Source: CBRE 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000. SF Leased

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1 ALLIANCE FOR DOWNTOWN NEW YORK Q COMMERCIAL OFFICE MARKET Leasing Activity Lower Manhattan kicked off the year with a robust quarter of leasing totaling 1.37 million square feet, a strong 39% increase year-over-year, and 32% higher than the ten-year average. LOWER MANHATTAN Q1 LEASING ACTIVITY, (sf) Source: CBRE 1,800,000 1,600,000 1,400,000 Six of Manhattan s top ten new deals were in Lower Manhattan. 1 They reflect the district s appeal to a broad range of office-using industries with media front and center. HarperCollins Publishers signed the quarter s largest lease at 195 Broadway for 180,700 square feet, relocating from 53rd Street in Midtown. Liberty Mutual Insurance Company signed the second-largest lease at 55 Water Street, one of the buildings hardest-hit by Hurricane Sandy. The 130,500-square-foot renewal and expansion was a vote of confidence from a major tenant, and a pinnacle moment capping off the district s quick recovery from the storm. 1 Source of top deals ranked among Manhattan deals: CBRE 1,200,000 1,000, , , , ,000 - Q1 10-YEAR AVERAGE 1.03 MSF TOP TEN LOWER MANHATTAN LEASES, Q Source: CBRE, CoStar, Alliance for Downtown New York Tenant Name Building Address SF Leased Transaction Type Sector 1 HarperCollins Publishers 195 Broadway 180,748 Relocation Creatives Services, Media 2 Liberty Mutual Insurance 55 Water Street 130,449 Expansion FIRE Company 3 WeWork 222 Broadway 120,537 Direct Professional Services, Other 4 Condé Nast 222 Broadway 80,000 Direct Creatives Services, Media 5 American Arbitration Association 120 Broadway 79,688 Direct Other 6 Green Ivy Schools 40 Wall Street 75,675 Direct Education 7 GfK Custom Research 200 Liberty Street 75,020 Relocation Professional Services, Other 8 Regus 200 Vesey Street 54,991 Direct FIRE 9 U. S. Equal Employment 33 Whitehall Street 39,627 Renewal Government Opportunity Commission 10 U.S. Bureau of the Census 32 Old Slip 39,406 Relocation Government 1

2 Other top leases included WeWork, a leading provider of co-working space for individuals and small businesses with five other locations in New York City. WeWork signed 120,000 square feet at 222 Broadway, where Condé Nast also signed 80,000 square feet. That deal brings Condé Nast to a total 1,213,000 square feet in Lower Manhattan when combined with their primary lease at 1 World Trade Center. Relocation activity was particularly strong this quarter, with 18 companies committing to move from Midtown and Midtown South to Lower Manhattan. This activity drove the cumulative total to 410 tenant relocations to Lower Manhattan since Midtown South holds the lowest vacancy rate in the nation at 6.9%, a slight decrease from 7.1% last quarter and up from 5.9% over the first quarter of Midtown maintained the highest vacancy rate of the three Manhattan markets at 10.1%, down from 10.3% last quarter but up from 9.9% year-over-year. 2 Source of national rank of vacancy: Cushman & Wakefield TOTAL VACANCY Source: Cushman & Wakefield 14% 12% Vacancy The quarter s robust leasing caused a drop in vacancy to just 8%, down from 8.8% last quarter, 9.2% last year, and the lowest since Lower Manhattan now ranks as the second-lowest vacancy rate in the nation, itching up a notch from last quarter when it ranked third-lowest. 10% 8% 6% 4% 2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Lower Manhattan Midtown Midtown South TOP 15 RELOCATIONS, Q Source: CBRE, CoStar, Alliance for Downtown New York Tenant Name Building Address SF Leased Previous Sector Location HarperCollins Publishers 195 Broadway 180,748 Midtown Creatives Services, Media GfK Custom Research 200 Liberty Street 75,020 Midtown South Professional Services, Other U.S. Bureau of the Census 32 Old Slip 39,406 Midtown South Government New York State Society of Certified Public Accountants 14 Wall Street 34,577 Midtown Other Catholic Charities of the Archdiocese 80 Maiden Lane 26,438 Midtown Nonprofit of New York Village Voice Media 80 Maiden Lane 11,879 Midtown South Creative Services, Media OrderGroove, Inc. 75 Broad Street 10,136 Midtown South Technology, Computer Systems Design Television Bureau of Advertising 120 Wall Street 9,276 Midtown Other Inwood House 80 Maiden Lane 8,523 Midtown South Healthcare First Chinese Presbyterian Home 30 Broad Street 8,500 Midtown South Healthcare Attendant Corporation Gamechanger 86 Chambers Street 6,716 Midtown South Technology, Computer Systems Design STELLAService 75 Broad Street 5,505 Midtown South Technology, Other Covala Group 1 Exchange Plaza 5,081 Midtown FIRE Sher Tremonte LLP 80 Broad Street 3,335 Midtown South Professional Services, Law Terry Hines & Associates 90 Broad Street 3,155 Midtown South Creative Services, Advertising 2

3 Rents Lower Manhattan asking rents remained stable. Average asking rents ended the year at $40.28 per square foot, up 2% from last quarter, and on par with last year. Class A rents were $45.36 per square foot, showing no change over last quarter and last year. Though asking rents held steady, taking rents improved, indicating that the market is getting stronger with less room to negotiate. The taking rent index, which shows taking rents as a percentage of asking rents, reached 90% this quarter the highest since the end of Meanwhile, overall asking rents in Midtown were $66.34 per square foot and Class A asking rents were $71.66 per square foot. Both were flat over last quarter and last year. $11.69 per square foot less than Midtown South. Those discounts give Lower Manhattan a competitive edge in attracting growing tenants. LOWER MANHATTAN TAKING RENT INDEX Source: CBRE 100% 95% 90% 85% Midtown South bucked the trend. Overall asking rents were $51.97 per square foot, up 5% from last quarter and 7% from last year, with increases driven by the Class B market. 80% 75% As a result of these fluctuations, Lower Manhattan asking rents are $26.06 per square foot less than Midtown and 70% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q OVERALL AVERAGE ASKING RENTS Source: Cushman & Wakefield CLASS A RENTS Source: Cushman & Wakefield $90 $80 $70 $60 $50 $40 $30 $100 $90 $80 $70 $60 $50 $40 $30 $20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Lower Manhattan Midtown Midtown South $20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Lower Manhattan Midtown Midtown South 3

4 RESIDENTIAL Development and Inventory Today, Lower Manhattan has an estimated 60,000 residents, and 30,140 residential units in 319 mixed use and residential buildings. These numbers will climb to an estimated 61,000 residents in 2013 and 62,000 in 2014 as development projects increase the total inventory. 3 Construction continues with 1,163 units in 7 buildings, and 388 of those units scheduled for completion in The Lara, a 168-unit rental building at 113 Nassau Street, is also scheduled to be completed in Two additional condominium properties will also be completed before the end of 2013: Warren Lofts at 37 Warren Street and 67 Liberty Street, with 12 units each. Work continues on the interior demolition of 70 Pine Street where the residential conversion will yield 750 condominium units in Fisher Brothers also began demolition of the existing building at 22 Thames this quarter in preparation for new construction of a 428-unit rental building. Rental Market 4 Lower Manhattan s rental market was active at the beginning of the year and pricing was stable even as the market entered the traditional slow season. Vacancy remained tight at just 1.8%. 3 The population estimate includes part-time residents 4 Source of data on rents, market share of rentals, active listings, and days on market: Miller Samuel/ Douglas Elliman. Source of vacancy: Citi Habitats AVERAGE RENTS Source: Miller Samuel/ Douglas Elliman $4,400 $4,200 $4,000 $3,800 $3,600 $3,400 $3,200 Construction continued at 180 Broadway, which will house 600 students as a Pace University dormitory in fall HIGHLIGHTS OF RESIDENTIAL DEVELOPMENT Source: Alliance for Downtown New York $3,000 Q1 Q2 Q3 Q4 Q Lower Manhattan Manhattan-wide Address/Building Name Lease Type Building Type Units Date Open Status 136 Church Street, Warren Lofts Condo Conversion Construction 67 Liberty Street Condo Conversion Construction 2 John Street/180 Broadway Dorm New Construction Construction 113 Nassau, The Lara Rental New Construction Construction 70 Pine Street Condo Conversion Construction 19 Park Place Condo New Construction 25 TBD Construction 87 Chambers Street Condo New Construction Planned 233 Broadw ay Condo Conversion Planned 33 Beekman Dorm New Construction Planned 12 Warren Street Condo New Construction Planned 161 Maiden Lane Condo New Construction 80 TBD Planned 99 Church Street Hotel/Condo New Construction 143 TBD Planned 5 Beekman Street Hotel/Condo Conversion 85 TBD Planned 22 Thames Rental New Construction 428 TBD Planned 5

5 MEDIAN SALES PRICE PER UNIT Source: Miller Samuel/ Douglas Elliman $1,050,000 $1,000,000 $950,000 $900,000 $850,000 $800,000 $750,000 AVERAGE SALES PRICE PER SQUARE FOOT Source: Miller Samuel/ Douglas Elliman $1,200 $1,150 $1,100 $1,050 $1,000 $950 $900 $850 $700,000 Q1 Q2 Q3 Q4 Q Lower Manhattan Manhattan-wide $800 Q1 Q2 Q3 Q4 Q Lower Manhattan Manhattan-wide Lower Manhattan apartments leased quickly during the first quarter, spending an average of just 40 days on the market, a week less than last quarter and the same yearover-year. This was also lower than the Manhattan-wide average of 57 days. Average rents were $4,059, up 5% year-over-year. The average rental price per square foot was $55.74, stable over last year. Lower Manhattan continues to command higher rents than the Manhattan-wide average, but the price premium narrowed this quarter. Lower Manhattan s average rent was 5% higher than the Manhattan-wide average rent of $3,881, as compared to the previous quarter s premium of 10%. Meanwhile, Manhattan-wide average rents were up 6% over last year, and the average rental price per square foot was stable over last year at $ Low vacancy, steady increases in rents, and a premium over the Manhattan-wide average rent show continued demand for Lower Manhattan apartments following Hurricane Sandy. Sales Market (Combined Condos and Co-ops) 5 Like the rental market, Lower Manhattan s residential sales market remained active during the first quarter. A total of 145 sales transacted south of Chambers Street during Q1 2013, up 7% from last quarter, and a 33% jump year-over-year. Lower Manhattan apartments also sold faster this quarter. The average 145 days-on-market was down 21% from last quarter and 16% from last year. Lower Manhattan outperformed the Manhattan-wide average where total sales dropped 5.4% from last quarter, and were up 6% from last year. Pricing remained stable in Lower Manhattan. The average sales price of a Lower Manhattan apartment was about $1.17 million in Q1 2013, up 6% over last year. The median sales price, however, dropped 3.5% to $870,000. The average price per square foot was stable year-over-year at $1,036 per square foot in Q Meanwhile, Manhattan-wide average prices registered increases over this time last year. The average sales price was $1,354,766, up 1% over last year, and the median sales price increased 6% year-over-year to $820,555. The average price per square foot was $1,103, close to the Lower Manhattan average and up 2% from last year. 5 Source of sales market data: Miller Samuel/ Douglas Elliman 6

6 HOSPITALITY The Port Authority of New York and New Jersey signed a 15-year deal with Legends Hospitality to develop and operate the 3-floor observation deck at One World Trade Center on the 100th, 101st, and 102nd floors. Legends operates stadium facilities for the New York Yankees and Dallas Cowboys. Under their agreement with the Port Authority, they will operate the viewing deck at One World Trade, as well as event space and dining areas. 6 One World Observatory will be a major Lower Manhattan tourist attraction when it opens in It is expected to compete with New York s other top observation decks at 30 Rockefeller Plaza and the Empire State Building, which currently draw about 4 million and 2.5 million annual visitors, respectively. 7 Development and Inventory Today Lower Manhattan has 4,092 rooms in 18 hotels. The Lower Manhattan hotel development pipeline remained active this quarter, as construction continued on 7 hotels and 3 new projects have taken a step forward in the preconstruction phase. 6 Press Release, Port Authority of New York and New Jersey, March 20, Gray, Billy. Empire State Building, 30 Rock Battle for Big Observatory Bucks; 1 WTC May Top Both. The Commercial Observer. March 20, Seven projects including 1,345 hotel rooms are under construction. One of these, a 32- room Hampton Inn at 32 Pearl Street, is slated to be complete in An additional 1,265 hotel rooms are scheduled to be complete in 2014, including the world s tallest Holiday Inn at 99 Washington Street and the 200-room Fairfield Inn by Marriott at 161 Front Street. Construction began this quarter on the conversion of 170 Broadway to a 243-room Residence Inn by Marriott. These additions will bring the inventory to 5,437 rooms in 25 hotels in Beyond that, another six hotels are planned for construction. Thompson Hotels began interior demolition on 5 Beekman Street this quarter in preparation for its planned conversion to a 297-room boutique hotel. Three additional hotels entered the planning stages this quarter. McSam Hotel Group s 6 Water Street is planned to be a 29-story, 249-room Hilton. Jiten Hotel Management s 200-room Hilton at 98 Greenwich Street is scheduled for completion in 2014, and a 311-room Courtyard by Marriott is planned at 133 Greenwich Street. These projects join a Four Seasons at 99 Church Street and a boutique hotel at the Battery Maritime Building also in the pipeline. HIGHLIGHTS OF HOTEL DEVELOPMENT Source: Alliance for Downtown New York Hotel Location Floors Rooms Year Open Owner/Developer Status Hampton Inn 32 Pearl Street Hersha Hospitality Under Construction Holiday Inn 99 Washington Street McSam Hotel Group Under Construction TBD John Street Duc Construction 2014 Corp Under Construction Aloft Hotel 49 Ann Street West Broadway 2014 Realty Corp Under Construction Fairfield Marriott 161 Front Street Lam Group Under Construction Marriott Residence Inn 170 Broadway Highgate, Crown, 2014 Carlyle Group Under Construction Four Points by Sheraton 217 Pearl Street Lam Group Under Construction Jiten Hotel Hilton 98 Greenwich Street Management Planned Hilton 6 Water Street McSam Hotel Group Planned TBD Battery Maritime Building 67 TBD The Dermot Group Planned 20 (of Four Seasons 99 Church Street 60) 190 TBD Silverstein Properties Planned Thompson Hotels 5 Beekman Street TBD GB Lodging Group Planned Courtyard by Marriott 133 Greenwich Street TBD Hidrock Realty Planned 7

7 Occupancy and Room Rates 8 Lower Manhattan s hotel market trended upwards during the first quarter, with performance statistics peaking in March as the market headed towards its traditionally strong spring and summer seasons. The average daily room rate (ADR) peaked in March of this quarter, with a strong $ average and a 6% increase year-over-year. The Lower Manhattan average nearly matched the Manhattan-wide average of $257.53, which increased 9% year-over-year. 8 Source of ADR and occupancy rates: Smith Travel Research, Inc. Republication or other re-use of this data without the express written permission of STR is strictly prohibited. These geographies are custom sets for the Alliance for Downtown New York. Lower Manhattan continued to do strong weekday business this quarter, with an average weekday ADR of $271.71, 25% higher than its weekend ADR. Occupancy rates also increased throughout the quarter, ending in March with an average of 84.3%, up 4.9% yearover-year. This gain in occupancy was the highest among the Manhattan submarkets, including Tribeca/SoHo, Times Square, Chelsea, and Midtown East. Manhattan s occupancy rate was relatively stable over last year and ended the quarter at 86%, just above Lower Manhattan s average. AVERAGE DAILY ROOM RATE (ADR), MARCH 2013 $325 AVERAGE OCCUPANCY RATE, MARCH % $275 90% $225 80% 70% $175 60% $125 50% $75 40% Source of ADR and occupancy rates: Smith Travel Research, Inc. Republication or other re-use of this data without the express written permission of STR is strictly prohibited. These geographies are custom sets for the Alliance for Downtown New York. 8

8 RETAIL Development Century 21 completed its retail expansion and redesign, adding 60,000 square feet over three floors for a new total footprint of 225,000 square feet in Lower Manhattan. As part of the expansion, Century 21 opened a Coffee Been & Tea Leaf café as well as a M.A.C. Cosmetics store on the ground floor. Century 21 s expansion is the first of several exciting development projects to open in the district that will enhance Lower Manhattan s stature as a retail destination. Projects scheduled to open in 2013 and 2014 include an upgrade and expansion of 200,000 square feet of retail at Brookfield Place (formerly the World Financial Center), as well as 65,000 square feet of commercial space being developed at the Fulton Center. In 2015, Westfield World Trade will open 350,000 square feet of new retail, dining and entertainment space. The Howard Hughes Corporation is also scheduled to complete its redevelopment of Pier 17 that year, with 365,000 square feet of retail, dining and entertainment space. Retail Market Retail momentum continued post-sandy as 13 new bars and restaurants and 3 new stores and storefront services opened in the first quarter. Several more are expected to open soon. Lower Manhattan s shopping opportunities continued to diversify this quarter with the addition of a 17,000-square-foot City Sports at 50 Broadway. This is City Sports third retail location in New York. The Dead Rabbit, Lower Manhattan s newest cocktail bar, opened at 30 Water Street, an 18th Century building, just around the corner from Fraunces Tavern. The bar pays homage to Manhattan s Irish roots, with a namesake of a 19th century gang and period décor, and serves more than 70 different types of drinks. The coming months will bring even more new retailers to the Lower Manhattan market. Retailers and restaurants coming soon include: Urban Outfitters will open a 21,000-square-foot location at 180 Broadway, at the base of the Pace University dormitory; El Vez, a Mexican restaurant by Philadelphia restaurateur, Stephen Starr, will open adjacent to Blue Smoke in Battery Park City; Bill s Bar and Burger will open its third New York City location at the base of the New York Marriott Downtown; and Roti Mediterranean Grill, a Chicago-based, healthconscious Mediterranean food eatery, will open its first New York location at 100 Maiden Lane. Several Manhattan restaurants and quick-service eateries opened their first location in Lower Manhattan including: Magic Mix Juicery, a quick-service restaurant serving healthful smoothies, juices and vegan fare, opened at 102 Fulton Street; Terri, a vegetarian quick service restaurant, with its first location in Chelsea, opened at 100 Maiden Lane; and Mooncake Foods opened its 4th Manhattan location at 111 John Street, serving casual, Asian comfort food to the lunch and dinner crowd. THE DEAD RABBIT, 30 WATER STREET 9

9 LOWER MANHATTAN REAL ESTATE MARKET OVERVIEW REBUILDING AND MAJOR CAPITAL IMPROVEMENT PROGRESS World Trade Center WORLD TRADE CENTER Lower Manhattan is rebuilding for the future with $30 billion of public and private investment. One World Trade Center is now in the final stages of exterior completion. The final roof steel, parapet, and the spire are being installed, and observation floors 100, 101 and 102 are being built out. Facade installation is active on floors 101, 102, and 103. The Port Authority of New York & New Jersey announced that Legends Hospitality will develop and operate the 120,000-square-foot observation facility which will include food and dining operations, a Source: Foster + Partners courtesy of Silverstein Properties Incorporated viewing deck, as well as a video area on the construction and history of the World Trade Center. Construction is scheduled for completion in late 2013/early Four World Trade Center also topped out in 2012 at a final height of 72 stories, and curtain wall installation will be finished in May. The building is scheduled for completion FULTON CENTER in October The 9/11 Memorial Museum resumed construction in the fall and is expected to be open in The museum will have 110,000 square feet of exhibition space. Meanwhile, the 9/11 Memorial has welcomed more than 7 million visitors since it opened in September The World Trade Center Transportation Hub, designed by Santiago Calatrava, has reached street level. Steel construction continues on the hub s above-ground oculus. The Transportation Hub will house the PATH station and connect underground to the Fulton Center on the east, Brookfield Place on the west, and to retail in and around the hub. Fulton Center The MTA s Fulton Center is nearing completion with significant progress visible above and below ground. Glass installation on the main building and the construction of a new entrance at 150 William Street is anticipated to be 10

10 complete in April The exterior and interior restoration of the 19th Century Corbin Building is now complete and street-level entrances and escalators are scheduled to open soon. The entire project is on track for completion in June Pier 17 Redevelopment City Council approved the Howard Hughes Corporation s redevelopment plan for Pier 17 this quarter, with construction now scheduled to begin October 1st. As part of the agreement, tenants in Pier 17 can occupy their space until September 9th, and Howard Hughes will provide a new food market. The City Council and NYCEDC also secured an agreement to provide another 10,000-square-foot food market in any future development of the Tin Building. Both new markets are required to be open 7 days a week and highlight regional purveyors. Fulton Street Reconstruction The reconstruction of Fulton Street, which began in 2009, is nearing completion. The project replaced all underground utilities, including water mains, sewers, electric, and gas. The effort also included construction of new streets, curbs, and sidewalks, as well as installation of new signage and lighting. The last section, from Pearl to Water Street, will be reconstructed through Broadway Reconstruction The Department of Design and Construction (DDC) has launched a capital reconstruction of Broadway, from Ann Street to Rector Street. This project will replace all underground infrastructure, including water mains, sewers, electric, gas, and other utilities, as well as construct new streets and curbs. Work is expected to begin this summer and the full project is scheduled to be finished in NYC Bike Share The first phase of implementing New York City s bike sharing system, Citibike, is underway and all Lower Manhattan bike stations are scheduled to be in place by the end of April. Lower Manhattan will be home to 25 stations south of Chambers Street, of 330 total stations citywide. They will be located throughout Lower Manhattan and the stations will hold between 32 and 59 bikes, with the largest station located at Staten Island Ferry Terminal. Visit 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 Back to Business: The State of Lower Manhattan Four Months After Hurricane Sandy, a report on the impact of Hurricane Sandy on Lower Manhattan and the district s swift and remarkable progress toward recovery. If you have questions or require additional information, please contact RESEARCH@DOWNTOWNNY.COM. 11