1Q 2017 Market Office Report (Trend Tracker)

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THE OFFICE MARKET REPORT

LEE NYC MANHATTAN TREND TRACKER 1Q 2017

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2 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC MARKET SUMMARY

2017 | 1Q Manhattan Office Total Total Total Direct Sublease Overall Inventory Available Under Vacancy Availability Net Asking Asking Asking Market (MSF) Total Construction Rate Rate Absorption Rent Rent Rent (Rnd.) (SF) (SF) (%) (%) (SF) ($PSF) ($PSF) ($PSF) Midtown 223 27,203,064 9.0% 12.2% -650,394 2,724,099 $83.92 $56.93 $80.31 Grand Central 71 9,428,776 9.3% 13.2% (138,550) 1,732,955 $77.09 $51.82 $73.21 Midtown East 25 2,244,743 4.6% 8.9% (16,763) 90,505 $73.63 $63.04 $69.86 Midtown West 20 1,544,969 5.4% 7.6% (350,393) 94,211 $86.05 $53.27 $82.34 Plaza District 39 6,285,111 11.6% 16.1% (111,627) 806,428 $112.86 $80.65 $108.67 Rockefeller Plaza 29 2,828,180 10.8% 9.9% 84,105 - $77.48 $60.07 $72.74 Times Square 38 4,871,285 9.4% 12.8% (117,166) - $74.81 $69.32 $73.55

Midtown South 153 15,674,962 7.3% 10.3% -823,531 9,704,596 $67.40 $51.65 $64.43 Chelsea 18 1,694,995 6.8% 9.3% (150,355) 877,867 $61.37 $46.01 $56.62 Gramercy | Flatiron 30 2,210,239 4.8% 7.3% (142,451) 73,323 $70.17 $58.12 $68.34 Hudson Square | Tribeca 22 2,846,810 10.8% 13.1% (42,930) - $84.92 $63.90 $81.23 Murray Hill 13 1,356,030 8.8% 10.4% 33,020 - $61.81 $45.78 $58.62 Penn Station-Garment 57 6,220,793 7.4% 11.0% (410,880) 8,494,465 $62.13 $47.29 $59.43 SoHo | NoHo 13 1,346,095 6.2% 10.7% (109,935) 258,941 $76.39 $62.52 $74.84

Downtown 105 12,687,681 9.3% 12.1% 100,594 2,861,402 $62.20 $47.18 $60.76 City Hall | Insurance Dist. 27 1,719,435 4.6% 6.4% (49,160) - $53.05 $42.43 $51.83 Financial District 43 6,459,333 10.1% 14.9% 165,663 - $61.15 $52.74 $58.78 World Trade Center 34 4,508,913 11.9% 13.1% (15,909) 2,861,402 $63.01 $54.97 $62.61

Manhattan 481 55,565,707 8.5% 11.6% -1,373,331 15,290,097 $73.81 $56.71 $71.13

Commenced with report, 1Q 2015, Lee & Associates utilizes new metric methods from its prior reporting methods. Lee & Associates Office Metrics are based on office buildings with a minimum rentable building area of 100,000 square feet, with the exception in the submarket of SoHo/NoHo, which uses metrics based on office buildings with a minimum rentable building area of 50,000 square feet. Lee & Associates Office Metrics comprise data representing existing office buildings for Classes A, B and C. Since new metric methods have been applied, the correlation of data for this report (and all reports since 1Q 2015) will have no bearing over the reports previously published by Lee & Associates (prior to 1Q 2015).

1. Arrows are an indication based on quarter-over-quarter movements. 2. All rent figures are based on market and submarket weighted averages. Overall Asking Rents take Direct and Sublease rents into account. 3. Under Construction only includes buildings with expected deliveries, with a primary office use and over 50,000 square feet. Buildings under construction that include office as a secondary or tertiary use are excluded. All proposed new construction buildings were excluded.

Lee & Associates NYC accepts no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document.

3 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC MIDTOWN

idtown vacancy and availability rates increased 60 and 20 basis with only the Financial District behind it at 120 basis points less. Due to Mpoints respectively, to 9% and 12.2% to finish the first quarter in the slow activity in leasing, the submarket experienced a negative net 2017. Leasing activity took a dive with preliminary figures of approximately absorption of -111,627 SF. Asking rents decreased $0.70 to $108.67 2.5 million square feet leased this quarter compared to 4 to 6 million compared to $109.37 last quarter. Starting rents decreased 1.2% or $1.10 square feet leased in each of the last three quarters. Overall asking rents to $92.42 compared to $93.52 quarter-over-quarter. Net effective rents decreased for the second consecutive quarter to $80.31 from $81.50 in in the submarket average out to $87 for the past two quarters, down $2 2016 Q4and $83.77 in 2016 Q3. Rents are down in five of the six Midtown compared to the past four rolling quarters. Notable Deals: Robins Kaplan submarkets with the exception of Midtown West. Nevertheless, base rents relocated from 601 Lexington Avenue to 399 Park Avenue, leasing 38,000 are up 2.16% or $1.59 quarter-over-quarter to $75.13. SF on the entire 36th floor and partial on the 37th floor, for approximately five years with a rent in the low $60’s. Grand Central leasing activity fell below one million square feet for the first time in five years. Quarter-over-quarter leasing activity is down 23%. Rockefeller Plaza leasing activity remains one of the most volatile Approximately 995,000 SF was leased compared to last quarter’s adjusted in Manhattan. After increasing 45% in the fourth quarter of 2016, it has figure at 1,296,239 SF. Although vacancy is up 30 basis points to 9.3%, decreased approximately 70% in the first quarter (the NewsCorp lease it’s below the 2016 annual average of 9.5%. Availability rate remains stable extension is not inclusive in this statistic). Nevertheless, with large amounts at 13.2%. Asking rents barely changed and are $73.21; with base rents of space that were put on the market along Avenue of the Americas, and only up slightly to $66.16 from $65.94. Notable Deals: Tommy Hilfiger existing space becoming vacant, the submarket’s vacancy and availability relocated to 285 Madison Avenue from 601 West 26th Street (Starrett- rates both increased. Vacancy increased 170 basis points to 10.8% Lehigh Building) taking approximately 200,000 SF on the 2nd through 11th compared to 9.1% quarter-over-quarter. Availability increased only 20 floors, in a 15-year lease with a starting rent in the mid-$60’s. W.W. Norton basis points to 9.9% from 9.7% in the same timeframe. Despite the extra & Company renewed their 95,643 SF space at 500 Fifth Avenue (floors 5 inventory, the submarket experienced a consecutive quarter of positive through 9) for another 20 years, with a reported asking rent in the mid- net absorption, albeit 74% less than the previous quarter. Asking rents $60’s. WeWork Companies leased 58,352 SF at 575 Fifth Avenue (floors 14 decreased $6.08 to $72.74 compared to $78.82 quarter-over-quarter. through 17) for 15 years with a starting rent in the high $60’s. Notable Deals: 21st Century Fox expanded their footage at 1211 Avenue of the Americas by 127,672 SF on 42nd through 44th floors. McGuirewoods Midtown East leasing activity was sluggish compared to last year’s LLP took 41,900 SF at 1251 Avenue of the Americas (Mitsui Building) in a 10 quarters, with preliminary figures of just below 100,000 SF leased in Q1. year deal on the 20th floor with a starting rent in the low $70’s. Despite that, vacancy and availability rates did decrease to 4.6% from 4.9% and 8.9% from 9.2% respectively. This can be contributed to sublet spaces Times Square leasing activity increased 34.2% to 673,130 SF and the being taken off the market and direct spaces getting withdrawn. We highest it’s been since 2015 Q4. Inventory slightly increased this quarter forecast that next quarter’s rates will increase if leasing activity doesn’t pick with a 20 basis point increase in the vacancy rate to 9.4% and a 10 basis up. Asking rents fell below the 2016 average of $71.57. Rents decreased point increase in the availability rate to 12.8%. The submarket’s sublet $2.84 to $69.86 from $72.70 quarter-over-quarter. Notable Deals: Toyota leasing activity increased by 115% to 90,201 SF from 41,925 SF quarter- Tsusho America extended their lease by five years at 805 Third Avenue over-quarter; pushing sublet asking rents up $1.56 to $69.32 from $67.76. (floors 16 through 17); paying high $50’s for 43,183 SF. Overall asking rents however decreased $3.49 to $73.55 from $77.04. Not since 2015 Q4, did the submarket experience a negative net absorption, Midtown West leasing activity was cut by over 50% quarter-over-quarter, with a Q1 net absorption of negative -117,166 SF. Leases in Q1 averaged that stimulated the increase in the submarket’s vacancy rate by 170 basis lease terms of 10 years with free rent concessions increasing 40%, with points to 5.4% from 3.7%. Availability increased 50 basis points to 7.6% majority of done deals averaging over 20,000 SF or more. Starting rents from 7.1%. The submarket’s 1Q net absorption was negative -350,393 SF, also decreased $6.63 to $64.72 from $71.35 quarter-over-quarter. Notable compared to having a combined positive net absorption of 301,446 SF for Deals: Kramer Levin Naftalis & Frankel LLP renewed their 448,234 SF all of 2016. Asking rents did increase $0.41 to $82.34 from $81.93 quarter- lease at the Americas Tower (1177 Avenue of the Americas) for another 15 over-quarter (the only Midtown submarket to have increases in rents). years, with a starting rent in the low $80’s. WeWork Companies signed a Notable Deals: Hutchin Hill Capital relocated from 142 West 57th Street new lease at 130 West 42nd Street, taking 64,389 SF on floors 5 through and leased 39,600 SF at 888 Seventh Avenue (floors 21 through 22) in a 8, for a 15-year term and a starting rent in the high $50’s. 10-year term, with a starting rent in the mid-$80’s.

Plaza District leasing activity decreased 40.6% to 394,990 SF compared to 665,011 SF last quarter. Blocks of vacant space along Park Avenue and Madison Avenue came onto the market, pushing the vacancy rate to increase 60 basis points to 11.6% from 11%. Availability continues to remain high and is relatively high at 16.1% compared to any quarter since 2010. It is also the highest availability rate of any Manhattan submarket,

4 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC MIDTOWN

Midtown Vacancy and Availability 16.0% 14.0% 12.0% 11.5% 10.0% 8.0% 6.0% 7.7% 4.0% 2.0% 0.0% 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 2007 2008 2008 2009 2010 2011 2011 2012 2013 2014 2014 2015 2016 2017

Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.

Midtown Leasing Activity 8,000,000 Ten Year Average 7,000,000 4,436,377 6,000,000 5,000,000 4,000,000 Great Recession 3,000,000 2,000,000 1,000,000 - 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 20072007200820082009200920102010201120112012201220132013201420142015201520162016

Historical statistics are updated to re ect newly released market information. SF Leased 10Y Avg.

Midtown Net Absorption 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 (500,000) (1,000,000) (1,500,000) (2,000,000) (2,500,000) 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 20072007200820082009200920102010201120112012201220132013201420142015201520162016

5 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC MIDTOWN SOUTH

idtown South preliminary leasing activity decreased 26% quarter- $3.56 from $71.70 to $75.26 and net effective rents increased slightly by M over-quarter to just below 2,000,000 SF. Not since the end of the $0.84 from $65.14 to $65.98. Landlords dropped the average number of Great Recession in 2009 did Midtown South experience this level of decline free months offered from nine to seven and a half months free rent. Notable in leasing numbers. There are more inventories to lease, thus pushing the Deal: WeWork Companies leased 94,740 SF at 205 Hudson Street (floors 5 market’s vacancy rate to 7.3%, the highest peak since 2010; compared and 7 through 8) for a term of 15 years, with a starting rent in the low $60’s.. to 6.7% last quarter. Availability, which was already in double digits since 2016 Q3, increased another 20 basis points to 10.3%. All Midtown South Murray Hill leasing activity decreased 25.8% to 144,578 SF submarkets experienced a rise in vacancy, with the exception of Murray compared to 194,964 SF last quarter. Availability increased 60 basis Hill where vacancy was not decreasing or increasing. The quarter finished points to 10.4% from 9.8%, while vacancy remained at a rate of with a negative net absorption of -816,136 SF compared to -10,962 SF last 8.8% for the two recent quarters. Rents decreased only $0.38 to quarter. Overall asking rents decreased for the third consecutive quarter $58.62 from $59. Notable Deals: NYU Langone Medical Center to $64.43, down $1.57 from $66.00 quarter-over-quarter. An analysis of leased 58,307 SF at 180 Madison Avenue (floors 3 through 5 and 7 taking rents show that landlords are holding tight on getting rents close to through 8) for a term of 15 years, with a starting rent in the mid-$50’s. their asking prices; with net effective rents in the market averaging $59.25, down $0.79 from $60.04 quarter-to-quarter. Penn Station-Garment leasing activity decreased 25% per preliminary numbers. Leasing fell below the 1,000,000 SF benchmark to 845,076 for Chelsea’s quarter leasing activity increased 7.1% to just below 200,000 the first time since 2009 Q2; compared to 1,127,753 SF in 2016 Q4 and SF. For the second consecutive quarter, leasing activity remained below 1,678,302 SF in 2016 Q3. Vacancy increased for the third straight quarter 200,000 SF compared to the 298,683 SF average of the prior five quarters to 7.4%, a 50 basis point bump from 6.9% last quarter. After increasing (2015 Q2 – 2016 Q1). The submarket experienced a negative net absorption for two consecutive quarters, the availability rate has decreased 30 of -150,355 SF compared to positive net absorption of 48,686 SF last basis points to 11% from 11.3% quarter-over-quarter. The submarket quarter. The average numbers of months spaces have been sitting on the experienced a negative net absorption for a consecutive quarter. The first market increased to seven months compared to five months year-over-year. quarter’s net absorption was negative -410,880 SF compared to negative Vacancy increased 130 basis points to 6.8% from 5.5% quarter-to-quarter. -170,322 SF last quarter. After the escalation in overall rents in 2016 Q3 to Availability increased only 10 basis points to 9.3% from 9.2% quarter-to- $69.21, asking rents decreased sharply to $61.65 in 2016 Q4 and again in quarter. There are five projects under construction that will deliver 877,867 2017 Q1 to $59.43. Year-over-year analysis shows that spaces are taking SF up through 2018 Q1. Overall asking rents decreased slightly to $56.62 an average of six months to lease compared to just four months to lease a from $56.93. Notable Deals: Argo Group leased 48,932 SF at 413 West year ago. Approximately 8.5 million square feet is under construction, with 14th Street (floors 3 through 4) for a term of 16 years, with a starting rent most of it in the Hudson Yards submarket. Overall asking rents in Hudson in the low $90’s. Also, Plated leased 23,000 SF at 111 West 19th Street Yards are averaging $90.17. Starting rents in the Penn Station and Garment (3rd floor) for a term of 10 years, with a starting rent in the low $60’s. District submarket are averaging $57.45 down $7.02 from last quarter; and net effective rents are averaging $54.01 down $7.23 from last quarter. Gramercy Park and Flatiron leasing activity decreased 49% from last During the same quarter-to-quarter period, concessional free months quarter to 375,212 SF. In terms of transactions, activity remains as high dropped from six and a half months to four and a half months. Notable as it was last quarter; however, this quarter’s transactions comprise much Deals: Context Media subleased 55,758 SF from Yodle at 330 West 34th smaller deals in square footage. The quarter finished with a negative net Street (floors 17 through 18) for a term of seven years, with a starting rent absorption of -142,451 SF compared to a positive net absorption of 127,247 in the low $70’s. HomeAdvisor leased 43,096 SF at 330 West 34th Street SF last quarter. With the addition of large amounts of space from 150 Fifth (10th floor) for a term of 10 years, with a starting rent in the low $60’s. Avenue, 360 Park Avenue South, and 18 West 18th Street (in addition to comScore renewed and expanded their 39,005 SF lease at 7 Penn Plaza others), the vacancy and availability rates increased respectively to 4.8% (floors 6 and 10) for a term of 11 years, with a starting rent in the low $60’s. and 7.3% from 4.2% and 6.2%, quarter-over-quarter. Overall asking rents decreased $3.13 to $68.34 from $71.47 from last quarter. Quarter- SoHo and NoHo leasing activity continues to remain in the 100,000’s over-quarter, taking rents decreased $0.53 to $64.71 and effective rents for the second consecutive quarter. The submarkets leased 138,880 decreased $1.54 to $61.01. Landlords began giving out two more months of SF in 2017 Q1 compared to 438,402 SF year-over-year. Vacancy has free rent, increasing the average months of free rent from three months to five consistently increased since 2015 Q4. The vacancy rate is 6.2% up 90 months. Notable Deals: AEG Live leased 28,128 SF at 53 West 23rd Street basis points from 5.3% last quarter and up 210 basis points from 4.1% (entire 5th floor) for a term of 15 years, with a starting rent in the low $60’s. year-over-year. Availability has also consistently been increasing since Compass expanded their footprint by 24,204 SF at 90 Fifth Avenue (floors 2016 Q2, up 120 basis points to 10.7% from 9.5% quarter-over-quarter. Net 10 through 11) for a term of eight years with a starting rent in the low $80’s.. absorption has been negative since 2015 Q4. The submarkets experienced a negative net absorption of -109,835 SF in 2017 Q1, the highest so far for Hudson Square and Tribeca leasing activity increased 16.3% from the past six quarters. Overall asking rents increased $2.27 to $74.84 from 262,903 SF to 305,877 SF quarter-over-quarter. The submarket’s vacancy $72.57. Notable Deals: Modern Post leased 7,230 SF at 434 Broadway increased 40 basis points to 10.8% from 10.4%. Availability decreased 30 (4th floor) for a term of 10 years, with a starting rent in the mid-$70’s. 21st basis points from 13.4% to 13.1%. Overall asking rents increased $1.32 to Century Fox America and its subsidiary TrueX Media leased 5,864 SF at $81.23 from $79.91 quarter-over-quarter. We forecast rents to decrease 853 Broadway (21st floor) for a term of 10 years, with a starting rent in the if vacancy continues to rise. Quarter-to-quarter, starting rents increased low $100’s.

6 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC MIDTOWN SOUTH

Midtown South Vacancy and Availability 14.0%

12.0% 9.9% 10.0% 8.0% 6.0% 6.4% 4.0% 2.0% 0.0% 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016

Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.

Midtown South Leasing Activity 8,000,000 7,000,000 Ten Year Average 3,222,883 6,000,000 5,000,000 4,000,000

3,000,000 Great 2,000,000 Recession 1,000,000 - 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 20072007200820082009200920102010201120112012201220132013201420142015201520162016 Historical statistics are updated to re ect newly released m arket information. SF Leased 10Y Avg.

Midtown South Net Absorption 1,500,000

1,000,000

500,000

(500,000)

(1,000,000)

(1,500,000) 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 20072007200820082009200920102010201120112012201220132013201420142015201520162016

Net Absorption

7 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC DOWNTOWN

owntown leasing activity more than doubled from last quarter’s that if leasing activity remains strong going into Q2, then the vacancy rate D leasing numbers and has increased 101.5% to 1,912,783 SF compared will decrease below double digits into the high 9’s. The submarket remains to 949,121 SF quarter-over-quarter. Downtown performance this quarter one of lingering inventory with the average amount of months a space stays was stronger than Midtown and Midtown South. Despite the availability on the market at 14 to 15 months. Overall asking rents increased $1.40 to rate increasing only 10 basis points to 12.1% due to City Hall and Insurance $58.78 from $57.38 quarter-over-quarter. Starting rents decreased $1.59 District, the market put up strong numbers. The vacancy rate is back at to $49.22 from $50.81; with net effective rents decreasing $2.24 to $46.09 9.3%, down 10 basis points from last quarter’s 9.4%. With leasing activity from $48.33. Notable Deals: Attorney General of New York State leased strong, a slight increase in availability and decrease in vacancy, the market 572,260 SF at 28 Liberty Street (floors 13 through 21 and 33) for a term experienced a positive net absorption of 100,594 compared to negative of 15 years, with a starting rent in the high $50’s. National Urban League net absorptions in 2016 3Q-4Q. Each of the three Downtown submarkets subleased 57,245 SF at 80 Pine Street (9th floor) for a term of five years with had increased rents. Overall rents increased $1.99 to $60.76 compared to a starting rent in the high $20’s. $58.77 quarter-over-quarter. Starting rents increased $0.43.

World Trade Center and World Financial Center leasing activity City Hall and Insurance District leasing activity almost doubled from increased 362% to 1,090,651 compared to 236,148 SF quarter-to-quarter. last quarter to 142,832 SF compared to 71,930 SF. However, if you Approximately 35% of the leased square footage was taken by Spotify USA include the New York City Department of Finance’s 182,750 SF deal that Inc. at 4 World Trade Center and 34% taken by Royal Bank of Canada at 3 took place early January, then the overall leasing count would increase World Financial Center. With a high increase in leasing activity, the availability to 325,582 SF. These submarkets were the only ones in Downtown to rate decreased 80 basis points to 13.1% from 13.9% quarter-over-quarter. have an increase in the availability and vacancy rates. The availability rate Vacancy remained constant at a rate of 11.9%. Nevertheless, the submarket’s increased two full percentage points to 6.4% compared to 4.4% quarter- net absorption remains in the negative for the third straight quarter since over-quarter. The annual average of 2016 is 4.8%. The availability rate of 2016 Q3. We forecast 2017 Q2 will lead a positive net absorption if leasing 6.4% is the highest rate the submarkets experienced since 2014 Q2 at activity continues to remain strong and above 500,000 SF. The average time 6.6%. Vacancy increased 20 basis points to 4.6% from 4.4% quarter-over- spaces have been sitting on the market have been gradually decreasing quarter. With the increase in both the vacancy and availability rates, the since is five-year peak at 20 months in 2016 Q3 and is now down to submarkets experienced a negative net absorption of -49,160 SF despite 14 months on the market. Overall asking rents increased only $0.13 to the strong performance in leasing activity. Overall rents increased $1.82 to $62.61 quarter-over-quarter and are down $5.13 year-over-year. Starting $51.83 from $50.01. Starting rents decreased $1.45 to $49.05 from $50.50 rents in the submarkets are averaging $54.46 for the past year, with net quarter-over-quarter; with net effective rents decreasing $2.14 to $46.33 effective rent averaging $51.33. Notable Deals: Spotify USA Inc. leased from $48.47. Notable Deals: New York City Department of Finance leased 378,243 SF at 4 World Trade Center (floors 62 through 72) for a 15-year 182,750 SF at 375 Pearl Street (floors 26 through 30) for an unknown term term, with a starting rent in the mid-$70’s. Royal Bank of Canada with its with a reported asking rent in the mid-$40’s. Legal firm Quinn Emanuel subsidiary RBC Capital Markets leased 370,437 SF at 4 World Financial Urquhart & Sullivan renewed their lease of 23,351 SF at 51 Madison Street Center (floors 8 through 12 and 14) for a term of 15 years, with a starting (21st floor) for a term of five years. rent in the high $50’s.

Financial District leasing activity increased 12.3% to 721,739 SF from 642,743 SF quarter-to-quarter. The submarket had a strong performance in 2017 Q1 with both vacancy and availability rates decreasing; a positive net absorption and direct, sublet, and overall rents increasing. A positive net absorption of 165,663 SF this quarter compared to negative net absorptions for 2016 Q3-Q4. Vacancy decreased 40 basis points to 10.1% from 10.5%. Availability decreased 40 basis points to 14.9% from 15.3%. We forecast

8 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC DOWNTOWN

Downtown Vacancy and Availability 18.0% 16.0% 14.0% 12.4% 12.0% 10.0% 8.0% 9.1% 6.0% 4.0% 2.0% 0.0% 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016

Vacancy Availability 10Y Vacancy Avg. 10Y Availability Avg.

Downtown Leasing Activity 4,000,000 3,500,000 Ten Year Average 3,000,000 1,557,622 2,500,000

2,000,000 Great Recession 1,500,000 1,000,000 500,000 - 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 20072007200820082009200920102010201120112012201220132013201420142015201520162016 Historical statistics are updated to re ect newly released market information. SF Leased 10Y Avg.

Downtown Net Absorption 4,000,000

3,000,000

2,000,000

1,000,000

(1,000,000)

(2,000,000)

(3,000,000) 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 20072007200820082009200920102010201120112012201220132013201420142015201520162016

9 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC CONSTRUCTION

Under Construction Office Property Developer Submarket Square Feet Class Est. Delivery 3 World Trade Center Silverstein Properties World Trade Center 2,861,402 A 2018 30 Hudson Yards Related Companies Penn Station-Garment 2,600,000 A 2019 (500 West 33rd Street)

400 West 33rd Street (One Manhattan West) Brookfield Properties Penn Station-Garment 2,216,609 A 2019 (North Tower) 3 Hudson Boulevard Moinian Group Penn Station-Garment 1,900,000 A 2019 (555 West 34th Street) One Vanderbilt Avenue SL Green Realty Corp. Grand Central 1,732,955 A 2021 55 Hudson Yards Related Companies Penn Station-Garment 1,556,136 A 2018 (550 West 34th Street) 425 Park Avenue GreenOak Real Estate Plaza District 670,000 A 2018 57 Eleventh Avenue RXR Realty Chelsea 263,835 A 2018 (Pier 57) 855 Ave. of the Americas Durst Organization Penn Station-Garment 221,720 A 2017 512 West 22nd Street Albanese Organization Chelsea 174,222 A 2017 61 Ninth Avenue Aurora Capital Associates Chelsea 167,170 A 2018 412 West 15th Street LM Legacy Group Chelsea 144,273 A 2017 432 Park Avenue Macklowe Properties Plaza District 136,428 A 2017 540 West 26th Street Savanna Chelsea 128,367 A 2017 600 West 58th Street Durst Organization Midtown West 94,211 A 2017 (Frank 57 West) 2 Pike Street Yeung Real Estate Dev. SoHo | NoHo 93,000 A 2018 330 East 62nd Street Joy Construction Corp. Midtown East 90,505 B 2018 300 Lafayette Street Related Companies SoHo | NoHo 83,000 A 2018

Reconstruction Office Property Owner Submarket Square Feet Class Completion 390 Madison Avenue Clarion Partners Grand Central 862,154 A 2017 787 Eleventh Avenue Pershing Square Capital Midtown West 470,000 B 2017 110 East 60th Street Princeton International Plaza District 181,917 A 2017 (Park Sixty) 9 Orchard Street Partners Group (USA) Inc. SoHo | NoHo 82,941 B 2017 44 Union Square East Liberty Theaters Inc. Gramercy | Flatiron 73,323 B 2018

Pre-Construction Office Property Sponsor Submarket Square Feet Class Commencing 415 Tenth Avenue Related Companies Penn Station-Garment 2,900,000 A N/A (50 Hudson Yards)

435 Tenth Avenue Tishman Speyer Penn Station-Garment 2,850,000 A N/A (66 Hudson Boulevard) 2 World Trade Center Silverstein Properties World Trade Center 2,800,000 A N/A 400 West 33rd Street (Two Manhattan West) Brookfield Properties Penn Station-Garment 1,976,602 A 2017 (South Tower) 511 West 35th Street Spitzer Enterprises Penn Station-Garment 950,000 A 2018

123-131 West 23rd Street JHG Holdings Chelsea 186,562 A 2017

104-106 West 56th Street Savanna Midtown West 90,000 A 2017 315 East 46th Street Fisher Brothers Management Midtown East 75,170 A 2017

Only Properties with over 50,000 Square Feet are listed. Only Properties with over 50,000 Square Feet are listed. 10 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC NOTABLE INVESTMENT SALES

Office Property Submarket Class SF Buyer Seller Price $PSF 60 Wall Street Paramount Group Financial Dist. A 1,612,000 GIC $1,040,000,000 $645 (95% Interest Sale) Morgan Stanley 1100 Ave. of the Americas Brookfield Properties HBO Building Grand Central A 344,000 Nickerson Family $370,000,000 $1,076 Swig Company (Leasehold) 866 United Nations Plaza Midtown East A 340,000 Carlyle Group Meadow Partners $217,700,000 $640 (Condominiums) 55 Broadway Paramount Group One Exchange Plaza WTC A 358,637 Harbor Group Int'l $215,000,000 $599 Savanna (Partial Interest Sale) 551 Madison Avenue Plaza District A 150,000 Lexin Capital Barings $155,000,000 $1,033 42 West 14th Street SoHo | NoHo C 180,000 The New School Samson Associates $153,000,000 $850 38-42 Greene Street (Portfolio) SoHo | NoHo B 85,121 Zar Property NY Nassimi Realty $141,600,000 $1,664 (Partial Interest) 220 Fifth Avenue Stellar Management Flatiron A 150,900 Dino Son Realty Corp. $120,000,000 $795 (Leasehold) Imperium Capital 71 Fifth Avenue Samco Properties Flatiron B 153,000 Madison Capital $85,000,000 $556 (Leasehold) WeWork 250 West 54th Street Midtown West C 147,170 Zar Property NY Ascot Properties $83,100,000 $565 56 West 45th Street Grand Central B 66,000 Gatsby Enterprises Valeray Real Estate Co. $50,000,000 $758 133 West 25th Street Chelsea C 45,499 Icon Realty Management Dezer Properties $33,000,000 $725 204 Fifth Avenue Flatiron B 11,165 Artemis Partners Stan Goodman $22,000,000 $1,970

Properties are sorted by highest priced sale. Pending sales and selective bulk portfolio sales, leaseholds and condominium units are excluded.

11 MANHATTAN TREND TRACKER 1ST QUARTER 2017 LEE & ASSOCIATES NYC Lee & Associates NYC 845 Third Avenue, Fourth Floor New York, NY 10022 | 212.776.1200 www.leeassociatesnyc.com James Wacht President 212.776.1202 [email protected]

Henry Abramov Research Director [email protected] Carly Farkas Research Associate [email protected]

With offices across the nation, the Lee & Associates® group of independently owned and operated companies is the largest provider of regional commercial real estate services in the United States and the fourth-largest full-service commercial real estate organization overall.