Strong year continues with high-profile leasing; rents remain flat as new and returning space looms 10.0% 5.0%

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1 $ PSF Office May 2017 New York Monthly Market Update Strong year continues with high-profile leasing; rents remain flat as new and returning space looms Manhattan Class A asking rents Manhattan Class A vacancy rents $ Apr-15 Apr-16 Apr % Apr-15 Apr-16 Apr-17 $80.00 $60.00 $40.00 $ % 5.0% $0.00 Manhattan Overall Midtown Midtown South Downtown 0.0% Manhattan Overall Midtown Midtown South Downtown Midtown Midtown South Downtown Brooklyn and LIC Asking rents fell slightly as less expensive space came on the market, while Class A vacancy was flat at 11.5 percent. Large blocks on Park Avenue, Avenue of the Americas and elsewhere will continue to hit the market over the next few years as currents tenants depart for newer or renovated product. Diversified leasing activity continues as NYC Human Resources Administration and two cosmetics companies take the top leases of the month. Several buildings will be undergoing renovations in order to keep up with the demand for new and improved space. Large pending leases by the city government appear to have been put on hold, possibly the result of expected cuts from the federal government. More than 500,000 square feet of ongoing retail projects should continue to drive demand to the market. Brooklyn recorded five leases signed in excess of 50,000 square feet in 2017, compared with just four for all of Over the past five years, roughly 4.2 million square feet of Brooklyn s industrial product has been either demolished or converted to higher use.

2 2 Midtown Leasing activity was strong in Midtown through April, when two major leases were recorded, including HSBC s renewal of its New York headquarters. Asking rents fell slightly as less expensive space came on the market, while Class A vacancy was flat at 11.5 percent. Despite ongoing demand at Hudson Yards, the new development zone at the western end of Midtown, not all tenants are opting to make the move. In the largest lease of the month, HSBC renewed at 452 Fifth Avenue for 548,170 square feet. The Trophy-quality tower anchors the southeast corner of Bryant Park, which has become one of Manhattan s prime locations in recent years. In contrast, the law firm Cooley LLP will move from tower floors at the Grace Building at 1114 Avenue of the Americas to tower floors at 55 Hudson Yards. Rents at Hudson Yards have risen sharply as the development zone increasingly attracts higher-paying tenants, including those in the legal and financial services sectors. Cooley LLP leased 131,000 at the new location, which is similar in size to its current space. Class A asking rents slightly decreased to $82.22 per square foot from $82.38 per square foot last month. Rents have been flat since last year as large blocks of space return to the market. In April, space at The New York Times building at 620 Eighth Avenue became available at rents below the market average. Large blocks on Park Avenue, Avenue of the Americas and elsewhere will continue to hit the market over the next few years, as current tenants depart for newer or renovated product. Some of this rise in vacancy should be offset when several major leases from a range of industries are slated to close by year end. Almost half of tenants moving to Hudson Yards are higher-paying, traditional office users Government 4.17% Business services 3.00% Legal services 15.60% Leasing by square feet TAMI 35.90% Apparel/ manufacturing 19.22% FIRE 22.11%

3 Number of leases 3 Midtown South Leasing activity in April picked up from the first quarter as several large leases were recorded in Midtown South. Concurrently, diversified leasing continued as a city agency took the top lease of the month. New York City Human Resources Administration finalized a 249,491-square-foot renewal at 109 East 16th Street in a deal that was first reported in the fall of This is the largest lease in Midtown South, year to date. A pair of cosmetic companies signed leases in the newly renovated One SoHo Square. MAC Cosmetics signed for 86,524 square feet at One SoHo Square West (233 Spring Street), taking the top four floors, including the newly added glass penthouses and roof deck. Makeup and skincare startup Glossier also signed on for 26,079 square feet at One SoHo Square East (161 Avenue of the Americas), relocating from 123 Lafayette Street. Glossier will be receiving $3 million in tax credits for expanding and relocating its team. In the first deal of its kind, IBM signed on with WeWork to take all of 88 University Place. The temporary space will be within close proximity to IBM Watson s headquarters at 51 Astor Place. Several tech tenants committed to space this past month: MarketFactory, Frame.io and CubeIQ will each be taking a floor for a total of 17,106 square feet in 45 West 27th Street. Month over month, overall vacancy increased marginally from 8.4 percent to 8.5 percent, while overall asking rents decreased slightly from $76.65 to $76.14 per square foot. With top-of-the-market space at One SoHo Square coming off the market, Hudson Square direct asking rents dipped to $81.90 from $84.87 per square foot. Overall Class A asking rents remained relatively flat month over month. Demand for new and/or renovated space persists as several owners announced plans to renovate their aging buildings. 150 Fifth Avenue, 71 Fifth Avenue and 287 Park Avenue South will be undergoing capital improvements in order to stay competitive in Midtown South Leases with a starting rent of $100 per square foot or greater signed year to date are on track to surpass all of YTD 2017

4 Millions 4 Downtown After a white-hot first quarter, Downtown leasing activity leveled in April. No leases in excess of 50,000 square feet were signed Downtown, with an average lease size for April of roughly 15,000 square feet, compared with 53,037 square feet in the first quarter of the year. Asking rental rates remained largely unchanged month over month at $56.39 per square foot, while vacancy in the market dipped 10 basis points to 10.3 percent. The largest lease of the month was signed by Sailthru at One World Trade Center. The firm will move to 27,320 square feet on the 48th floor of the tower in a relocation from 160 Varick Street in Midtown South. Other notable leases for the month of April include shared office provider Knotel. The firm expanded its Manhattan footprint in a 27,000-square-foot lease at One State Street Plaza. Additionally, IA Interior Architects and women s apparel retailer MM.LaFleur signed leases at 100 Broadway for 17,625 and 18,986 square feet, respectively. Large pending leases by the city government appear to have been put on hold, possibly the result of expected cuts from the federal government. Since government tenants comprise roughly 20 percent of Downtown occupiers, this could have a particularly negative impact on Downtown absorption figures. The effect could be exacerbated as large blocks of space are expected to hit the market in the coming months. The demand picture looks healthy for Class A assets like those in the World Trade Center and Brookfield Place, which have seen strong touring activity in Class B product in Downtown represents the last value option in Manhattan. This is especially true along the Water Street Corridor, where average Class B rents of $44.96 per square foot represent respective discounts of 21 percent and 29 percent to Class B space in Midtown and Midtown South. Ongoing retail projects, such as the 200,000-square-foot retail pavilion at 28 Liberty Street and the 365,000-square-foot South Street Seaport, should continue to drive demand to the market that has long been viewed as underserved from a retail perspective. Through April, Downtown has already seen more FIRE sector leasing than in all of Morgan Stanley (1.2M) Citigroup (2.6M) Projected Apr-17

5 5 Submarket statistics Class A Class B Overall Inventory Vacancy rate Asking rent (PSF) Inventory Vacancy rate Asking rent (PSF) Inventory Vacancy rate Asking rent (PSF) Midtown Columbus Circle 17,313, % $ ,534, % $ ,847, % $70.44 Grand Central 40,335, % $ ,548, % $ ,883, % $68.24 Penn Plaza / Garment 19,780, % $ ,803, % $ ,583, % $65.47 Plaza District 86,882, % $ ,038, % $ ,920, % $87.70 Times Square 31,960, % $ ,263, % $ ,223, % $72.57 Total 196,272, % $ ,186, % $ ,459, % $75.62 Midtown South Chelsea 14,588, % $ ,533, % $ ,121, % $77.25 Gramercy Park 12,748, % $ ,823, % $ ,572, % $73.82 Greenwich Village 1,915, % $ ,769, % $ ,684, % $83.85 Hudson Square 7,275, % $ ,371, % $ ,646, % $74.74 SoHo 1,865, % $ ,869, % $ ,735, % $76.97 Total 38,393, % $ ,367, % $ ,761, % $76.14 Downtown Financial District 14,308, % $ ,524, % $ ,832, % $52.47 Tribeca / City Hall 4,372, % $ ,467, % $ ,839, % $50.38 Water Street Corridor 21,466, % $ ,534, % $ ,000, % $54.44 World Trade Center 21,264, % $ % $ ,264, % $72.33 Total 61,411, % $ ,525, % $ ,936, % $56.39 Manhattan 296,078, % $ ,079, % $ ,157, % $71.43 Closed leasing transactions Size (SF) Tenant Address Submarket Type 548,000 HSBC Bank 452 Fifth Avenue Penn Plaza / Garment Renewal 99,668 Deloitte 1221 Avenue of the Americas Plaza District New 86,524 MAC Cosmetics One SoHo Square West Hudson Square New 63,466 Glencore 330 Madison Avenue Grand Central New

6 About JLL JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the first quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 78,000. As of March 31, 2017, LaSalle Investment Management has $58.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit About JLL Research JLL s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today s commercial real estate dynamics and identify tomorrow s challenges and opportunities. Our more than 400 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions. For more information, contact: Midtown Manhattan 330 Madison Avenue New York, NY Leasing Peter Riguardi Capital Markets Anthony Ledesma Glenn Tolchin Yoav Oelsner Research Tristan Ashby Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.