May 2013 The Retail Pulse Updates & Trends Real estate investment services May 2013 New York City’s Strong Investor Demand Defi es Property Sales Volatility Tourists from around the world are not the only ones interested in New York City’s retail offerings, real estate investors have been scouring the City to BUY retail properties boosting sales volume at the end of 2012. Yet despite the numerous anecdotal stories confi rming how New York’s economy is thriving, the retail property sales sta- tistics were disappointing in the fi rst quarter of 2013. Volume fell signifi cantly, but this was expected given the rush at the end of 2012 to close deals before the capital gains tax increased as it did at the 11th hour. As per Chairman and CEO, Peter Hauspurg, “To no one’s surprise, sales volume fell in the fi rst quarter but investor inter- est has been strong. Because prices are climbing every day, more sellers are bringing properties to the market. While we will not see the same fourth quarter 2012 volume in the next quarter or two, the statistics will start to refl ect the high demand we are seeing in the market.” This issue of Eastern Consolidated’s Retail Pulse report will review every statistic pertaining to the retail industry in New York City. The fi ndings are compelling and show why New York City has retained its title of “Retail Capital of the World:” — Retail property sales volume declined in early 2013, but this was expected given the surge at the end of 2012. — New York City’s retail industry added 4,700 jobs in the fi rst quarter of 2013 – the third highest job growth of any industry after health services and social services. In 2012, retail trade added 7,600 jobs in the year. — Restaurants added 6,800 jobs in 2012 and have added another 800 jobs in the fi rst quarter of 2013. — Adding retail trade to restaurant employment, together these industries have grown by 87,000 jobs since 2009, or 18%. More importantly, their added 87,000 jobs amounts to nearly half of the TOTAL job gains in the City since 2009. — Retail and restaurant employment gains were spread across all fi ve boroughs. — Tourism remains strong. — Retail asking rents are increasing in every neighborhood. Retail Property Sales After shattering all records in the fourth quarter as shown in the chart below, the volume of retail properties sales plum- meted in the fi rst quarter of 2013, but this decline was expected given that sellers wanted to cash out on their holdings and close their sales before the capital gains tax increase. Volume fell from $2.5 billion at the end of 2012 to $102 million in the fi rst quarter of 2013. Just 17 deals closed, down from 50 at the end of 2012. The quarterly average from 2010 through the third quarter of 2012 had been $300 million. Real estate investment services Browse listings at www.easternconsolidated.com 2 2 May 2013 New York City’s Strong Investor Demand Defi es Property Sales Volatility Manhattan Retail Property Sales $-Volume (in millions) $2,400 $4,000 Price per SF $1,800 $3,000 $1,200 $2,000 Price Per SF Per Price $600 $1,000 Volumemillions) (in $0 $0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 *Includes deals still under contract. Source: Eastern Consolidated, CoStar, Property Shark As mentioned above, these results were disappointing but expected. The jump in the capital gains tax was a strong impetus to close deals at the end of 2012 even though the passing of the deal to raise the capital gains tax did not occur until the fi rst of the year. This pushed a number of deal closings that would have otherwise closed in the fi rst quarter to the previous quarter. One could also argue that the drop in volume was once again due to a lack of supply of available properties. After the surge of sales at the end of 2012, owners remain very reluctant to list their properties due to the chal- lenge they face for redeploying capital in a high-priced market. Investors may also feel skittish about the stock market’s high valuation as well. Already through half of the second quarter, volume has exceeded that of the fi rst quarter of 2013. Real estate investment services Browse listings at www.easternconsolidated.com 3 3 May 2013 New York City’s Strong Investor Demand Defi es Property Sales Volatility Selected Retail Property Sales are listed below. Recent Sales Price Buyer (True) Seller (True) Property Name/Tenant Property Address Size Sale Date Sale Price Submarket Name Per SF Company Company Vacating Retail 58-60 Ninth Avenue 10,839 4/8/2013 $18,200,000 $1,679 DelShah Capital Icon Realty Meatpacking Treasure & Bond, (Nordstrom) 350 West Broadway 11,115 2/12/2013 $25,500,000 $2,294 Spitzer Enterprises AH 350 Retail LLC Soho LLC Retail and Garage 350-364 Bleecker Street 14,510 1/15/2013 $10,900,000 $751 American Realty Tudor Realty Hudson Square Capital, Inc. Services Corp. International Gem Building 50 W 47th Street 12,000 3/12/2013 $10,000,000 $833 Gulaylar Group Extell Development Times Square Company Retail Space at 1546 Second Avenue 9,288 2/22/2013 $9,100,000 $980 Icon Realty Alexandros Upper East Side Management LLC Enterprises Ltd Apthorp Retail Space 2211-2219 Broadway 1,800 1/22/2013 $6,181,500 $3,434 HFZ Capital Group Africa Israel USA Upper West Side Fourth Quarter Of 2012 Price Buyer (True) Seller (True) Property Name/Tenant Property Address Size Sale Date Sale Price Submarket Name Per SF Company Company Retail Space at 666 Fifth Avenue 114,000 12/6/2012 $707,820,000 $6,209 Vornado Realty The Carlyle Group Plaza District Trust St. Regis Hotel Retail Space 2 E 55th Street 24,700 10/11/2012 $317,730,600 $12,864 Richemont North Crown Acquisitions, Plaza District America, Inc Inc. Plaza Hotel Retail 768 Fifth Avenue 141,885 11/26/2012 $291,926,669 $2,057 Sahara India EL AD US Holding, Plaza District Pariwar Inc. The Carlton House Retail Space 680 Madison Avenue 33,401 12/31/2012 $277,000,000 $8,293 Thor Equities LLC Extell Development Plaza District Company Knickerbocker Hotel Retail 1466 Broadway 46,652 12/11/2012 $196,000,000 $4,201 Invesco Ltd. Crown Acquisitions, Penn Plaza/Garment Inc. New Nike Store 529 Broadway 43,888 12/20/2012 $147,000,000 $3,349 Thor Equities LLC Estate of William Soho Gottlieb Retail and Bank Space at 702-708 Madison Avenue 19,100 11/29/2012 $141,510,000 $7,409 Friedland Properties The Bank of Plaza District New York Mellon Corporation The Grand Madison 225 Fifth Avenue 40,073 12/31/2012 $78,275,000 $1,953 CIM Group, LP Ceres RE Partners Chelsea Gym and The Gap 1511-1515 Third Avenue 60,000 12/19/2012 $60,000,000 $1,000 TIAA-CREF The Related Upper East Side Companies Leasehold Interest 1565 Broadway 5,159 12/28/2012 $47,500,000 $9,207 Wharton Properties Reva Hart Times Square Temporary Apple Store 72-76 Greene Street 45,000 12/11/2012 $41,100,000 $913 L3 Capital LLC BSJ Realty LLC SoHo Retail Space at 69 and 71 Greene Street 32,950 11/15/2012 $32,600,000 $989 Greene St Owner Robert Zeisel SoHo CVS and 7-11 Retail Space 1225-1239 Second Avenue 18,464 10/5/2012 $27,500,000 $1,489 Equity One, Inc. Madison Capital Plaza District Retail Space at 149-153 Wooster Street 15,000 11/6/2012 $25,000,000 $1,667 Premier Equities Alfa Development Soho Management, LLC Retail Space at 120-124 Prince Street 6,416 12/26/2012 $20,000,000 $3,117 Crown Acq. Edgar Greene Soho Retail Space at 210 Bowery 9,200 12/26/2012 $7,500,000 $815 Acadia Realty Robert Balter Retail Space at Q2 and Q3 2012 Price Buyer (True) Seller (True) Property Name/Tenant Property Address Size Sale Date Sale Price Submarket Name Per SF Company Company The Cammeyer 650 Avenue of the Americas 7,130 7/24/2012 $40,000,000 $1,474 Trevi Retail LLC Madison Realty Chelsea Retail Space at 501 Broadway, Retail 9,200 8/20/2012 $31,000,000 $3,370 Vornado Realty 501 Broadway LLC SoHo Retail Space at 40 Mercer Street 14,100 7/3/2012 $57,000,000 $4,043 Savanna GLL Real Estate SoHo Retail Space at World Trade Center 365,000 5/16/2012 $612,500,000 $1,678 Westfi eld Corp. PANYNJ Downtown Real estate investment services Browse listings at www.easternconsolidated.com 4 4 May 2013 New York City’s Strong Investor Demand Defi es Property Sales Volatility Outer Borough Sales Price Buyer (True) Seller (True) Property Name/Tenant Property Address Size Sale Date Sale Price Submarket Name Per SF Company Company Kings Plaza Shopping Center 5100 Kings Plaza 759,912 11/28/2012 $751,000,000 $988 The Macerich Vornado Realty Trust South Brooklyn Company Canarsie Plaza 860 Remsen Avenue 269,913 12/5/2012 $124,000,000 $459 Cole Real Estate Acadia Realty South Brooklyn Investments Retail and Garage 276-300 Livingston Street 272,065 4/10/2013 $75,000,000 $276 TF Cornerstone Inc. Thor Highstreet Downtown Brooklyn Advisors Retail Space at 247 Bedford Avenue 110,000 4/5/2012 $66,000,000 $600 Redsky Capital LLC The Backer Group North Brooklyn LLC Clock Tower Plaza 9210 Atlantic Avenue 78,820 9/28/2012 $56,000,000 $710 Equity One, Inc.