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Commercial Office Market Lower Manhattan Tenants Deepened Roots

Commercial Office Market Lower Manhattan Tenants Deepened Roots

OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

ALLIANCE FOR DOWNTOWN LOWER REAL ESTATE MARKET OVERVIEW Q3 2016

COMMERCIAL OFFICE MARKET TENANTS DEEPENED ROOTS

While total activity has slowed this year, a strong set of Lower Zurich America Insurance Company, a Switzerland-based Manhattan’s existing tenants have recommitted to remain in insurance firm, signed the largest deal of the quarter, Lower Manhattan and, in some cases, expand throughout 2016. committing to move its New York headquarters from 1 Liberty This market logged 846,000 square feet of new leasing activity Plaza to 131,856 square feet in . The in the third quarter, according to CBRE, bringing year-to-date second largest deal of the quarter also represented a move activity to 2.8 million square feet. Lower Manhattan is down 15% within Lower Manhattan: the Port Authority of New York and compared to this time last year, but both Midtown and Midtown will be consolidating its Lower Manhattan offices in South saw notably larger decreases, 20% and 29%, respectively. a 57,245-square-foot office in 80 Pine Street.

2016 has been a strong year so far for top leases from existing The FIRE sector dominated this quarter’s top deals as well tenants, especially from the FIRE sector. More than half of the as in-district moves and expansions and made up more top 20 deals year to date have been taken by tenants moving than 28% of all new leasing activity, according to Jones to new offices within Lower Manhattan or expanding; this Lang LaSalle. 4 World Trade Center, in particular, benefitted represents 848,000 square feet of transactions, an increase from these types of deals. In addition to Zurich, Silverstein of nearly 15% from this type of deal activity in the same period Properties also signed a deal with Global Atlantic Financial in 2015. In addition, three out of the seven deals signed year Company, a financial services company, to open a second to date, representing new activity over 50,000 square feet, office in 44,711 square feet (which is an expansion of its were committments from the FIRE sector. Third quarter activity current 20,326-square-foot office) in . strengthened these trends. Validus Group, a Bermuda-based insurance firm, completed

TOP 20 DEALS BY TRANSACTION TYPE AND SF, YTD 2014 - 2016 Source: CBRE, Cushman & Wakefield, Jones Lang Lasalle & Colliers International

3.5 Million

3 Million While large relocations are down, moves within Lower Manhattan and 2.5 Million 1,670,651 expansions among top deals are up.

2 Million 231,489

Square Feet Square 397,315 1.5 Million 848K

470,957 632K 469,653 450,538 In-district Moves & 1 Million Expansions 160,960 276,969 739K 500,000 462,224 1,055,703 818,960

264,714 0 2014 -Q3 2015 Q1-Q3 2016 Q1-Q3 Relocation Expansion Moving within LM Renewal New LM Location

Up Moving Within LM Lower Manhattan Real Estate Market Overview| Q2 2016 1

Renewal 49.4% Q3 2016 YTD

Relocation 10.8% OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

a 24,489-square-foot lease to relocate operations from 48 Wall NEW LEASING ACTIVITY BY INDUSTRY IN Street and expand their Lower Manhattan footprint. With 200,000 LOWER MANHATTAN, Q3 2016* square feet of deals signed in one quarter, 4 World Trade Center is Source: Jones Lang LaSalle now over 80% leased. Education, Health Care & Other Lower Manhattan buildings also benefitted from expanding Nonprofit Government tenants. In the third quarter, QBE , an insurance company, signed a lease to expand its footprint at 26% 24% by 21,149 square feet, for a total of 118,377 square feet in the building. Earlier in the year, the company committed to move Professional & within Lower Manhattan from 88 Pine Street. WeWork leased an Business Services Q3 2016 18% additional 39,099-square-foot floor at 85 Broad bringing its 85 Government Broad commitment to 274,000 square feet and its total Lower New Leasing 20% Manhattan footprint to 814,325 square feet. Activity by NOTABLE NONPROFITS SIGN RELOCATION DEALS Industry While 2016’s largest deals have been focused on existing tenants, TAMI Lower Manhattan did gain a slew of smaller commitments from 15% tenants outside the market in the third quarter, including several noteworthy nonprofits. Overall, the nonprofit sector comprised FIRE Professional 15.2% of all new leasing activity. Among these relocations: Services 28% Other 6% The Solomon R. Guggenheim , a nonprofit Services •• 1% focused on the collection and preservation of art for public Note: Government sector leasing activity Includes NYC Dept. of Finance’s benefit, accounted for the second largest relocation of the * By182,000 square SF footage, lease at NOTE:375 Pearl This Street. data reflects the closing of the NYC quarter. They will be expanding and moving from Hudson Department of Finance lease at 375 in the third quarter. Square in into 45,558 square feet at Brookfield’s 1 Liberty Plaza.

2012 - 2016 YEAR-TO-DATE LEASING ACTIVITY BY MANHATTAN SUBMARKET Source: Cushman & Wakefield

14 Million Lower Manhattan posts smallest decline in year-over-year activity. 20% 12 Million

10.89 10 Million MSF

8 Million

Square Feet 6 Million

29% 4 Million 15% 2.87 3.19 2 Million MSF MSF

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 Market Overview| Q3 2016 2 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

LOWER MANHATTAN TOP LEASES, Q3 2016 Source: Downtown Alliance, CBRE, JLL, CoStar, Colliers International ••Demos: A Network For Ideas And Action, a public policy Tenant Name SF Leased Sector organization, signed a 16,500-square-foot lease with 80 Location Transaction Type to relocate from Midtown South. 131,856 Zurich American Insurance 1 Moving Within FIRE 4 World Trade Center ••The Regional Plan Association, currently in the Con Edison LM building in Union Square, will relocate to One Whitehall The Port Authority of New 57,245 2 York & New Jersey Moving Within Government Street in early 2017, based on a 9,135-square-foot lease 80 Pine Street LM signed this quarter. True Entertainment 49,320 3 TAMI 180 Relocation MEDIA RELOCATIONS CONTINUE Guggenheim Foundation 45,558 4 Nonprofit 1 Liberty Plaza Relocation The TAMI (Technology, Advertising, Media and Information) sector also accounted for about 15% of new leasing activity this quarter, Global Atlantic Financial 44,711 5 FIRE 4 World Trade Center Expansion which included the following media relocations: 41,986 Hawkins Delafield & Wood Professional ••True Entertainment, a television production company for 6 Moving Within 7 World Trade Center Services, Law reality television shows such as (“The Real Housewives of LM Weill Cornell Atlanta”) and its sister firm, Original Media, took 49,000 40,274 7 Medical College Healthcare square feet at 180 Maiden Lane with the largest relocation Expansion 156 William Street deal of the quarter. The firms will be relocating and U.S. Equal Employment 39,721 consolidating operations from the Starrett-Lehigh building 8 Opportunity Commission Government Renewal 33 and two other buildings in Hudson Square. Professional WeWork 39,099 Modern Luxury Media, a luxury lifestyle magazine 9 Services, •• 85 Broad Street Expansion Other publisher, signed a lease for 8,210 square feet at 40 Fulton The Quad Preparatory Street and will be relocating from Midtown South. 36,756 10 School Education Relocation 40 New York State While this quarter lacked news of a major relocation or strong 27,030 11 Department of Finance Government Expansion leasing activity, the media revealed that several large deals 1 are in discussion and may close by the end of the year. These Validus Group 24,489 12 FIRE include the New York State Attorney General’s rumored move 4 World Trade Center Moving within LM to 28 Liberty, New York Department of Investigation’s QBE North America 21,149 13 FIRE consolidation at 180 Maiden Lane and others. 55 Water St Expansion Professional Microtek Computer Labs 20,768 14 Services, IT 180 Maiden Lane Moving within LM Consulting Regional Plan Association Relocates to Enterprise Foundation 20,208 One Whitehall Street 15 Nonprofit 1 Whitehall Street Renewal

Booker Software 17,050 TAMI, 16 22 Cortlandt Street Renewal Technology Demos: A Network For 16,500 17 Ideas And Action Nonprofit Relocation 80 Broad Street The Regional Plan Association joins other key Infosys Technologies 13,715 TAMI, 18 Expansion Technology influencers in the urban planning2 Rector and development Street field in Lower Manhattan across the nonprofit, SimCorp 13,706 19 FIRE private and public sectors. The Department of City 1 State Street Moving within LM Planning and the New York Landmarks Conservancy Professional Argyle Executive Forum 13,130 — as well as the satellite campus of 20 Services, 50 Broad Street Relocation Cornell University’s Art, Architecture, and Planning Other School and many well-known architecture firms, such as Skidmore, Owings, & Merrill and SHoP Architects--are all located south of Chambers Street.

Lower Manhattan Real Estate Market Overview| Q3 2016 3 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

VACANCY BELOW 10% FOR SECOND CONSECUTIVE QUARTER Manhattan has shown success in not only keeping major tenants Despite tepid leasing activity, Lower Manhattan was the only downtown, but also enticing them to sign up for new spaces in submarket to reflect a year-over-year drop in its overall vacancy many of the new or upgraded office buildings on the market, such rate which now stands at 9.9%. Hovering just above Midtown’s as 4 World Trade Center or 375 Pearl, among others. vacancy rate for the second quarter in a row, this market’s vacancy rate has also remained below 10% during the same These moves and expansions within Lower Manhattan, as well as period. smaller relocation deals, helped absorb some of this submarket’s largest blocks of space in the third quarter. Among the biggest Keeping the overall vacancy rate below 10% has been helped changes: by a drop in the Class A vacancy rate, which fell by nearly 1 percentage point since the end of the first quarter to 11.7%. The ••4 World Trade Center is now 80% leased, up from 70% just Class A vacancy rate is also down notably since its last spike in last quarter, thanks to over 200,000 square feet of activity the fourth quarter of 2013, when it hit 14.9%. in the third quarter.

180 Maiden Lane is 45% leased after signing 70,888 The vacancy rate has been moderated by a wealth of renewal •• square feet of tenants. activity as well as moves within the district and expansions by existing tenants. Year to date 2016, renewals have accounted for 31% of leasing velocity, in part due to the 900,027-square-foot renewal by McGraw Hill Financial at 55 Water Street; this is still the largest deal citywide year to date. By contrast, renewals accounted for about 9% of leasing velocity in 2015. Lower 9.9% Lower Manhattan’s overall vacancy VACANCY RATES BY SUBMARKET, Q3 2012 - Q3 2016 Source: Cushman & Wakefield

13%

12%

11% 10.5% 9.9% 10%

9.3% 9.5% 9%

8%

7% 6.7% 6.6% 6%

5% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2013 2014 2015 2016 Lower Manhattan Midtown Midtown South

Lower Manhattan Real Estate Market Overview| Q3 2016 4 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

OVERALL RENTS STABILIZE BELOW $60 PSF LOWER MANHATTAN ASKING RENTS BY CLASS TYPE Lower Manhattan’s overall asking rent held steady at $59.10 per Q3 2012 - Q3 2016 square foot as of the end of the third quarter, basically flat since the Source: Cushman & Wakefield fourth quarter of 2015. While the Lower Manhattan average has $70 been at a historic high for eight quarters in a row, Midtown South and $65 $62.20 Midtown average rents have both been rising at a quicker pace, up $60 4.8% and 3.7% respectively, year-over-year. $55 $53.10 $50 Lower Manhattan’s Class A asking rent has remained steady at $45.19 $50.30 $45 about $62.20 per square foot, wavering only slightly since it reached $40 a historic high for the market at the end of last year. While pricing$34.61 $35 remains relatively static overall, due to the consistent pricing at$31.80 some of the market’s highest priced and largest blocks at the World Trade $30 Center and others, several considerable spaces have been repriced $25 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 higher over the course of 2016. According to research by Colliers 2013 2014 2015 2016 International, more available inventory in Lower Manhattan has been Class A Class B Class C repriced higher than re-priced lower, year to date, while Midtown and Midtown South have trended oppositely. Landlords adjusted pricing upwards in existing blocks on the market such as 195 , 30 Broad Street and 88 Pine Street this year.

Lower Manhattan’s Class A space, even in repriced blocks, continues Lower Manhattan to be very competitive. Midtown South’s Class A rents jumped 12.8% in just one quarter to $88.10 due to the dearth of available Class A Average Class A Rent $62.20 space in this market. Midtown Class A rents are also up year-over-year, rising 4.3% to $85.10 per square foot. With these changes, Lower Manhattan’s Class A rents are $26 less than Midtown South and $23 lower than Midtown Class A rents, on average.

CLASS A ASKING RENTS BY SUBMARKET, Q3 2012 - Q3 2016 Source: Cushman & Wakefield

$100

$90 $88.10

$80 $85.10

$70 $62.20 $60

$50

$40

$30 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2013 2014 2015

Lower Manhattan Midtown Midtown South

Lower Manhattan Real Estate Market Overview| Q3 2016 5 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

PROPERTY SALES Lower Manhattan had a quiet quarter for property sales volume, but there has been strong interest across property types and locations this year.

Retail Condominiums An undisclosed buyer purchased a 9,538-square-foot retail condominium with ground and lower level space at the base of The (a 283-unit residential condominium building) located at 20 West Street, for $6 million, or $629 per square foot, from The Moinian Group. The current tenant is The Learning Experience, a day care center, and the entrance is located on the Street side of the residential tower.

Retail Buildings 2 Rector Street

JTRE Holdings is in contract to purchase , the Courtesy of CoStar 145,000-square-foot former JP Morgan headquarters at the corner of Broad and Wall Streets for an unconfirmed purchase price, 23 Wall Street from China Sonangol, a Chinese Oil Company. China Sonangol JTRE Holdings is in contract to purchase 23 purchased the property in 2008 for $150 million from Africa Israel, Wall Street, the 145,000-square-foot former JP an international real estate investor. Plans for the property have Morgan headquarters at the corner of Broad not been confirmed, and the property has not had a long-term and Wall Streets, from China Sonangol. tenant since JP Morgan Chase & Co. left in the late 1980s.

Residential 63/67 Wall Street, a residential property comprised of two adjacent buildings and 810 units, was purchased by Rockpoint Mixed-Use Group, a private equity firm headquartered in Boston, from HUBB NYC, a privately held real estate company founded in a joint venture between MetroLoft and DTH . The 2011, closed on the $16.2 million purchase of 121 Chambers purchase closed for $429 million, or about $545,000 per unit, Street — an 18,750-square-foot building including four in September. Originally the headquarters for Brown, Brothers, residential units and 3,675 square feet of retail space — from Harriman & Co. and the Munshon Shipping Company, the the Ackerman family for $864 per square foot in August. The properties were converted to residential use between 2003 and retail space is currently vacant. HUBB NYC also purchased a 2007 and also include 20,000 square feet of retail at the base of 4,211-square-foot retail condominium in nearby 37 Warren the building (now home to Sweetgreen, La Colombe, Tumi and La Street earlier this year for $11.2 million. Maison du Chocolat). The sale of 106 Fulton Street, currently a 75,000-square-foot BH Properties, a Los Angeles-based real estate firm, closed on residence hall, to DSA Property Group for $51 the fee interest in the 399-key, DoubleTree Financial District million was announced this quarter, but not yet closed. The located at 8 , from Lexington Realty Trust for $101 purchase price is $680 per square foot, and rumored plans million in September. The hotel, which opened in 2010, has a include a rental conversion. If the sale closes, Pace University ground lease that expires in 2112. will have four active residence halls remaining with a population of about 2,400 in Lower Manhattan.

Source of property sales data: Newmark Knight Grubb Frank

Lower Manhattan Real Estate Market Overview| Q3 2016 6 EMPLOYMENT & OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

RETAIL MARKET

Developments, New Openings and Announcements throughout the District Lower Manhattan’s retail revolution is driven by major development projects at Westfield World Trade Center, Brookfield Place, and the Seaport District, along with numerous other projects throughout the district. The horizon in 2016 and beyond promises a flurry of major retail developments. By the end of 2019, Lower Manhattan will have nearly 3 million square feet of new and repositioned retail.

Westfield World Trade Center was officially unveiled on August 16th. The magnetic and engaging destination has over 100 stores and

restaurants located in the Santiago Calatrava-designed Oculus and at the Courtesy of iPic Theaters base of 3 and 4 World Trade Center buildings (see feature). iPic Theaters opened an eight-screen, luxury movie At Brookfield Place, contemporary brands continued to attract shoppers theater in the Seaport to 375,000 square feet of repositioned retail space. This quarter saw District at 11 Fulton Street. the opening of Saks , the first downtown outpost for the luxury department store. The 86,000-square-foot store anchors the retail complex and features an edited collection of women’s designers. A separate 17,000-square-foot Saks Fifth Avenue Men’s Store is slated to open in spring 2017 in Brookfield Place. Additionally, Allen Edmonds committed to opening in early 2017, while Warby Parker and Starbucks Reserve Bar both opened locations on the second level.

In the Seaport District, iPic Theaters opened an eight-screen, luxury movie theater in early October in the Fulton Market Building. In addition, The Tuck Room, a bar and restaurant, opened on the third floor of the building. This quarter, Milan-based 10 Corso Como announced it will

open a 13,000-square-foot experiential store in the Seaport, its first U.S. Photo by Romer Pedron for Saks Fifth Avenue location. The new pier, opening in late 2017, along with the revitalized Saks Fifth Avenue debuted historic will provide 365,000 square feet of retail, dining and its downtown store in entertainment. Brookfield Place at . At the end of the third quarter, the district had 1,161 stores and restaurants. A total of 102 new stores and restaurants opened in Lower Manhattan — an 8% increase since the second quarter. In addition to the array of stores opening at the major retail anchors, largely driven by the opening of Westfield, other major restaurants and retailers opened or signed leases this quarter: ●● CUT by Wolfgang Puck at the Four Seasons Hotel New York Downtown at 99 Church Street; and Fowler & Wells by Tom Colicchio and Augustine by Keith McNally opened this fall at The Beekman Hotel at ; Courtesy of Target ●● Target, the first flexible-format store for the national retailer, opened at 255 ; and Whole Foods signed on as the first Target unveiled its first retail tenant at Macklowe’s One Wall Street. Opening in 2018, the flexible-format store at 255 grocery chain will occupy a two-level, 44,000-square-foot space. Greenwich Street in .

Lower Manhattan Real Estate Market Overview| Q3 2016 7 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

Westfield World Trade Center is “the new New York place to be” The wait is over at Westfield World Trade Center. Encompassing 365,000 square feet of retail space with over 100 shops and restaurants, offers an array of fashion, beauty, lifestyle and technology brands. The grand opening was on August 16th and featured a day full of performances, headlined by Grammy Award winner John Legend. Photo by Mark Weinberg for Utopia, The Agency The list of brands at Westfield World Trade Center includes: Apple and Bose in technology; Boss Hugo Boss, H&M, Kate Spade, John Eataly & other eateries Varvatos, LK Bennett, Lacoste, and Banana Republic in apparel; Under Armour in the athletic category; Sephora, Caudalie, Kiehl’s, MAC, and Dior Cosmetics in beauty; Cole Haan, Stuart Weitzman, Aldo, and Vince Camuto in footwear; Breitling, Jewelers, Links of London, and Swatch in jewelry; as well as Disney and Kingkow in the children’s category. Bold chefs also take center stage at Westfield World Trade Center. Located on the third floor of 4 World Trade Center, chef Mario Batali’s popular Italian food hall, Eataly, debuted with 40,000 square feet, including restaurants, bars and markets. The property also includes fresh food/gourmet grocer Market Lane, the renowned London steakhouse Hawksmoor (slated for future opening), bakeries and sweets from Lady M. and Epicerie Boulud, among many other eateries. There are few places in the world as “connected” as Westfield World Trade Center. The property’s light-filled centerpiece, known as The Oculus and designed by internationally acclaimed architect Santiago Calatrava, provides connections to 13 subway lines, the PATH trains and terminals via Fulton Center and

Brookfield Place. A total of 300,000 commuters, residents and Photo by Mark Weinberg for Utopia, The Agency tourists pass through each day. The World Trade Center and Fulton Center retail complexes, both overseen by Westfield, will Santiago Calatrava’s Oculus add roughly 10,000 full and part-time jobs to the local economy.

“The World Trade Center is a symbol of hope, opportunity, progress, and perseverance. Westfield is profoundly proud to be a part of this project and to introduce new experiences and energy to Lower Manhattan.”

- William Hecht, Westfield’s Chief Operating Officer in the United States Over 100 retail shops

Lower Manhattan Real Estate Market Overview| Q3 2016 8 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

TOURISM & HOSPITALITY

Record Year for Tourism LOWER MANHATTAN HOTEL DEVELOPMENT PIPELINE Source: Downtown Alliance Lower Manhattan welcomed 14.2 million unique visitors1 Owner/ Open in 2015, up 14% from 2014 and up 48% from 2013 (which Hotel & Address Rooms Floors Developer Date felt the aftermath of ). This upward trend is sustained by strong visitation at One World Observatory, the Courtyard by Marriott 1 133 Greenwich Street Hidrock Realty 317 31 2016 National September 11 Memorial Museum, the and . Westbury 2 The Artezen Hotel Realty 89 21 2017 24 John Street Associates

Hotel Development Takes Off Fairfield Inn & Suites Jiten Hotel 3 100 Greenwich Street Management 192 25 2017 At the end of the third quarter, there were 6,313 hotel rooms in 30 throughout Lower Manhattan — a 21% increase Hilton Garden Inn McSam Hotel 4 6 Water Street Group 250 29 2017 over the past year. With the hotel inventory set to grow to 6,630 rooms by year-end 2016, Lower Manhattan moved the 120 5 Marriott Residence Inn Lam Group (upper 40 2017 needle in cachet and creativity with the opening of two luxury 215 Pearl Street floors) hotels this quarter: 200 6 Courtyard by Marriott Lam Group (lower 40 2017 215 Pearl Street floors) ●● The Beekman Hotel opened in the historic Temple Court building at 123 Nassau Street with 287 hotel rooms. The AC Hotel | Marriott Fortis Property 7 151 Maiden Lane Group 271 33 2017 hotel features two restaurants: Fowler & Wells by Tom Colicchio and Augustine by Keith McNally; Hotel Indigo 10-12 MLane 8 8-12 Maiden Lane Inc. 190 25 2017 ●● The Four Seasons Hotel New York Downtown opened at 27 Barclay Street with 189 hotel rooms. The hotel Boutique Hotel 9 Battery Maritime Building NYCEDC 70 5 2017 features a full-service spa and CUT by Wolfgang Puck, the celebrity chef’s first restaurant in New York City. TBD Hotel Premier 10 11 Stone Street Emerald LLC 143 27 2018 Additionally, some 2,100 hotel rooms in 12 hotels are currently Extended Stay Hotel under construction. By 2019, the hotel inventory in Lower 11 17 John Street Networks 81 23 20188 Manhattan is expected to grow to nearly 8,800 hotel rooms in 45 hotels. Moxy Hotel Tribeca 12 143 Fulton Street Associates 228 26 2018

Hotel Indigo Atlas 13 120-122 Water Street Hospitality 122 31 2018

Aloft Hotel Fit Investment Y-O-Y growth 14 50 Trinity Place Group 173 29 2018 in hotel room TBD Hotel Lightstone TBD 12 inventory by year- 15 Street Group (of 50) 2018 end 2016 Total Hotels in the Pipeline 15 24% Total Hotel Rooms in the Pipeline 2,446

1 Source of tourism estimates: Audience Research & Analysis 2 Source of New York figures: NYC & Company

Lower Manhattan Real Estate Market Overview| Q3 2016 9 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

Occupancy and Average Daily Room Rate The third quarter’s average occupancy was 89%, consistent with LOWER MANHATTAN HOTEL PERFORMANCE, trends in Lower Manhattan and citywide. The average daily room ACROSS THIRD QUARTER Source: Downtown Alliance rate (ADR), however, has seen a decline over the past two years.

Lower Manhattan’s ADR in the third quarter of 2016 was $255, $300 down 3% year over year and 13% since 2014. New York City’s ADR 94% has grown 9% year over year to $289. $290 92% $288.33 Over the past two years, the number of hotel rooms in the district has $280 90% grown 34%, while demand has yet to reach its full potential. While $280.03 88.6% $270 occupancy has held strong, expanding hotel room supply, especially 88% 86.6% 88.2% in limited-service hotels, has led to downward pressure in the overall $260 86% average room rate and has revealed a 13% decrease since 2014. $264.18 $255.30 Overall average room rates are anticipated to grow with the arrival of 84% $250 the Four Seasons and Beekman Hotels. Revenue per available hotel 82% 83.0% $240 room is staying strong, as high occupancy rates are making up for decreasing room rates. 80% $230 Q3 2013 Q3 2014 Q3 2015 Q3 2016

While downtown hotel supply continues to increase, future demand is Average Daily Room Rate Occupancy Rate expected to grow with the recent addition of upgraded transportation infrastructure, new office product, residential buildings and retail destinations in the next several years.

Photo by Mark Weinberg for Utopia, The Agency Photo by Mark Weinberg for Utopia, The Agency The Beekman Hotel opened The Four Seasons Hotel New at 123 Nassau Street York Downtown opened at with 287 rooms, featuring 27 Barclay Street with 189 restaurants by Tom Colicchio rooms, featuring Wolfgang & Keith McNally. Puck’s first NYC restaurant.

Lower Manhattan Real Estate Market Overview| Q3 2016 10 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

RESIDENTIAL MARKET

Inventory and Development HIGHLIGHTS OF LOWER MANHATTAN RESIDENTIAL DEVELOPMENT Lower Manhattan, defined as the area south of Chambers Source: Downtown Alliance Address & Lease & Street, has nearly 30,800 units in 322 mixed-use and residential Units Open Date Building Name Building Type buildings and an estimated population of about 60,000. There Rental Units Under Construction TOTAL 2,025 are currently more than 4,100 units in 26 buildings that are 60 Fulton Street 1 Rental 120 2017 under construction or planned for development. Among the Exhibit New Construction 180 Water Street Rental projects under construction and in development, approximately 2 Conversion 565 2017 45% are condos and 55% are rental units. 20 Broad Street Rental 3 Conversion 521 2017 Several major residential projects received certificates of 4 112-118 Fulton Street Condo 483 2019 occupancy during the third quarter. Among them: New Construction Condo Units Under Construction TOTAL 2,120 ●● The Beekman Residences at 5 Beekman Street, a 51-story 1 19 Park Place Condo 21 2016 tower with 68 condo units, opened this past fall. The new New Construction 12 Warren Street Condo residential tower was joined by the opening of the 287-room 2 New Construction 13 2016 Beekman Hotel, both developed by GFI Development and 5 50 West Street Condo 191 2016 GB Lodging. New Construction 6 101 Wall Street Condo 52 2016 ●● ’ Four Seasons Residences at 30 Conversion 233 Broadway Condo Park Place debuted in October. The 82-story tower has 157 8 Woolworth Residences Conversion 34 2017

condo units and also features the newly-opened, 189-room 9 Condo 80 2018 Four Seasons Hotel New York Downtown on the first 20 1 Seaport New Construction 49-51 Chambers Street Condo floors. 10 New Construction 81 2018

45 Park Place Condo ●● Magnum Real Estate began welcoming residents to 11 New Construction 50 2018 the top 22 floors of the former at 100 12 1 Beekman Street Condo 29 2018 Barclay Street. The tower features 166 condo units and New Construction Condo approximately 100,000 square feet of retail at the base. 13 New Construction 157 2018

125 Greenwich Street Condo 14 New Construction 275 2018 LOWER MANHATTAN RESIDENTIAL UNITS, Rental/Condo UNDER CONSTRUCTION & IN DEVELOPMENT 15 Conversion 262/262 2018 Source: Downtown Alliance Condo & Rental Buildings Planned for Development 921

30 Warren Street Condo 1 New Construction 23 2017

130 William Street Condo/Hotel 2 New Construction 188 2018

75-83 Nassau Street Rental/Condo 3 New Construction 197 2018 Condo Units 23-31 Condo 45% 4 New Construction 108 2019 Rental Units Condo 55% 5 New Construction 150 2019 77 Greenwich Street Condo 6 Former Syms site New Construction 85 2019

59-61 Warren Street Condo 7 New Construction 21 TBD

106 Fulton Street Rental 8 Conversion TBD TBD Over 4,100 residential units are under construction and TOTAL UNITS IN THE PIPELINE 4,119 planned for development in Lower Manhattan. Note: Chart displays selected properties. For complete pipeline, please click here.

Lower Manhattan Real Estate Market Overview| Q3 2016 11 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

MEDIAN RENTAL PRICE Residential Rental Market Source: Miller Samuel/Douglas Elliman According to residential statistics published by Miller Samuel/ $3,800 Douglas Elliman, median rents across several Manhattan $3,701 neighborhoods1 remained relatively steady year over year. $3,700 $3,698 Lower Manhattan’s median rent, $3,701, is on par with the $3,600 rent this time last year. With the influx of new luxury rental $3,500 $3,445 product across Manhattan, Downtown and , citywide concerns about oversupply have stymied $3,400 the growth of rental rates. $3,300 $3,197 $3,200 Residential Sales Market The Lower Manhattan market demonstrated a jump in sales $3,100 pricing and activity, which can be in part attributed to a number $3,000 of high-end residential projects starting to close sales in their Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016 buildings. Lower Manhattan has had an active sales market in Lower Manhattan Downtown East Side West Side 2016, with year-to-date closing activity up 17% year over year, and quarterly activity up 58% from the second quarter. The AVERAGE SALES PRICE ($) PER SF market’s average price per square foot of $1,815 also saw Source: Miller Samuel/Douglas Elliman an increase of 15% and 33% over the past quarter and year, $2,000 respectively – the greatest quarterly and annual increases across comparable neighborhoods. $1,900 $1,873 $1,815 $1,800 1Lower Manhattan defined as south of Chambers Street to the $1,758 Battery. Downtown defined as south of W. 34th and E. 42nd $1,700 Street to . East Side defined as east of 6th Avenue, between E. 96th and E. . West Side defined as west $1,600 of 6th Avenue, between W. 116th and W. . $1,518 $1,500

$1,400

$1,300 Q3-2015 Q4-2015 Q1-2016 Q2-2016 Q3-2016

Lower Manhattan Downtown East Side West Side

An Untapped Market: Lower Manhattan’s Young Professionals The Alliance for Downtown New York recently released a residential survey highlighting Lower Manhattan as a neighborhood of choice for young professionals in New York City and focusing on ways to capture residents’ robust appetite for dining out and entertainment. The population of people 18-44 years old living in Lower Manhattan is more than in the East Village and on par with Williamsburg. Young residents have incredible spending power and go out for dinner, drinks or entertainment on average 16 days a month.

For the complete report, see An Untapped Market: Lower Manhattan’s Young Professionals on the research page of our website.

Lower Manhattan Real Estate Market Overview| Q3 2016 12 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

MAJOR PROJECTS UPDATE - Q3 2016

Momentum continues at the World Trade Center and elsewhere 4 World Trade Center throughout Lower Manhattan. In the third quarter, over 200,000 The 72-story, 2.3 million-square-foot office tower was completed in square feet of office leases were signed in 4 and One World Trade November 2013. The building is over 80% leased to MediaMath, Center. In mid-August, Westfield World Trade Center debuted its retail PadillaCRT, SNY (SportsNet New York), Silver Suites, IEX, Morningstar, offerings at over 100 stores and restaurants, allowing shoppers and the Port Authority and the City of New York. In the third quarter, Zurich commuters a seamless underground pedestrian walkway from Fulton American Insurance Company leased 132,000 square feet, and Center to the World Trade Center Transportation Hub, 4 World Trade insurance firms Global Atlantic Financial Group and Validus inked a Center, One World Trade Center and Brookfield Place. combined 70,000 square feet worth of leases. World Trade Center (WTC) One World Trade Center Performing Arts Center at the World Trade Center (PAC WTC) The 104-story, 3.1 million-square-foot office tower opened on In September, designs for The Ronald O. Perelman Center for Performing November 3rd, 2014. One World Trade Center is 70 percent leased; Arts at the World Trade Center revealed a 90,000-square-foot cube- tenants include Condé Nast, High 5 Games, Moody’s, xAd, China shaped building. Wrapped in translucent marble, the building will house Center New York, Mic Network and Ameriprise Financial. In the third three theaters of varying sizes, with the potential to be combined to form quarter, technology firm Infosys inked a 14,000-square-foot lease on seven unique performance spaces. Brooklyn-based firm REX is the lead the 79th floor. architect. Earlier in the summer, philanthropist Ronald Perelman announced a $75 The 2.5 million-square-foot office tower topped out at 80 floors in June million donation to the project. With Perelman’s contribution, the project 2016 and is scheduled to be completed in 2018. At the end of the takes a significant step toward its estimated $240 million cost. The fourth quarter of 2015, anchor tenant GroupM Worldwide finalized an Lower Manhattan Development Corporation (LMDC) committed $100 expansion, adding 170,000 square feet to the existing 520,000 square million in federal funds awarded after September 11th for the project’s feet it signed on for in 2014 and bringing the tower to 28% leased. design, construction and administrative costs. The site for the PAC WTC is currently occupied by the temporary PATH entrance at Greenwich After over a year of negotiation between Silverstein Properties and Street and , which closed this summer when the World 21st Century Fox and News Corp to anchor 1.3 million square feet, Trade Center Transportation Hub opened with additional entry points. the deal was called off in early 2016. Silverstein has postponed The project is slated for a 2018 groundbreaking and a 2020 completion. work on the tower until an anchor tenant agrees to lease a substantial portion of the space.

Designs Revealed for The Ronald O. Perelman Center for Performing Arts at the World Trade Center

Rendering by Luxigon for The Perelman Center Rendering by Luxigon for The Perelman Center

Lower Manhattan Real Estate Market Overview| Q3 2016 13 OFFICE RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE

Infrastructure & Resiliency Broadway Reconstruction The World Trade Center Transportation Hub The Department of Design and Construction’s (DDC) $42 million The 800,000-square-foot World Trade Center Transportation Hub capital reconstruction project on Broadway, referred to as Broadway 1 officially opened in early March 2016, providing underground access and stretching from to Rector Street, began in 2014. This to One World Trade Center, 4 World Trade Center, Brookfield Place project will replace all underground 3infrastructure, World Trade including water and the PATH trains. Additional underground access became available mains, sewers, electric, gas and otherCenter utilities, as well as construct new streets and curbs. Crews will focus on two blocks at a time, to Church and Vesey Streets (base of future Tower 2) and to Fulton With financing in Center via the Dey Street Connector in June 2016. Underground moving northward on the west side, then southward on the east side. The full project is scheduled to be finishedplace, inthe August building 2017. connection to the E and R train stations from the World Trade is scheduled to be Center are anticipated to open in late 2017, while the 1 train station West Thames Pedestrian Bridgecompleted in 2018. expects to open into the complex by mid-2018. The temporary PATH The pedestrian bridge planned for West Thames Street is now slated station is now closed and the deconstruction is ongoing. Westfield’s to begin construction before the endGroupM of this year. signed The bridge a will span 365,000-square-foot retail complex opened on August 16th, 2016. West Street and will feed into a newlease privately for owned 515,000 public plaza at 50 Vehicle Security Center & Liberty Street Bridge West Street. According to the New Yorksquare City Economic feet in theDevelopment 2.5 The Vehicle Security Center (VSC) is the World Trade Center’s main Corporation (NYC EDC), completion million-square-footis anticipated in early 2018 and entry point for automobiles, trucks and buses. Operated by the Port will replace the Rector Street pedestrianoffice bridge. tower. Authority, the VSC will provide deliveries, tenant and bus parking for Return of W local train those with affiliations with the World Trade Center and is scheduled to The Metropolitan Transportation Authority announced the return of the be fully operational in early 2017. W local train. The train will begin running again after a six-year hiatus The Liberty Street Bridge and opened this summer, on the N/Q/R/W line in advance of the anticipated Second Avenue connecting the park (atop the VSC) with Brookfield Place. Sidewalk subway opening this winter. The line will terminate at Whitehall Street pedestrian access under the bridge opened this fall, allowing and include Lower Manhattan stops at City Hall, Cortlandt Street, ground-level access from the 9/11 Memorial to the Greenwich South Rector Street and Whitehall Street-. Rector Street and neighborhood. Federal, State & City Investment This past spring, the de Blasio administration announced that $100 million in city capital funds would be allocated to coastal resiliency FROM BROADWAY in Lower Manhattan as part of a larger resiliency project funded by the U.S. Department of Housing and Urban Development’s National TO BROOKFIELD PLACE Disaster Resilience Competition. The money will help build a network of flood walls, berms and deployable flood barriers to protect the seamless underground tip of Manhattan from flooding. The project will extend from the pedestrian passage , around the tip of the island, all the way to . Separately, the City set aside nearly $15 million, including $6.75 million from the City and State, for preliminary design and environmental review and another $8 million for first-phase flood protection design and implementation in Battery Park. The City’s Economic Development Corporation recently kicked off design work for the Lower Manhattan coastal resiliency initiative. South Ferry station The main entrance to the South Ferry station has been closed since Hurricane Sandy as damaged equipment is replaced and flood mitigation measures are put into place. During construction, the old South Ferry station will remain operational and accessible from alternative entrances. The construction is part of a $194 million contract to rebuild the South Ferry subway station. The station will get permanent flood protection via Fulton Center & measures and become wheelchair accessible and will allow entry and exit for all ten cars along the No. 1 line. Completion is expected World Trade Center Transportation Hub

Lower Manhattan Real Estate Market Overview| Q3 2016 14 Visit www.downtownny.com/research for additional publications on the Lower Manhattan real estate

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

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

An Untapped Market: Lower Manhattan’s Young Professionals, a residential survey highlighting Lower

Manhattan as a neighborhood of choice for young professionals in New York City, as well as ways to capture residents’ robust appetite for dining out and entertainment.

Surging Ahead: Lower Manhattan’s Economic Revival and What It Means For New York, a report on the major advances in Lower Manhattan’s economy expected over the next five years as a result of post-September 11th investments and the area’s status as a burgeoning center for some of New York City’s highest value, most dynamic industries;

The Brain Gain, 2015 Report, updated report on how the region’s shifting demographics continue to favor the

Lower Manhattan Business District. Previously released in 2012, updated data shows an even stronger trend;

TAMI Takes Lower Manhattan, a report on the growth of technology, advertising, media, and information companies moving south of Chambers Street;

Everything Old is New Again: Conversions of Historic Properties in Lower Manhattan, a report on historic properties preserved through significant investment and changs in use;

The Golden Age of Transit in Lower Manhattan, a report released on Fulton Center’s opening, describing how the more than $6.4 billion of transit investments made since 2005 benefit a large and growing labor force;

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

A Surge of Bits and Bytes: The State of Tech and Innovation in Lower Manhattan, a report on Lower

Manhattan’s growing technology industry.

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