3Q 2019 Office Market Trend and Analysis 2019 Q3 NEW3Q 2019 YORK New OFFICE York MARKETOffice TREND AND ANALYSIS Market Trend and Analysis

The office market finished the third quarter with another Manhattan Asking Rent and Availability Rate recordThe Manhattan high for office average market asking finished rents. the third They quarter increased setting 1.5% another from 2Qrecord to $77.61, high of average which isasking 5.7% rents. higher This thantime increasinga year ago. 1.5% Asking from 2Q rents to $80.00 12.0% have$77.61 increased and is 5.7% every higher consecutive than a year ago. quarter Asking since rents have3Q 2018. increased Direct The Manhattan office market finished the third quarter setting another Manhattan Asking Rent and Availability Rate 11.5% askingevery consecutive rents increased quarter in since 12 out3Q2018. of 15 Direct office asking submarkets. rents increased in $75.00 record12 out ofhigh 15 of office average submarkets. asking rents. This time increasing 1.5% from 2Q to $80.00 12.0% 11.0% Recent$77.61 and new is 5.7% construction higher than deliveries a year ago. contributedAsking rents have to the increased increase every consecutive quarter since 3Q2018. Direct asking rents increased in $70.00 11.5% inRecent rents, new mostly construction in Midtown deliveries South’s definitely far contributed . to There’s the increase over in $75.00 10.5% 600,00012rents, out which of square15 officeis mostly feet submarkets. in available Midtown South'sbetween far Onewest side.Manhattan There's overWest, 30 11.0% Hudson 600,000 squareYards, feet 55 available Hudson between Yards, One and Manhattan 40 Tenth West,Avenue, 30 Hudson where $65.00 10.0% Recent new construction deliveries definitely contributed to the increase in $70.00 askingYards, 55rents Hudson are Yardswell andover 40 $100 Tenth perAvenue, square where foot. asking Such rents rents are well are 10.5% rents, which is mostly in Midtown South's far west side. There's over commonlyover $100 per seen square in thefoot. PlazaSuch rents District, are seen which commonly saw an in the increase Plaza in 600,000 square feet available between One Manhattan West, 30 Hudson $65.00 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 10.0% District, which saw an increase in rents by $1.38 to $118.31 quarter-to- rentsYards, by 55 Hudson $1.38 toYards $118.31 and 40 Tenth quarter-to-quarter Avenue, where andasking are rents up are $5.44 well Asking Rent Availability Rate 4Y Rate Avg. year-over-year.overquarter $100 and per is upsquare $5.44 foot. year Such-over rents-year. are seen commonly in the Plaza

15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 District, which saw an increase in rents by $1.38 to $118.31 quarter-to- ThoughThough leasingleasing volume volume decreased decreased to 7.9 tomillion 7.9 squaremillion feet square or 26% feet from (or Asking Rent Availability Rate 4Y Rate Avg. quarter and is up $5.44 year-over-year. Midtown Asking Rent and Availability 26%) quarter from-to- quarter,quarter-to-quarter, leasing activity leasing remained activity high and remained strong ending high the and strongthird quarter. to end Wethe forecastthird quarter. high leasing We forecast volumes highto continue leasing into volumes the next to $88.00 13.0% Though leasing volume decreased to 7.9 million square feet or 26% from Midtown Asking Rent and Availability continuequartertwo quarters;-to into-quarter, thedue nextto leasing a strong two activity quarters. local andremained Thisnational is high due economy, and to astrong strong with ending strong local the andjob $86.00 12.5% nationalthirdnumbers quarter. economy, and lowWe unemploymentforecast with strong high leasing job rates; numbers volumes followed andto by continue anlow increased unemployment into the appetite next $88.00 13.0% rates, followed by an increased appetite of technology companies $84.00 12.0% twoof technology quarters; duecompanies to a strong moving local into and and national expanding economy, in Manhattan, with strong new job $82.00$86.00 12.5% movingnumbersconstruction intoand deliverieslow and unemployment expanding and an increased rates; in Manhattan, followed role of startups by an new increased keeping construction thisappetite office 11.5% $80.00$84.00 12.0% deliveries,ofmarket technology so active. and companies an increased moving roleinto and of startupsexpanding keepingin Manhattan, this new office $82.00 11.0% marketconstruction so active. deliveries and an increased role of startups keeping this office $78.00 11.5% $80.00 marketTAMI (Technology so active. -Advertising-Media-Information) tenants continued to $76.00 10.5% TAMI (Technology-Advertising-Media-Information) tenants $78.00 11.0% drive the demand for large blocks of space. Four of the largest TAMI deals continued to drive the demand for large blocks of space. Four $76.00 10.5% TAMIwere all(Technology signed in the-Advertising downtown-Media area.-Information) Spotify continued tenants its continuedexpansion toat

15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 of the largest TAMI deals were all signed in the downtown area. drivethe World the demand Trade Center, for large subleasing blocks of 85,666 space. squareFour of feet the atlargest 4 World TAMI Trade deals Spotify continued its expansion at World Trade Center, subleasing wereCenter all (26th signed & 27thin the floors). downtown Joining area. Spotify Spotify at thecontinued World Tradeits expansion Center isat Asking15Q4 16Q1 Rent16Q2 16Q3 16Q4 17Q1 Availability17Q2 17Q3 17Q4 Rate18Q1 18Q2 18Q3 18Q4 4Y19Q1 Rate19Q2 Avg.19Q3 85,666 square feet at 4 World Trade Center (26th & 27th floors). theUber World Technologies, Trade Center, which subleasing signed a new 85,666 lease square at 3 World feet at Trade 4 World Center Trade JoiningCenter (26thSpotify & 27th at World floors). Trade Joining Center Spotify is at Uber the World Technologies, Trade Center which is Asking Rent Availability Rate 4Y Rate Avg. (43rd to 49th floors) for 307,970 square feet for 11 years. The signedUber Technologies, a new lease which at 3 signed World a newTrade lease Center at 3 World (43rd Trade to 49th Center floors) Midtown South Asking Rent and Availability transportation tech leader will be consolidating their Manhattan office for(43rd 307,970 to 49th floors) square for feet 307,970 for square 11 years. feet for The 11 years. transportation The tech operations and relocating from 1400 Broadway and the Terminal Stores $100.00 Midtown South Asking Rent and Availability 15.0% leadertransportation will be consolidatingtech leader will betheir consolidating Manhattan their office Manhattan operations office and (261-271 Eleventh Avenue). Advertising giant, Publicis Groupe signed a 20 relocatingoperations from and relocating 1400 Broadway from 1400 and Broadway the Terminal and the StoresTerminal (261-271 Stores $100.00 $80.00 15.0% year lease term to renew 682,883 square feet and expand by 277,339 Eleventh(261-271 Eleventh Avenue). Avenue). Advertising Advertising giant giant, Publicis Publicis Groupe Groupe signed signed a 20 a 10.0% square feet at 375 Hudson Street, bringing their footprint at the building to $60.00$80.00 20-yearyear lease lease term term to renew to renew 682,883 682,883 square feet square and expand feet and by 277,339expand by 10.0% 960,222 square feet. $40.00$60.00 277,339square feet square at 375 feet Hudson at 375 Street, Hudson bringing Street, their footprint bringing at their the buildingfootprint to 5.0% 960,222 square feet. $40.00 at the building to 960,222 square feet. $20.00 5.0% Most notably is the indicative trend of large tech giants giving more weight $20.00 $- 0.0% TechMostto the giantsnotably term, Silicon is continue the Alley,indicative towith expand trend the largest of inlarge of “Silicon techthem giants all Alley,” creating giving with amore block Google weight-by- $- 0.0% creatingtoblock the campus. term, a block-by-block Silicon Google Alley, continues with campus the to largest expand in ofthe gradually, them southwestern all creatingtaking over a portionblock more-by of-of Midtownblockthe southwestern campus. South. Google After portion continues expanding of Midtown to expand at South. 85 Tenthgradually, After Avenue, expanding taking over57 at Eleventh85 more Tenth of 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 theAvenue; southwestern 57 Eleventh portion Avenue of Midtown(Pier 57); South.345 Hudson After expandingStreet and at315 85 Hudson Tenth

15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 Avenue (Pier 57), 345 Hudson Street, and 315 Hudson Street, Asking Rent Availability Rate 4Y Rate Avg. theAvenue;Street, tech the 57 behemoth tech Eleventh behemoth Avenue committed committed (Pier 57); to to345 Oxford Oxford Hudson PropertyProperty Street andGroup's Group’s 315 newHudson new Street, the tech behemoth committed to Oxford Property Group's new Asking Rent Availability Rate 4Y Rate Avg. developmentdevelopment ofof 1.3 1.3 million million square square feet feetat 550 at Washington 550 Washington Street (St. Street development of 1.3 million square feet at 550 Washington Street (St. (St.John's John’s Terminal). Terminal). Delivery Delivery of the new of the premises new premises is slated for is 1Qslated 2023, for where 1Q Downtown Asking Rent and Availability John's Terminal). Delivery of the new premises is slated for 1Q 2023, where Downtown Asking Rent and Availability 2023,Google where will occupy Google the willclass occupy-A, COOKFOX the class-A, designed COOKFOX building & pay designed rents Googlestarting willin the occupy low $70s the class and -intoA, COOKFOX the high $80sdesigned at the building end of &its pay lease. rents $70.00 15.0% buildingstarting inand the paylow $70srents and starting into the in high the $80s low at $70s the end and of intoits lease. the high $70.00 15.0% $80s at the end of their lease. $65.00 10.0% $65.00 10.0% New York Quarter-to-Quarter Movement $60.00 5.0% ↑ 20 bp ↓ 30 bp ↑ $1.17 (1.5%) $55.00 0.0% ↑ ↓ ↑ AVAILABILITY VACANCY ASKING RENTS

15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 - 26% 2.4% Rate (30 bp) $3.23 (5%) Asking Rent Availability Rate 4Y Rate Avg. ↑ ↑ ↓ LEASING VOLUME SUBLET AVAILABILITY SUBLET ASKING RENTS Lee & Associates NYC Henry Abramov Peter Braus James Wacht 845 Third Avenue, 4th Floor Research Director Managing Principal President New York, NY 10022 [email protected] [email protected] [email protected] 845 THIRD AVENUE | FOURTH FLOOR | NEW YORK, NY 10022 | www.leeassociatesnyc.com 212.776.1200 212.776.1273 212.776.1203 212.776.1202 2019 Q2 | New York Office Market 2019 2019 Q3 Q3 | New York Office Market NEWLabor StatisticsYORK OFFICE MARKET TREND AND ANALYSIS 's total nonfarm employment increased 1.7% year-over-year to 4,629,300 ending the second quarter. The city's unemployment rate has been on anLabor downward Statistics five-year trend, at 4.3% compared to 7.3% in 2014. The real gross city product has been averaging above 3% growth since 2018 Q4 and is 3.4% compared to the LABORnationalThe U.S. gross unemployment STATISTICS domestic product rate declined at 2.1%. by Payroll 0.2% tojobs 3.5% growth in September. has also increased The last totime 2.4% the from rate 2% was year-over-year. this low was in New December York City 1969 continues (3.5%). to Total have nonfarm payroll employment Theaincreased solid U.S. job growthby unemployment 136,000. market Employment with unemployment rate indeclined health carerate by andat 0.2% near in professional record to 3.5% low; inaand labor September. business force participation services The continued last rate time and to employment-to-populationthe trend rate up. wasJob growth this low has averagedwas ratio inremain December 161,000 at near per record month1969 thus(3.5%). far in Totalhighs2019. and nonfarm average payroll hourly earnings employment up. The education increased & health by 136,000. services sector Employment grew at 6.2%, in followedhealth careby the and professional in professional & business andservices business sector at services5.4%. Unemployment continued toin Manhattantrend up. has Job increased growth 10 has basis averaged points to 3.6% 161,000 year-over-year per month and is justthus below far inthe 2019. U.S. unemployment rate of 3.7%. New York City's over-the-year picture remained positive, with private sector jobs in NYC increasing over the year by 84,200, or 2.1%, to 4,023,800 in August 2019. The city's New2.1% growthYork City’s rate was over-the-year above the comparable picture rate remained for both NY positive, state (1.3%) with and private the U.S. (1.5%).sector The jobs city's in seasonally NYC increasing adjusted unemployment by 84,200, rateor 2.1%,was 4.2% to in 4,023,800 August 2019, inslightly August down 2019. from July The and city’s up 0.2% 2.1% from growth August 2018.rate was above the comparable rate for both NY state (1.3%) and the U.S. (1.5%). The city’s seasonally adjusted unemployment rate was 4.2% in August 2019, slightly down from July and up 0.2% from August 2018. Total Nonfarm Employment, 12-Month % Change UNEMPLOYMENT RATE (SEASONALLY ADJUSTED

4.0% U.S. NYC TOTALTotal NONFARM Nonfarm EMPLOYMENT EmploymentU.S. (SA), (SA), 12NYC 12-MONTH-Month % %Change CHANGE UNEMPLOYMENTUNEMPLOYMENT RATERATE (SEASONALLY(SEASONALLY ADJUSTED) ADJUSTED) 3.5% 4.0% 7.30% U.S. NYC

3.0%3.5% 6.10%

5.60% 5.30% 6.80% 2.5%3.0% 5.20%

4.90%

4.70%

5.90% 4.30% 2.5% 4.30% 4.10% 4.00%

2.0% 5.30% 3.70%

5.20%

5.00% 5.00%

2.0% 1.5% 4.60% 4.20% 4.20%

1.5% 3.90% 3.70% 1.0% 3.50% 1.0% 0.5%0.5% 0.0%0.0% 20142014 Q2 Q3 20152015 Q2 Q3 20162016 Q2 Q3 20172017 Q2 Q3 20182018 Q2 Q3 20192019 Q2 Q3 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2

U.S. NYC 2014 Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019 Q3 Largest Lease Transactions by Market LARGESTLargest Lease LEASEMidtown Transactions TRANSACTIONS by Market BY MARKET Midtown South Downtown Submarket: Grand Central Submarket: Flatiron District Submarket: Financial District Address: 622Midtown Third Avenue Address: Midtown620 Avenue South of the Americas Address: 55Downtown Water Street Tenant:Submarket: McCann-EricksonPlaza District USA, Inc. Tenant:Submarket: WeWorkHudson CompaniesSquare Inc. Tenant:Submarket: EmblemHealth,World Trade Center Inc. SquareAddress: Feet: 464,598437 Madison Avenue SquareAddress: Feet: 212,937550 Washington Street SquareAddress: Feet: 438,4763 World Trade Center LeaseTenant: Type: RenewalWeWork Companies, Inc. LeaseTenant: Type: NewGoogle, Sublease Inc. LeaseTenant: Type: RenewalUber Technologies, Inc. Square Feet: 362,197 Square Feet: 1,295,800 Square Feet: 307,970 TenantLease Type:since 2002,New the research firm renewed their TheLease coworking Type: giantNew subleased Spotify's 3rd TenantLease sinceType: 2004,New the health insurer renewed its lease for 15 years with across floors 2nd to 5th and and 7th floors & Mediaocean's 6th floor for lease for 15 years on the bottom thirteen floors. The coworkingsame week giant it lost leased its CEO, 362,197 the coworking square feet, giant during Google committed toto 1.3 1.3 million million square square feet feet at at Oxford TheThe transportation tech tech company company signed signed a a new new lease at 16th to 28th. Lease renewal will commence at $58 12 years with the rents starting at $91.50 per Lease will renew at $55 per square foot for five years, theleased same 362,197 week ofsquare losing feet. its CEO. WeWork WeWork will take will 12take 12 OxfordProperty's Property’s new development, new development, slated forslated delivery for 2023. lease3 World at 3Trade World Center Trade forCenter 11 years, for 11 and years, will and be will per square foot for five years and then $62 for years square foot for five years, and then $98.50 for and then $60 for sixth through 10th year, then $65 floors atat 437437 MadisonMadison Avenue,Avenue, previouslypreviously occupiedoccupied by deliveryThe internet in 2023. giant The signed internet a 15-year giant signed lease thata 15-year will beconsolidating consolidating their their Manhattan Manhattan staff staff and and relocating relocating six through 10 and $66 till expiration. Landlord years six through 10 and $105.50 till expiration. till expiration. The landlord provided six months Omnicom.by Omnicom. The The landlord landlord will will provide provide an a private private entrance leasecommence that will with commence rents starting with rents at $72 starting per square at $72 foot. themthem fromfrom 1400 1400 Broadway Broadway and and the the Terminal Terminal Stores. Stores. provided six months free and $70 in TI. Spotify provided 11 months free and $100 in TI. free and $100 in TI. andentrance private and outdoor private space.outdoor The space. deal, The which deal, would which have perThe square landlord foot. provided The landlord no free provided rent. no free rent. TheThe lease will start at at $80 $80 per per square square foot, foot, and and the the beenwould in have negotiation been in negotiationfor months, for comes months, just comesafter WeWork tenanttenant will will receive receive 18 18 months months free free and and $105 $105 per per square reportedlyjust after WeWork announced reportedly an end announced to all new leasingan end into order squarefoot in tenantfoot in tenantimprovements. improvements. toall cutnew losses. leasing in order to cut losses.

Submarket Statistics

Total Under 20192019 Q2 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 12-Month Submarket Statistics TotalInventory ConstructionUnder Net 2019Availability Q2 2018Availability Q2 2019Vacancy Q2 2018Vacancy Q2 2019 Asking Q2 Rent 2018Asking Q2 Rent 12-MonthAsking AbsorptionNet Rent% Inventory(SF) Construction(SF) (SF) AvailabilityRate AvailabilityRate VacancyRate VacancyRate Asking($/SF) Rent Asking($/SF) Rent AskingChange Rent Absorption2019 Q3 (SF)Total Under(SF) 2019Rate Q3 2018Rate Q3 2019Rate Q3 2018Rate Q3 ($/SF)2019 Q3 ($/SF)2018 Q3 %12-Month Change (SF)Net Inventory Construction Availability Availability Vacancy Vacancy Asking Rent Asking Rent Asking Rent Absorption Midtown 240,089,344(SF) 3,044,216(SF) 176,176 12.3%Rate 11.4%Rate 7.6%Rate 8.1%Rate ($/SF)$80.36 ($/SF)$80.56 %-0.3% Change (SF) Midtown South 200,083,674 14,353,958 2,516,648 9.3% 10.8% 6.8% 6.1% $77.20 $75.97 1.6% Midtown 232,834,755 3,013,738 586,767 12.5% 11.8% 7.3% 7.7% $82.14 $82.06 0.1% Downtown 113,112,122 546,873 10,195 11.5% 13.1% 8.8% 10.7% $66.97 $62.99 6.3% Midtown South 202,115,406 13,903,829 -265,610 9.3% 9.9% 7.1% 6.1% $79.05 $75.48 4.7% Manhattan 553,285,140 17,945,047 2,703,019 11.1% 11.6% 7.6% 8.0% $76.44 $74.05 3.2% Downtown 113,307,871 545,410 752,448 11.0% 13.1% 8.1% 10.0% $67.47 $62.91 7.3% FOR MORE INFORMATION, PLEASE CONTACT: Manhattan 548,258,032 17,462,977 1,073,605 11.3% 11.5% 7.7% 7.7% $77.61 $73.42 5.7% Henry Abramov | Research Director | 212.776.1273 | [email protected]

845 THIRD AVENUE | FOURTH FLOOR | NEW YORK, NY 10022 | www.leeassociatesnyc.com