, Westbrook Madison Realty Owner/ Brooklyn Navy Yard Development Corp. Developer Assets Family Corp Speyer Group, BLT Rudin Mgt Partners, RXR Capital Building 10 Jay 80 Hudson 420 Albee 422 Fulton 41 Flatbush GMC Building Building Dock 47 Hall 29 Ryerson Address Street Avenue Square Street Avenue Building 128 77 3 72 Street Street
Size (SF) 206,000 90,285 400,000 TBD 270,000 215,000 1,100,000 700,000 675,000 650,000 215,000
Year Open 2016 2016 2018 TBD 2016 2016 2017 2017 2018 TBD TBD Project Type New New New Redevelopment Redevelopment Redevelopment Redevelopment Redevelopment Redevelopment Redevelopment Redevelopment Construction Construction Construction Status Underway Underway Proposed Planned Underway Underway Underway Planned Planned Planned Proposed
Submarket SUNSET PARK RED HOOK WILLIAMSBURG BUSHWICK
Rendering not yet available
Owner/ Jamestown, Madison Normandy, Savanna, Lincoln Thor Estate Heritage Two Trees Cayuga Heritage Developer Belvedere Cap, Realty PWR Royalton, Hornig Property Equities Four Equity Management Capital Equity Angelo Gordon Capital Sciame Capital Group Building Address Industry City Whale Square 280 Richards 160 Van 68 Ferris 25 Kent Domino Sugar 87 Wythe 333 Johnson 215 N. Moore 95 Evergreen 455 Jefferson 32nd - 41st St. 14 53rd St. Street Brunt Street Street Avenue Factory Avenue Avenue Street Avenue Street Size (SF) 6,000,000 405,416 300,000 111,565 1,200,000 400,000 600,000 (max) 100,000 285,000 SF 170,000 165,000 122,700 Year Open In phases 2015-2016 TBD 2016 2020 2017 TBD 2017 2017 2017 2016 2016 Project Type starting 2015 New New New New Redevelopment Redevelopment Redevelopment Redevelopment Redevelopment TBD Redevelopment Redevelopment Status Construction Construction Construction Construction Underway Planned Planned Completed Planned Planned Planned Planned Planned Planned Planned Planned
Source: Newmark Grubb Knight Frank Research
| 32 Brooklyn Inventory Pipeline 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) 16,103,358 6,405,416 3,887,808 1,686,890 2,875,330
Projected Inventory 16,503,358 6,405,416 3,887,808 3,341,890 4,415,330 (SF) Through 2018
Inventory Differential (SF) 517,954 405,416 633,697 1,809,735 2,717,000 2013-2018
118.1% 160.0% SF DIFFERENCE SF DIFFERENCE 3.2% 6.8% 19.5% 2013-2018 2013-2018 SF DIFFERENCE SF DIFFERENCE SF DIFFERENCE 2013-2018 2013-2018 2013-2018
Source: Newmark Grubb Knight Frank Research
| 33 Dumbo and Downtown Brooklyn Trends Overall Average Asking Rent and Availability
Key Redevelopments drove rapid growth in asking Takeaway rents in 1Q16 as availability increased.
$60 12% Average asking rents reached $53.67/SF in the first quarter, up 3% from last quarter and 29% year-over- $50 10% year, driven by the addition of space
at 55 Water Street.
In the first quarter of 2016, LA-based $40 8% law firm 72andSunny signed at Empire Stores. The Slate Group will relocate to 15 Metrotech from the $30 6% West Village.
$20 4%
$10 2%
$0 0% 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16
Average Asking Rent (Price/SF) Availability (%)
Source: Newmark Grubb Knight Frank Research
| 34 Asking Rent Comparison Average Asking Rents ($/SF)
Key Prime Dumbo and Williamsburg assets neared Downtown Manhattan rents. Long Island City Takeaway offers proximity to Midtown at a fraction of the cost.
$90
$81.68 $80
$72.00 $70
$61.24 $60 $58.42
$50.05 $50 $48.27
$40 $37.00 $37.38
$30 $27.50
$20
$10
$0 Sunset Park Brooklyn Navy Yard Long Island City Downtown Brooklyn Williamsburg / Dumbo Downtown Midtown South Midtown Prime Prime Prime Prime Bushwick Prime Manhattan Overall Overall Prime Overall Prime Assets are Class A and newly repositioned space. Source: Newmark Grubb Knight Frank Research
| 35 Long Island City Trends Overall Average Asking Rent and Availability
Key Availability and asking rents jumped during 1Q16 Takeaway as premium-priced space hit the market.
$40 20% Premium-priced space hit the market this quarter, pushing asking rents to an all-time high of $36.72/SF, up 7% $35 from the prior quarter and 13% from 16% a year earlier.
Prime buildings continued to attract $30 tenants this quarter, with United 12% Health Services taking 19,533 SF at the Factory Building. $25
However, additional spaces at the 8% Factory and Falchi Building hit the $20 market, driving the availability rate up to 11.5%.
4% $15
$10 0% 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16
Average Asking Rent (Price/SF) Availability (%)
Source: Newmark Grubb Knight Frank Research
| 36 Long Island City Submarket Snapshot
THE FACTORY DISTRICT Total Inventory: 4,429,170 SF Availability Rate: 16.2% Average Asking Rent, Prime Assets: $38.10/SF Astoria Average Asking Rent, Standard Assets: $25.00/SF YTD Absorption: -88, 308 SF Recent Significant Transaction: United Healthcare Services signed 19,500 square feet at the Factory.
Hunter’s Point/ HUNTERS POINT/LIC WATERFRONT LIC Waterfront Total Inventory: 3,733,385 SF Availability Rate: 3.9% Average Asking Rent, Prime Assets: $40.70/SF Average Asking Rent, Standard Assets: $29.00/SF YTD Absorption: 8,349 SF
ASTORIA Total Inventory: 3,855,083 SF Factory District Availability Rate: 13.6% Average Asking Rent, Prime Assets: $35.42/SF Average Asking Rent, Standard Assets: $28.03/SF YTD Absorption: -38,456 SF
Source: Newmark Grubb Knight Frank Research Prime Assets are Class A and newly repositioned space. Standard Assets are all other office inventory.
| 37 Long Island City Transformation Statistics
8 subway lines and the Long Island 34,500 residents live in Long Rail Road serve Long Island City. Island City, up 18% in the last 5 years. There are 5.0 million workers within a 60-minute commute There are 24,500 new residential of Court Square, exceeding Fulton units in the construction pipeline. Center (4.4 million) and Union Millennials comprise 27% of Square (4.5 million), and comparable Long Island City population, to Penn Station and Grand Central a greater percentage than (5 million each). Manhattan (21%), and New York ACCESS TO RESIDENTIAL City (17%). WORKERS GROWTH
IMPROVED 28% of total office inventory (3.4 OFFICE AMENITIES 36 new hotels are in the MSF) has been repositioned in the INVENTORY construction pipeline. last 3 years. There has been a recent increase Additional developments are in the in retail amenities, including planning stages, including three coffee houses, gourmet restaurants projects totaling 905,787 SF. and nightlife options. Long Island City includes major cultural institutions like MoMA PS1 and Socrates Sculpture Park.
Source: Newmark Grubb Knight Frank Research, Regional Plan Association, Long Island City Partnership, US Census Bureau, ESRI
| 38 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
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 David Chase Romania Hong Kong Senior 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
All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Grubb Knight Frank (NGKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NGKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient’s choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications.
Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains.
www.ngkf.com