Office. Manhattan leasing activity rose sharply following the presidential election, while other indicators remained flat.

Transcription

1 Office New York Q Quarterly Office Outlook Manhattan leasing activity rose sharply following the presidential election, while other indicators remained flat In a reversal from last year, Downtown led large-block activity, accounting for five of the top 10 leases year to date, including the relocation of Spotify to 378,000 square feet at 4 World Trade Center. With new product and returning blocks on the horizon, Midtown Class asking rents have risen just 1.6 percent year over year to $82.38 per square foot the slowest rate of growth since the financial crisis. Near-term economic uncertainties slowed investment sales volume in the first quarter, though high-profile properties and portfolios both under contract and on the market should continue to bolster investor sentiment in the quarters to come.

2 2 New York overview Manhattan leasing activity rose following the presidential election and through the first months of the year. New and returning blocks of space offset the gains, resulting in little change in vacancy. The overall Manhattan vacancy rate dropped to 10.3 percent from 10.4 percent in the first quarter. In a reversal from last year, Downtown led activity with five of the top 10 leases of the quarter, including the relocation of Spotify to 378,000 square feet at 4 World Trade Center. With availability near equilibrium and more space on the horizon, Manhattan asking rents have turned flat rising just 1.9 percent year over year. The New York City unemployment rate, at 4.5 percent, is at an all-time low. t the close of the first quarter, annual New York City employment growth remained above the national average (1.9 percent vs. 1.6 percent). While the city has added jobs at a faster rate than the United States since the recession, the margin in the rate of growth has narrowed as full employment nears. Despite gains in employment, Manhattan occupancy fell 0.3 percent year over year as inventory expanded and tenants continued to drive square-feet-per-employee ratios lower. more diverse mix of tenants led Manhattan leasing in the first quarter of the year. In the largest transaction year to date, Fox/News Corp announced it would stay at 1211 venue of the mericas for the near future in a renewal/expansion totaling 1,224,000 square feet. Tommy Hilfiger signed the largest new lease in Midtown at 285 Madison venue for 196,792 square feet. ut it was Downtown that led large-block activity, accounting for five of the top 10 leases year to date. Newer, high-quality space west of roadway and good-value space to the east has attracted and retained tenants. In addition to Spotify s relocation to 4 World Trade Center, the Royal ank of Canada (RC) renewed for 402,000 square feet at 200 Vesey Street, the New York State ttorney General leased 345,000 square feet at 28 Liberty Street, on Insurance will move to 203,000 square feet at One Liberty Plaza and Tullett Prebon leased 128,000 square feet at 200 Vesey Street. This summer, 3 World Trade Center will join the inventory, adding more than 1.8 million square feet of available space to the Downtown market, which will likely increase both the vacancy rate and asking rent for Downtown.

3 3 Recent tightening in venture capital has corresponded with lighter activity among startup technology tenants. In Midtown South, non-tmi firms took the top leases. Capital One signed a sublease at 11 West 19th Street for 78,000 square feet. Insurance company rgo Group took 45,495 square feet at the newly renovated 413 West 14th Street. umble and bumble., a hair care company and division of Estée Lauder, signed for 41,210 square feet at 412 West 14th Street. Midtown South remains one of the strongest markets in the country, but new inventory boosted vacancy from 7.5 percent to 8.4 percent in the first quarter, and more new inventory is slated to come online over the next two years. While large migrations from Manhattan to rooklyn have yet to occur, this movement could become a factor going forward. In the first quarter, three of the four largest leases signed in rooklyn came out of Manhattan. Education technology firm 2U signed a 79,500-squarefoot lease at 55 Prospect Street in Dumbo, Lafayette 148 took 68,000 square feet at rooklyn Navy Yard s uilding 77 and jarke Ingels Group (IG) signed a 50,000-squarefoot lease at 45 Main Street, also in Dumbo. rooklyn currently has 4 million square feet of office product under construction or renovation, only 37 percent of which is preleased. Despite the improvement in overall activity and slight dip in vacancy, concessions free rent and tenant work letters are near historical highs as owners of current inventory compete with newer construction. lso, in this competitive market, owners are continuing to upgrade older buildings, investing billions of dollars in the aging Manhattan office market this cycle. pproximately 11.7 million square feet of new office space will be delivered in Manhattan through 2020, with only 50 percent currently committed. While demand has been strong for new construction, older blocks will become available as tenants relocate. The city s allimportant financial services industry which has not fully recovered from the last recession has recently shown a minor uptick in hiring with the promise of higher interest rates and less regulation. However, with the city nearing full employment, new employees to fill space would have to come from outside the region. Tristan shby Vice President, Research Director

4 4 Capital Markets overview Macroeconomic and policymaking uncertainties following the election gave temporary pause to some long-term investment decisions, resulting in reduced sales activity to begin the year. In total, $3.7 billion of sales were recorded in Manhattan in the first quarter, the second-lowest quarterly amount in the past six years. Office remained the most active segment, accounting for five of the top six sales and 60.3 percent of total dollar volume. n additional $4 billion across all property segments was under contract by quarter-end, while several additional high-profile properties and portfolios were actively being marketed. This is a strong indication that sales activity is primed for a rebound in the coming quarters. The strengthening dollar did not noticeably discourage overseas investment in New York City real estate, with foreign institutions participating in the top three trades of the first quarter. Each of these sales involved Class office product, including the 27.6 percent partial-interest acquisition of the One Vanderbilt development site by the National Pension Service of Korea for approximately $500 million. Office has consistently been the most attractive Manhattan sector for overseas buyers, leading all other asset categories in nine of the last 10 quarters. Since 2015, 58.2 percent of all Manhattan Class office sales were attributable to foreign entities, attracted by the segment s consistent long-term performance backstopped by steady employment growth. Recapitalizations, or partial-interest acquisitions, are expected to remain prevalent in the coming months, adding much-needed liquidity to a market notably lacking in full-building offerings. Partial-interest acquisitions accounted for 43.6 percent of total sales volume in the office sector from 2016 through the first quarter of 2017, and 71.4 percent of those transactions were attributable to overseas investors. s expected, the Fed increased the federal funds rate by 25 basis points in March to a target rate of 75 to 100 basis points. Two additional 25-basis-point escalations are anticipated by year end. Inflation accelerated to the desired two-percent annualized rate while the economy achieved near-full employment strong signals of economic stabilization befitting the Fed s strategy. While this may make borrowing more expensive, particularly for maturing pre-recessionary CMS debt, rising interest rates are not expected to have a material effect on Manhattan cap rates. Manhattan investment yields, which have demonstrated resiliency in the office and the multifamily sectors throughout this cycle, are expected to be more heavily influenced by market fundamentals than by modest interest rate increases, at least in the near term. Further clarity concerning potential economic stimulus programs and other pro-business policies could spur transaction velocity in Manhattan, particularly given the historic quantity of uncommitted capital that remained on the sidelines during the recent period of uncertainty. Some prospective economic policy initiatives, namely tax reductions and risk retention reform, could prove to be an advantage to property markets across the United States. This, coupled with the increasing investment volume that will result from the completed sales of marquee properties both currently under contract and on the market, should continue to bolster Manhattan investor sentiment. nthony Ledesma Managing Director Glenn Tolchin Managing Director Yoav Oelsner Managing Director

5 5 New York property clock Midtown South Downtown Midtown Peaking market Falling market Rising market Stabilizing market Clock description This diagram illustrates our estimate of the location of each prime office market within its individual rental cycle at the end of the quarter. Markets can move around the clock at different speeds and directions. The diagram is a convenient method of comparing the relative position of markets in their rental cycle. The position is not necessarily representative of investment or development market prospects. The position refers to prime face rental values. Q positions Midtown: Demand for new construction continues to drive the market as tenants seek more efficient space. In Midtown, activity at Hudson Yards is expected to stay strong throughout the year as a number of transactions are scheduled to close. ut not all tenants have opted to move during this real estate cycle. Tenants that have made recent investments in their space may choose to remain in place at favorable terms. Midtown South: Despite rising vacancy, a major correction does not seem likely without a significant decline in the tech industry and a subsequent increase in sublease availability. Developers are taking advantage of the low supply and high demand with the addition of new product. ut vacancy will likely remain low because of the relatively small size of these new developments. Downtown: The pace of new entrants migrants from both Midtown and Midtown South will serve as a good barometer for where the Lower Manhattan market is headed, especially as these tenants tend to represent more diverse industries, including New York s growing creative, or TMI, sector.

6 6 New York market definitions The Manhattan market is comprised of three major submarkets: Midtown, Midtown South and Downtown. These markets are further divided into five, five and four submarkets, respectively. Midtown submarkets: Columbus Circle, Grand Central, Penn Plaza/Garment District, Plaza District, Times Square Midtown South submarkets: Chelsea, Gramercy Park, Greenwich Village, Hudson Square, SoHo Downtown submarkets: Financial District, TrieCa/City Hall, World Trade Center, Water Street Corridor

7 7 New York space statistics Current inventory (SF) Under construction (SF) YTD completion (SF) Overall net absorption (SF) YTD overall net absorption (SF) YTD overall net absorption (% of inventory) Overall vacancy Overall asking rent (gross $ PSF) Midtown Columbus Circle 23,847, , , % 8.4% $69.45 Grand Central 71,883,891 2,595, ,484-64, % 11.3% $68.09 Penn Plaza/Garment District 47,583,157 6,372, , , % 9.8% $65.50 Plaza District 101,920, , , , % 11.2% $88.24 Times Square 40,223, , , % 10.7% $73.09 Midtown market totals 285,459,442 9,637, , , % 10.7% $75.78 Midtown South Chelsea 23,121, , , , % 9.6% $77.00 Gramercy Park 21,572, ,928 34, % 5.9% $74.14 Greenwich Village 5,684, ,557-81, % 4.1% $83.41 Hudson Square 10,646, ,833-32, % 11.8% $76.77 SoHo 4,735, , ,833 65, % 11.7% $78.31 Midtown South market totals 65,761, , , , % 8.4% $76.65 Downtown Financial District 37,832, , , % 11.4% $52.46 TrieCa/City Hall 17,839, , , % 8.5% $51.95 Water Street Corridor 23,000, ,686-57, % 11.6% $54.04 World Trade Center 21,264,366 2,861, , , % 9.0% $72.13 Downtown market totals 99,936,996 2,861, , , % 10.4% $56.45 Market totals 451,157,838 13,390, , , % 10.3% $71.54

8 8 Midtown

9 9 Midtown boundaries Columbus Circle South of West 66th Street, west of Central Park West and venue of the mericas, north of West 50th Street, east of the Hudson River. Grand Central South of East 47th Street, north of East 30th Street, east of Fifth venue. Plaza District South of East 65th Street, west of the East River, north of 47th Street, east of venue of the mericas. Times Square South of West 50th Street, west of venue of the mericas, north of West 40th Street, east of the Hudson River. Penn Plaza / Garment District South of 40th Street, west of Fifth venue, north of 30th Street, east of the Hudson River.

10 10 Quarter in review The Class vacancy rate in Midtown Manhattan, the nation s top office market, dropped to 11.5 percent from 11.8 percent in the first quarter as a result of new leasing activity from a variety of sectors. Following the presidential election in November, activity has been brisk. Yet with new product and returning blocks on the horizon, Midtown Class asking rents have risen just 1.6 percent year over year to $82.38 per square foot the slowest rate of growth since the financial crisis. Tommy Hilfiger signed the largest new lease in Midtown at 285 Madison venue for 196,792 square feet. The fashion and apparel company will be moving to Midtown from 601 West 26th Street in Chelsea. Endurance Reinsurance leased 95,554 square feet at 1221 venue of the mericas, RSM US leased approximately 95,000 square feet at 4 Times Square and WeWork continued its growth strategy with a lease of 64,390 square feet at 130 West 42nd Street. In the largest transaction year to date, Fox/News Corp announced it would stay at 1211 venue of the mericas for the near future in a renewal/expansion totaling 1,224,000 square feet. The Midtown Trophy vacancy rate rose to 8.8 percent from 8.0 percent year over year. In March, loomberg reported that more hedge funds closed in 2016 than in any year since the financial crisis as investors withdrew assets following lackluster performance. lthough weaker demand from the hedge fund sector has likely had an impact on pricing and activity at the top of the market, much of the increase in Midtown Trophy vacancy is from blocks vacated by large banks and law firms. This summer, the Trophy vacancy rate could further increase as space at 299 Park venue, formerly occupied by US, will add inventory back to the market. rookfield Office Properties, one of New York s largest owners, announced the purchase of a long-term ground lease at 1100 venue of the mericas. With anchor tenant HO leaving for 30 Hudson Yards in 2018, many expect the 350,000-square-foot property will be redeveloped into a Trophy-quality asset more suitable for its prime location at the north end of ryant Park. In recent years, older properties, including 380 Madison venue (rebranded as 390 Madison venue) and 425 Park venue, have undergone massive renovations to take advantage of their premier locations. Submarket boundaries map Key market indicators Q Stock Overall net absorption Midtown 285,459,442 s.f. -220,096 s.f. Overall vacancy rate 10.7% verage asking rent Under construction Market outlook $75.78 p.s.f. 9,637,854 s.f. Demand for new construction continues to drive the market as tenants seek more efficient space. In Midtown, activity at Hudson Yards is expected to stay strong throughout the year as a number of transactions are scheduled to close. ut not all tenants have opted to move during this real estate cycle. Tenants that have made recent investments in their space may choose to remain in place at favorable terms.

11 s.f. in millions 11 Midtown verage rental rates (Class vs. Class ) Overall new deliveries / overall net absorption / overall vacancy rates $ $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 Class rental rate Class rental rate Q New deliveries YTD Vacancy Class YTD Net absorption YTD Vacancy Class YTD Q % 12% 8% 4% 0% Significant lease transactions Fox/News Corp 1211 venue of the mericas Kramer Levin Naftalis & Frankel 1177 venue of the mericas Tommy Hilfiger 285 Madison venue Class 1,224,000 s.f. Class 265,000 s.f. Class 196,792 s.f. Large availabilities 390 Madison venue Class 640,117 s.f venue of the mericas Class 538,688 s.f. 75 Rockefeller Plaza Class 446,087 s.f. Endurance Reinsurance 1221 venue of the mericas Class 95,554 s.f. Five Manhattan West (450 West 33rd Street) Class 306,004 s.f. W.W. Norton & Company 500 Fifth venue Class 95,000 s.f. Recent sales transactions 1250 roadway 645,977 s.f. Class $875 p.s.f. 441 Ninth venue 350,000 s.f. Class $943 p.s.f.

12 12 Midtown South

13 13 Midtown South boundaries Chelsea South of 30th Street, west of Fifth venue, north of 14th Street and east of the Hudson River. Gramercy Park South of 30th Street, west of the East River, north of 14th Street and east of Fifth venue. Hudson Square South of 14th Street, west of venue of the mericas, north of Canal Street and east of the Hudson River. SoHo South of Houston Street, west of the East River, north of Canal Street, and east of venue of the mericas. Greenwich Village North of Houston Street, south of 14th Street, west of the East River and east of venue of the mericas.

14 14 Midtown South Quarter in review Submarket boundaries map The majority of first-quarter leasing in Midtown South came from more traditional sectors despite the submarket s status as New York s technology and creative hub. New construction boosted both vacancy and asking rents. There were no leases signed for more than 100,000 square feet in the first quarter, but with the rise of demand for Midtown South s boutique office inventory, at least five were in excess of $ per square foot. The recent tightening in venture capital has corresponded with slower leasing activity among smaller technology tenants. TMI accounted for 30 percent of leasing activity to date in Midtown South versus 69 percent for the same period last year. The FIRE sector only accounted for 22 percent of transactions in the first quarter of 2016, but rose to 29 percent for the same period this year. Non-TMI firms took the top leases. Capital One signed a sublease at 11 West 19th Street for 78,000 square feet. Insurance company rgo Group took 45,495 square feet at the newly renovated 413 West 14th Street. umble and bumble., a hair care company and division of Estée Lauder, signed for 41,210 square feet at 412 West 14th Street. Overall vacancy increased 90 basis points quarter over quarter to 8.4 percent, the result of new product coming online in the next 12 months. The pipeline includes 413 West 14th Street, 412 West 15th Street, 61 Ninth venue and 300 Lafayette Street, along with large sublease availabilities at 601 West 26th Street and 75 Varick Street. combination of strong demand and new or substantially renovated inventory has driven Midtown South rents to an all-time high. Year over year, the overall asking rents for Midtown South have increased 11.7 percent, from $68.61 per square foot to $76.65 per square foot. Market outlook Key market indicators Q Stock 65,761,400 s.f. Overall net absorption -248,249 s.f. Overall vacancy rate 8.4% verage asking rent $76.65 p.s.f. Under construction 890,977 s.f. Despite rising vacancy, a major correction does not seem likely without a significant decline in the tech industry and a subsequent increase in sublease availability. Developers are taking advantage of the low supply and high demand with the addition of new product. Several new developments will be delivered in the next 12 months and are anticipated to be priced at the top of the market. ut vacancy will likely remain low because of the relatively small size of these new developments.

15 s.f. in millions 15 Midtown South verage rental rates (Class vs. Class ) Overall new deliveries / overall net absorption / overall vacancy rates $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Class rental rate Class rental rate New deliveries YTD Vacancy Class YTD Net absorption YTD Vacancy Class YTD 12% 10% 8% 6% 4% 2% $ Q Q % Significant lease transactions MC Cosmetics 233 Spring Street (One Soho Square West) Capital One 11 West 19th Street rgo Group 413 West 14th Street umble and bumble. 412 West 14th Street Class 86,524 s.f. Class 78,000 s.f. Class 45,495 s.f. Class 41,210 s.f. Large availabilities 601 West 26th Street Class 254,516 s.f. 512 West 22nd Street Class 164,300 s.f. 61 Ninth venue Class 141,736 s.f. 412 West 15th Street Class 129,666 s.f. Recent sales transactions 817 roadway 114,000 s.f. Class $956 p.s.f.

16 16 Downtown

17 17 Downtown boundaries TrieCa/City Hall South of Canal Street, west of the East River and Pearl Street, north of nn Street and east of West Street. World Trade Center South of Vesey Street, but inclusive of 7 World Trade Center, west of Trinity Place, north of lbany Street and east of the Hudson River. Financial District South of nn Street, west of Pearl Street, east of the Hudson River, south of lbany Street and east of Trinity Street. Water Street Corridor South of the rooklyn ridge, west of the East River and east of Pearl Street.

18 18 Quarter in review In the first three months of 2017, Lower Manhattan recorded its strongest quarter of leasing activity in over two years. Roughly 2.4 million square feet were signed in the submarket, representing 31 percent of total firstquarter activity in Manhattan. In fact, five of the quarter s top 10 Manhattan leases were signed in Downtown. The largest Downtown lease was a renewal by the Royal ank of Canada at 200 Vesey Street for 402,000 square feet. Spotify signed the largest new lease, committing to 378,000 square feet at 4 World Trade Center in a big-ticket relocation from Midtown South. The New York State ttorney General signed a 345,000-square-foot lease at 28 Liberty Street, relocating from 120 roadway and on Insurance signed a 203,000-square-foot lease at One Liberty Plaza. ll of these top leases took place in Class buildings, bringing Downtown s Class vacancy rate below 10 percent for the first time since the second quarter of The current Class vacancy rate of 9.7 percent represents a 210-basis-point decline from year-end The rate will likely increase in the near future, as 3 World Trade Center is scheduled to deliver in May 2018 with 1.8 million square feet of vacancy. Class rents across Downtown declined 3.0 percent quarter over quarter to $60.79 per square foot. This was mainly the result of strong Class leasing activity, which removed more expensive blocks from available inventory. Class rents rose 2.0 percent on the quarter to $50.49 per square foot breaking $50.00 per square foot for the first time in the Downtown market. Overall asking rents dipped 2.1 percent to $56.45 per square foot, again the result of increased Class leasing. Market outlook Downtown s recent strong performance should continue, as a large pipeline of leases is expected to close in the coming quarters. Upcoming new and returning blocks could pose a threat to the market s balance, particularly if leasing activity is confined to existing Downtown tenants. The pace of new entrants migrants from Midtown and Midtown South will serve as a good barometer for where the Lower Manhattan market is headed, especially as these tenants tend to represent more diverse industries, including New York s growing creative, or TMI, sector. Downtown Submarket boundaries map Key market indicators Q Stock 99,936,996 s.f. Overall net absorption 737,440 s.f. Overall vacancy rate 10.4% verage asking rent $56.45 p.s.f. Under construction 2,861,402 s.f.

19 s.f. in millions 19 Downtown verage rental rates (Class vs. Class ) Overall new deliveries / overall net absorption / overall vacancy rates $65.00 $60.00 $55.00 $50.00 $45.00 $40.00 $35.00 Class rental rate Class rental rate New deliveries YTD Vacancy Class YTD Net absorption YTD Vacancy Class YTD 18% 16% 14% 12% 10% 8% $30.00 $ Q Q % 4% Significant lease transactions Royal ank of Canada (RC) 200 Vesey Street Class 402,000 s.f. Large availabilities 180 Maiden Lane Class 621,771 s.f. Spotify 4 World Trade Center Class 378,000 s.f. One World Trade Center Class 602,144 s.f. New York State ttorney General 28 Liberty Street Class 345,000 s.f. 375 Pearl Street Class 543,312 s.f. on Insurance One Liberty Plaza Class 203,000 s.f. One Liberty Plaza Class 219,484 s.f. Recent sales transactions 40 Rector Street 42,052 s.f. Class $983 p.s.f.

20 20 ppendix Statistics Contiguous space New construction Select sales Glossary

21 Midtown buildings with large contiguous blocks of space 39 locks: 7,746,091 s.f. 390 Madison venue 640,117 s.f venue of the mericas 538,688 s.f. 75 Rockefeller Plaza 446,087 s.f. 5 Manhattan West - 306,004 s.f. 9 West 57th Street 278,200 s.f. Five Manhattan West 265,338 s.f. 237 Park venue 230,566 s.f. 4 Times Square 225,677 s.f. 777 Third venue 221,850 s.f. 399 Park venue 218,351 s.f. 575 Fifth venue 212,136 s.f roadway 212,122 s.f. 485 Lexington venue 210,373 s.f. 65 East 55th Street 191,628 s.f. 601 Lexington venue 188,848 s.f. 135 West 50th Street 183,948 s.f. 237 Park venue 183,415 s.f roadway 179,467 s.f. 605 Third venue 175,653 s.f. 335 Madison venue 172,602 s.f. 31 West 52nd Street 169,916 s.f venue of the mericas 169,226 s.f. 110 East 60th Street 156,917 s.f. 620 Eighth venue 156,766 s.f. 787 Eleventh venue 155,191 s.f. 405 Lexington venue 145,813 s.f venue of the mericas 144,540 s.f. 520 Madison venue 140,466 s.f. 733 Third venue 131,554 s.f. 717 Fifth venue 125,616 s.f. 4 Times Square 123,283 s.f roadway 112,541 s.f. 11 Times Square 108,923 s.f. 135 West 50th Street 106,250 s.f roadway 105,506 s.f. 132 W 31st Street 103,996 s.f West 33rd Street 103,343 s.f. 530 Fifth venue 103,068 s.f roadway 102,106 s.f. Contiguous blocks greater than 100,000 square feet

22 Midtown South buildings with large contiguous blocks of space 7 locks: 1,024,709 s.f. 601 West 26th Street 254,516 s.f. 512 West 22nd Street 164,300 s.f. 61 Ninth venue 141,736 s.f. 233 Spring Street 132,191 s.f. 412 West 15th Street 129,666 s.f. 315 Park venue South 102,300 s.f Eleventh venue 100,000 s.f. Contiguous blocks greater than 100,000 square feet

23 Downtown buildings with large contiguous blocks of space 19 locks: 4,129,940 s.f. 180 Maiden Lane 621,771 s.f. One World Trade Center 602,144 s.f. 375 Pearl Street 543,312 s.f. 55 Water Street 270,944 s.f. One Liberty Plaza 219,484 s.f. 195 roadway 205,219 s.f. 32 Old Slip 193,118 s.f. 28 Liberty Street 170,583 s.f. 32 Old Slip 153,500 s.f. 300 Vesey Street 150,580 s.f. 17 attery Place North 121,189 s.f. 60 Hudson Street 120,000 s.f. One World Trade Center 119,184 s.f. One State Street 118,489 s.f. 32 Old Slip 105,601 s.f. 28 Liberty Street 104,827 s.f. One World Trade Center 104,420 s.f. 28 Liberty Street 103,228 s.f. One New York Plaza 102,347 s.f. Contiguous blocks greater than 100,000 square feet

24 Manhattan under construction Market/building Class Developer/owner R Pre-leased Major tenants signed Delivery date Midtown 30 Hudson Yards Trophy Related Companies 2,600,000 s.f % Time Warner; KKR; Wells Fargo; Related; DN Manhattan West Trophy rookfield Properties 2,216,609 s.f. 40.7% Skadden; NHL 2019 One Vanderbilt Trophy SL Green Realty 1,732,955 s.f. 11.5% TD ank Hudson Yards Trophy Related Companies/Mitsui Fudosan 1,556,136 s.f. 43.8% oies, Schiller; Marketxess; Milbank Madison venue Trophy Clarion Partners 862,154 s.f. 24.0% Hogan Lovells Park venue Trophy L&L Holding Company/GreenOak Real Estate 670,000 s.f. 29.9% Citadel 2018 Midtown South 512 West 22nd Street Vornado Realty Trust/lbanese Organization 174,222 s.f. 0.0% Ninth venue Vornado Realty Trust/urora Capital ssociates 167,170 s.f. 12.8% Starbucks (retail) West 15th Street Rockpoint Group/Highgate Holdings/Meilman Family Real Estate 144,273 s.f. 0.0% West 26th Street Savanna 128,367 s.f. 47.7% venues: The World School West 14th Street Rockpoint Group/Highgate Holdings/Meilman Family Real Estate 113,004 s.f. 0.0% Orchard Street Partners Group US, Inc. 82,941 s.f. 0.0% Lafayette Street Related Companies 81,000 s.f. 0.0% 2018 Downtown 3 World Trade Center Trophy Silverstein Properties 2,861,402 s.f. 37.0% GroupM 2018 CD totals 13,390,233 s.f. 44.3%

25 Manhattan select sales Downtown 60 Wall Street (95% interest) Midtown 1100 venue of the mericas (leasehold interest) Class Class R 1,617,206 s.f. R 348,786 s.f. uyer GIC uyer rookfield Properties/The Swig Company Seller Paramount Group/Morgan Stanley Seller 1100 venue of the mericas ssociates Price per s.f. $677 Date sold January 2017 Price per s.f. $1,061 Date sold March 2017 Midtown 1619 roadway Midtown 551 Madison venue Class Class R 175,562 s.f. R 150,000 s.f. uyer Seller rookfield Properties Conway Capital/Schottenstein Realty/ & Capital/Fox-Wizel/Halman ldubi/rickman ssociates/llied Partners/Merchants Hospitality Price per s.f. $1,253 Date sold March 2017 uyer Lexin Capital Seller arings Price per s.f. $1,033 Date sold January 2017

26 Glossary Common real estate terms ctive requirements Tenants actively seeking space in the market. verage asking rent Quoted at a gross price exclusive of tenant electricity based on a weighted average of available space. vailable space Existing space that is being actively marketed for immediate or future occupancy, including both direct and sublease space. uildout The cost of configuring and finishing new space in accordance with a tenant s specifications. uild to suit method of leasing property whereby the landlord builds a new building in accordance with a tenant s specifications. Capital improvement ny major physical development or redevelopment to a property that extends the life of the property. Examples include upgrading the elevators, replacement of the roof and renovations of the lobby. Class uilding classification system broken down by Trophy, Class, and C buildings. Location, building amenities, mechanical/hvc systems, age of building and tenant roster are some of the components that determine an office building's class. Concessions Cash expended by the landlord in the form of rent abatement, build-out allowance or other payments to induce the tenant to sign a lease. The level of concessions fluctuates with supply and demand conditions in the market and is up for negotiation in a similar fashion to rental rates. Contiguous space djoining office space. Delivered buildings uildings that have completed construction and are ready for tenant buildout. May or may not yet have a Certificate of Occupancy. Direct rent Rents quoted directly from the landlord on vacant space. Effective rent The rental rate actually achieved by the landlord or tenant after deducting the value of concessions from the base rental rate paid; usually expressed as an average rate over the term of the lease. Face rental rate The asking or nominal rental rate published by the landlord. Gross leases The quoted rents include tax and operating costs (property taxes, insurance and maintenance expenses). Hard cost The cost of actually constructing property improvements. Indirect (soft) costs Development costs other than material and labor costs, which are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering and financing costs. Lease legally binding agreement whereby the owner of real property (i.e., landlord) gives the right of possession to another (i.e., tenant) for a specified period of time (i.e., term) and for a specified consideration (i.e., rent). Leased space Existing space under contract, regardless of if it is occupied; also includes subleased space. NNN leases The quoted rents do not include tax and operating costs (property taxes, insurance and maintenance expenses). Net absorption Net change in occupied space between two dates measured as square footage. (i.e., a measure of the total square feet leased over a period of time taking into consideration office space vacated in the same area during the same period). Occupied space Total supply minus available space. Operating expense The actual costs associated with operating a property, including maintenance, repairs, management, utilities, taxes and insurance.

27 Glossary Common real estate terms (cont d) Preleased space Space that has been leased prior to construction completion date or Certificate of Occupancy date. Proposed construction uildings are proposed when permits are in place, site is being actively marketed but significant base building has not yet commenced. Proposed asking rents are not included in market calculations. Shell space The interior condition of the tenant's usable square footage when it is without improvements or finishes. Shell construction typically denotes the floor, windows, walls and roof of an enclosed premises and may include some HVC, electrical or plumbing improvements but not demising walls or interior space partitioning. Sublease space Leased space that is being actively marketed by the tenant under contract to another party. Tenant at will One who holds possession of premises by permission of the owner or landlord, but without agreement for a fixed term. Tenant improvement allowance (TI) Improvements to land or buildings to meet the needs of tenants. May be new improvements or remodeling, and may be paid for by the landlord, the tenant or shared. Total supply The entire area of an office building comprised of both usable space and an allocated portion of the common area. Turn key project project in which the developer is responsible for the total completion of a building (including interior design and construction) or demised premises to the customized requirements of a future owner or tenant. Under construction uildings are under construction when significant work is under way from ground-up development (i.e., steel is going up). Under renovation / rehab uildings are under renovation / rehab when significant base building renovation is under way. Vacant space Direct existing space being actively marketed for immediate occupancy as of the survey date, not including sublease space.

28 bout JLL JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. 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. t year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. s of December 31, 2016, LaSalle Investment Management had $60.1 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 bout 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: New York Headquarters Corporate Office 330 Madison venue New York, NY Downtown Office 28 Liberty Street New York, NY Jones Lang LaSalle IP, Inc. ll rights reserved. ll information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.