LOWER MANHATTAN REAL ESTATE MARKET REPORT

Transcription

1 RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE ALLIANCE FOR DOWNTOWN NEW YORK LOWER MANHATTAN REAL ESTATE MARKET REPORT Q LOWER MANHATTAN MARKS STRONGEST LEASING QUARTER IN SEVEN YEARS AND CELEBRATES THE OPENING OF 3 WORLD TRADE CENTER AND PIER 17 Lower Manhattan s commercial market had a particularly robust second quarter. Major brand-name tenants closing deals in the TAMI (Technology, Advertising, Media and Information) and fashion sectors helped make this the most active quarter in seven years. J.Crew signed the largest deal of the quarter at Brookfield Place where they will be moving their headquarters to a 325,000-square-foot office from Midtown South. Three World Trade Center s opening brings the total office square footage on the World Trade Center campus to 7.8 million square feet. In addition, McKinsey & Company executed the quarter s second largest deal at 3 World Trade Center and will be relocating their headquarters from Midtown. LOWER MANHATTAN WELCOMES 3 WORLD TRADE CENTER TO THE MARKET Positive news abounds on the east side as well with the opening of Pier 17. Now home to ESPN Broadcasting Studios, the pier will host concerts through the fall and several restaurant openings are expected by year-end. In additional good news for the Seaport District, the Mr. C Seaport Hotel opened this summer. This quarter s strong leasing activity helped mitigate the long expected increase in the vacancy rate resulting from 3 World Trade Center s completion. Finally, private sector employment remains at its highest level since September 11, 2001 (242,593 employees). Photo Courtesy of Silverstein Properties. By Joe Woolhead. 1

2 SECOND QUARTER LEASING BEST SINCE Q Lower Manhattan leasing more than doubled from the first quarter levels. In the second quarter there was 1.9 million square feet of new activity. This represents the best quarter for new activity since the second quarter of 2011 and it also places well above the five-year quarterly average of 1.3 million square feet. A flurry of large deals boosted this quarter with more than 24 leases of over 20,000 square feet signed, according to Cushman & Wakefield. With this rebound, year-to-date activity now totals about 2.7 million square feet in Lower Manhattan. While leasing was up in Midtown and Midtown South quarter-over-quarter as well, 1.9 Million SF Q2 New Leasing Activity it surged most dramatically in Lower Manhattan. At mid-year, leasing in Manhattan overall is up 12 percent as compared to 2017, while Lower Manhattan s year-to-date activity is off 12 percent from this time last year. BRAND NAME TENANTS TOP LARGEST SECOND QUARTER DEALS The World Trade Center and Brookfield Place continued to top the charts of Lower Manhattan s largest deals with two deals signed for over 100,000 square feet. J. Crew inked the largest deal of the quarter and the fifth largest citywide deal after committing to relocate their headquarters from 770 Broadway to 325,000 square feet in 225 Liberty Street in Brookfield Place. J.Crew s commitment marks the largest relocation since Spotify announced its move to 4 World Trade Center in early J. Crew s move absorbed Bank of New York Mellon s sublease space placed on the market after their February 2018 announcement that the bank would be consolidating in 100 Barclay Street. The relocation announcement is the latest in a slew of media and fashion industry firms that have long been headquartered in Midtown and Midtown South moving south of Chambers Street. This move further enriches the Lower Manhattan fashion community which already includes Hudson s LOWER MANHATTAN NEW LEASING ACTIVITY BY QUARTER, Q Q Source: CBRE 2.75 Million 2.5 Million 2.5 MSF 2.25 Million 2.0 Million Best Quarter since Q MSF 1.75 Million SF 1.5 Million 1.25 Million 1.0 Million 750, , ,000 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q

3 LOWER MANHATTAN TOP LEASES, Q Source: Downtown Alliance, CBRE, JLL, CoStar, Colliers International Tenant Name Location SF Leased Transaction Type Sector 1 J. Crew Group Inc. 225 Liberty Street 325,000 Relocation Retail Trade 2 McKinsey & Company 3 World Trade Center 184,389 Relocation Professional Services, Management Consulting 3 Wolters Kluwer 28 Liberty Street 130,000 Relocation TAMI, Media 4 National Debt Relief 180 Maiden Lane 95,284 Moving within LM and Expanding 5 Convene 1 Liberty Plaza 93,096 New LM Location FIRE Professional Services, Coworking 6 MDRC 200 Vesey Street 54,735 Relocation Nonprofit 7 IQVIA (Quintiles/IMS) 300 Vesey Street 45,927 Relocation TAMI, Technology 8 Scotia Bank 225 Liberty Street 43,374 Expansion FIRE 9 Virtusa Corporation 225 Liberty Street 42,705 Relocation TAMI, Technology 10 TerraForm 200 Liberty Street 42,291 Relocation Other, Utilities 11 Getty Images 195 Broadway 41,982 Relocation TAMI, Media 12 CallisonRTKL 233 Broadway 28,098 Relocation Professional Services, Design 13 Knotel 30 Broad Street 26,982 New LM Location Professional Services, Coworking 14 Outfront Media 140 Broadway 26,206 Relocation TAMI, Advertising 15 Millbank Tweed 33 Whitehall Street 25,605 Moving Within LM Professional Services, Legal 16 Community Access Inc 17 Battery Plaza 25,075 Moving Within LM Nonprofit 17 Collibra 61 Broadway 24,479 Expansion TAMI, Technology 18 Hello Alfred 61 Broadway 22,327 Relocation TAMI, Technology 19 NYFD Pension Fund 1 Battery Park Plaza 20,679 Relocation Government 20 American Civil Liberties Union 125 Broad Street 18,245 Expansion Nonprofit 3

4 Bay, also headquartered at Brookfield Place, Hugo Boss, Gucci, MM.LaFleur, Bottega Veneta and more. The second largest deal of the quarter was completed by McKinsey & Company. Announced in November 2017, the premier management consulting firm signed a lease for 184,389 square feet on floors 60 through 64 in 3 World Trade Center. The Big Three firm will begin relocating its NYC headquarters to the World Trade Center from Midtown East this summer. TAMI AND FLEXIBLE SPACE PROVIDERS CONTINUE TO DOMINATE TOP DEALS After a subdued first quarter, activity rebounded in the second quarter as TAMI (Technology, Advertising, Media and Information industries) companies and flexible space providers (defined as short term office, coworking, event/conference space companies, etc.) returned as the largest dealmakers. Year to date, TAMI has accounted for 36 percent of all new activity in Lower Manhattan, just up from 2017 s level, according to Jones Lang LaSalle. Combined with leasing by flexible space providers, these industries were responsible for more than 43 percent of all new activity in 2018 to date. Wolters Kluwer, an information services firm for industries including law, accounting, healthcare and more, signed the third largest deal in the second quarter and will be relocating from Google s 111 Eighth Avenue to 130,000 square feet in 28 Liberty. This marks 28 Liberty s largest lease since the New York State Attorney General signed for 379,000 square feet in February Convene, a hospitality focused flexible office and meeting services provider, announced that it will be opening another Lower Manhattan location after signing a 93,096-square-foot lease in 1 Liberty Plaza. This commitment marks Convene s fourth partnership with Brookfield Properties and its fourth location in Lower Manhattan. Convene will be operating a coffee shop and cafe on the building s ground floor, with its other operations on the mezzanine, second, and third floors. With this lease, Convene s Lower Manhattan footprint now totals over 190,000 square feet, making them the third largest flexible space provider south of Chambers Street behind WeWork and Regus. The second quarter also yielded a steady flow of mid-size leases from TAMI tenants. IQVIA (Quintiles/IMS), a healthcare data analytics company, will be relocating from Midtown East to 46,000 square feet in 300 Vesey Street. Another TAMI firm, Virtusa Corporation, also announced a relocation to Brookfield Place. The information technology firm will also be NEW LEASING ACTIVITY BY INDUSTRY, 2018 YTD Source: Jones Lang LaSalle Other Services Government Education, Healthcare 2.9% 3.5% & Nonprofit 7.1% Professional Services 11.2% FIRE 17.6% *by Square-footage 2018 Year-to-Date New Leasing Activity by Industry Fashion & Retail Trade TAMI 35.9% Flexible Space Providers 7.1% 14.7% moving from Midtown East to a 42,705-square-foot office in 225 Liberty Street. TAMI tenants were active on Broadway as well. Getty Images, an international photo and multimedia agency, announced a relocation from Hudson Square to a new 42,000-square-foot headquarters in 195 Broadway. 195 Broadway is currently 70 percent leased by TAMI companies. Other TAMI commitments across the district include Hello Alfred, a New York-based home service technology company, which signed a lease for 22,327 square feet at 61 Broadway and has already moved into a portion of BIG s (Bjarke Ingels Group) former office space from Midtown South. Finally, Knotel, one of Lower Manhattan s 23 flexible space providers, signed on for its fourth district location with a 26,982-square-foot lease at 30 Broad Street. FIRE SECTOR AND NONPROFITS REMAIN ACTIVE IN LOWER MANHATTAN In the second quarter, the FIRE (Financial Services, Insurance and Real Estate) sector accounted for the second largest share of new leasing activity after TAMI and helped to drive quarterly activity to its highest point in seven years. While Deutsche Bank announced its 2021 relocation to Columbus Circle from longtime offices in 60 Wall Street in May 2018, Lower Manhattan continued to welcome new activity from tenants in the financial services sector. The fourth largest deal of the quarter was signed by National Debt Relief, a consumer debt relief agency, who will be moving and expanding from 11 4

5 Broadway to a 126,0000-square-foot office in 180 Maiden Lane, after signing a 95,284-square-foot deal in the second quarter and a 30,810-square-foot expansion in late July. In addition, ScotiaBank expanded for a second time in 2018, signing on for an additional, short term, 43,374-square-foot floor in 225 Liberty Street. Year to date, FIRE sector activity has accounted for about 18 percent of new activity in Lower Manhattan, just behind Midtown (23 percent) and more than double Midtown South (8 percent). In Lower Manhattan, FIRE sector employment comprises about 35 percent of total private sector employment with about 84,000 employees. This is an increase of about 3.8 percent year over year. Citywide, FIRE employment is up 1.9 percent over the same period. A nonprofit education and social policy organization, MDRC, signed a 54,735-square-foot lease on the 23rd floor of 200 Vesey Street. The 44-year old nonprofit will be relocating from Midtown and joins other significant non-profit tenants including Teach for America, Planned Parenthood, and the American Civil Liberties Union. 195 BROADWAY: FROM HOME OF FIRST TRANSATLANTIC PHONE CALL TO 21ST CENTURY TAMI HEADQUARTERS Long known as the Telephone Building, 195 Broadway is not only among Lower Manhattan s oldest existing landmarked buildings -- it s history tells the story of technological advance as we have progressed from telephone cables on the ocean floor to the omnipresent interconnectivity of our current digital age. Nine years after it opened in 1916, the tower was the site of the American end of the first transatlantic phone call. After AT&T moved to midtown in the 1980s, the building went through a series of ownership changes. L&L Holding Company purchased the building in 2005 and helped attract a series of tenants that transformed the building. Today, 195 Broadway is a draw for cutting edge companies and is almost exclusively rented out to fashion and TAMI tenants, including some of the biggest names in technology. XO Group is the owner of digital brands The Knot, The Nest, The Bump and much more. Namely is a human resources technology company and Getty Images will relocate to the tower later this year. Other tenants in media include Omnicom, HarperCollins Publishers and Abrams Publishing. L&L also presided over a multi-million dollar lobby redesign and retail redevelopment project that brought Anthropologie and Nobu to the building s ground floor. It was most recently purchased in 2013 by institutional investors advised by JP Morgan Asset Management while L&L retains a minority interest. 5

6 VACANCY RATE UP TO 11.3 PERCENT WITH ADDITION OF THREE WORLD TRADE CENTER In the second quarter, Lower Manhattan s overall vacancy rate rose, as expected, above 11 percent for the first time since the first quarter of 2014 due to the addition of 3 World Trade Center to the market. The addition of 1.6 million square feet of availability was responsible for the bulk of the 2.3 percentage point increase over last quarter. Overall, available space rose by about 2.3 million square feet over the last quarter, with other significant additions at 199 Water Street. While Lower Manhattan charted this long-anticipated increase in its vacancy rate, Midtown and Midtown South s overall vacancy rates were stable over last quarter at 9.2 percent and 6.7 percent, respectively. Lower Manhattan s direct vacancy rate is currently 9.9 percent and its sublet vacancy rate is 1.3 percent. This is on par with its historical average as well as with levels in other submarkets. However, a few substantial Lower Manhattan sublet spaces loom on the horizon including Condé Nast s 350,000-square-foot space at One World Trade Center and a 106,320-square-foot Ambac Financial Group space at One State Street. Sublet space is usually priced below average asking rents and in recent quarters other sublet spaces have successfully been re-leased. BNY Mellon put about 350,000 square feet on the market at 225 Liberty in early 2018 at Brookfield Place and more than 325,000 square feet of this space has already been absorbed by J.Crew s planned move to Lower Manhattan. 1.3% Q Sublet Vacancy Rate in Lower Manhattan WORLD TRADE CENTER SUBMARKET AND OVERALL LOWER MANHATTAN VACANCY RATE, Q Q Source: Cushman & Wakefield 25.0% 22.5% 21.9% 20.0% 17.5% 15.0% 13.9% 12.5% 10.0% 7.5% 10.9% 11.3% 5.0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q World Trade Center Submarket Lower Manhattan 6

7 WORLD TRADE CENTER AND BROOKFIELD PLACE INK QUARTER S LARGEST DEALS Leasing activity in the World Trade Center submarket has accounted for about half of Lower Manhattan s activity so far this year. This is up significantly from its share in 2017 (38 percent) and in 2016 (27 percent), according to Cushman & Wakefield. In the second quarter, seven of the top ten largest deals in Lower Manhattan were recorded in the World Trade Center submarket. Three World Trade Center is 38 percent leased, on par with committment levels at 4 and One World Trade Centers on their opening days. Today, 4 World Trade Center (opened in November 2013 ) is fully leased and One World Trade Center (opened in November 2014) is 78 percent leased. While the World Trade Center submarket s overall vacancy rate rose this quarter to 13.9 percent with the addition of 3 World Trade Center, strong leasing in this submarket has historically dropped this vacancy rate within several quarters. This submarket s vacancy rate was above 14 percent two years ago and dropped to less than 10 percent in the first quarter of this year just prior to the opening of 3 World Trade Center. 7

8 LOWER MANHATTAN OVERALL ASKING RENT REACHES MARKET HIGH WITH 3 WORLD TRADE CENTER ADDITION The addition of 1.6 million square feet of new Class A space at 3 World Trade Center propelled Lower Manhattan s overall average asking rent to $62.90 per square foot, the highest overall average asking rent in the market s history. Higher priced space was also added at Pier 17 where Howard Hughes is now marketing about 110,000 square feet of office space. These additions pushed the average Class A asking rent to a record asking price of $ Elsewhere in the district, rents are largely stable. The average Class B asking rent declined slightly from last quarter to $54.90 yet is still up 3.9 percent year-over-year. Lower Manhattan Asking Rents Class A $66.50 Class B $54.90 Class C $45.00 LOWER MANHATTAN ASKING RENTS BY CLASS Q Q Source: Cushman & Wakefield $70 $65 Highest Class A Asking Rent in Market s History $66.50 $60 $55 $54.90 $50 $45 $45.00 $40 $35 $30 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Class A Class B Class C 8

9 SECOND QUARTER PROPERTY SALES Lower Manhattan logged a second consecutive quarter of quiet investment activity with few closed sales across market sectors and just two announced sales in the hotel and office sectors. Retail In June, Unibail-Rodamco-Westfield, a European property company, closed on the purchase of the 287,000-square-foot Westfield World Trade Center from Westfield Corporation for $240 million or about $836 per square foot. In May, Westfield World Trade Center approved a takeover by Unibail, who will rebrand its malls under the Westfield name under the terms of the deal. The Lowy family (founders of the Westfield Corporation) will retain a minority 2.5 percent interest in the combined company. Unibail owns many European malls in iconic locations and gains significant U.S. and other global retail centers with this takeover. This deal represents the combining of two of the world s largest retail mall operators. Hotel In the second quarter, the Riff Hotel, a recently opened 36-room hotel, was purchased by The King s College, a Lower Manhattan based college, for $19.2 million or about $533,000 per hotel room from Salt Equities, the hotel s developer. The college plans to utilize the property as a residence hall for its Lower Manhattan students. The King s College signed a lease for a 51,750-squarefoot Lower Manhattan campus in 2012 and relocated fromw Midtown. Development Sites Howard Hughes Corporation purchased 250 Water Street, a development site with about 290,000 buildable square feet, from Milstein Properties for $182.7 million or about $632 per buildable square foot. Milstein purchased the property in the 1970s for $5.8 million and sold the property after several development plans failed to come to fruition. Office Pending In May, a partnership between Rockwood Capital and Midtown Equities, announced the purchase of One Broadway, a 253,000-square-foot office building located at the southern end of Broadway for about $140 million or about $553 per square foot from Stoffel & Partners. The property s most recent office tenants include Kenyon and Kenyon, a law firm, and Citibank. Kenyon and Kenyon will be consolidating in their Midtown location. Rumored plans for the 1920 International Merchant Marine Corp. building include repositioning the building for continued office use. Midtown Equities most recently redeveloped the Empire Stores on the DUMBO waterfront in Brooklyn. Pending In May 2018, Blackstone s purchase of the Holiday Inn Wall Street from LaSalle Hotel Properties for $67.7 million was announced but has yet to close. The 138-room hotel has been open since Multifamily 15 Cliff Street, a 157-unit rental property, was purchased for $125.4 million by Brookfield Asset Management from Carmel Partners. 15 Cliff Street opened in 2003 and sold for approximately $798,726 per unit. Carmel Partners is also currently developing the 483-unit residential rental tower, 19 Dutch, on Fulton Street, anticipated to start welcoming residents later this year. Courtesy of Newmark Holdings One Broadway Rockwood Capital and Midtown Equities purchased this 1920 office building located across from Bowling Green and the National Museum of the American Indian for $553 per square foot. The property is expected to be repositioned to attract new office tenants. Courtesy of CBRE 9

10 RETAIL TOURISM & HOSPITALITY RESIDENTIAL MAJOR PROJECTS UPDATE RETAIL MARKET New Openings and Announcements Lower Manhattan retail continued to expand in the second quarter of Pier 17 opened in the Seaport District and a variety of new retailers also opened across the district. By the end of 2019, Lower Manhattan will have more than 7.28 million square feet of retail -- an expansion of 2.92 million square feet since Westfield World Trade Center welcomed back the NYC greenmarket at the beginning of summer, which is open every Tuesday on the outdoor plaza. With the June opening of 3 World Trade Center and the surrounding plaza spaces, an entirely new street level restaurant collection is on the horizon. Over 75,000 square feet of retail and restaurant space will open throughout At Brookfield Place, popular seafood eatery Seamore s opened along Vesey Street in early July, while Sant Ambroeus, the fashionable Italian restaurant, will open early next year. The Seaport District is full steam ahead for a busy 2018 with a number of its shops and eateries opening this summer and fall. The Pier 17 rooftop concerts by LiveNation will begin in August, while various summer pop ups and activations are underway. The popular Pacific Coast Highway eatery, Malibu Farm, announced they will open a 6,000-square-foot restaurant on Pier 17, joining restaurants by Jean-Georges Vongerichten, David Chang and Andrew Carmellini. Additionally, the SJP Collection, a boutique by Sarah Jessica Parker, announced it will open at the corner of South and Fulton Streets. The shops and restaurants expect to open this fall. With 13 new retailers opening in Lower Manhattan in the second quarter, the district now has 1,193 stores and restaurants. The eateries and retailers that opened in the second quarter include: Manhatta, Danny Meyer s newest restaurant, was unveiled on the 60th floor of 28 Liberty Street. The adjacent Bay Room, with room for over 500 people, is Union Square Hospitality Group s first dedicated event space; Bellini, an Italian and seafood concept from the Cipriani family, opened at the new Mr. C Seaport hotel at 33 Peck Slip; Primo s, a stylish cocktail bar offering light bites, opened in The Frederick Hotel at 125 Chambers Street; Vintage 61, a sports bistro with a wine focus, opened at 233 Front Street in the Seaport; Don Wagyu, a small spot serving Japanese wagyu katso sandwiches, opened at 28 South William Street; Toro Loco, a Mexican restaurant and bar, opened at 15 Stone Street; and Sons of Thunder, a Hawaiian and Californian-inspired casual restaurant, opened at 225 Pearl Street. Courtesy of Manhatta Danny Meyer s Manhatta & The Bay Room event space opened on the 60 th floor of 28 Liberty Street. Photo by Adrian Mesko Courtesy of Primo s Primo s, a cocktail bar, opened in the Frederick Hotel at 125 Chambers Street. Courtesy of Toro Loco Toro Loco, a Mexican restaurant and bar, opened at 15 Stone Street. Lower Manhattan Real Estate Market Overview Q

11 TOURISM & HOSPITALITY Record Year for Tourism Lower Manhattan continues to be a growing destination for tourists. In 2017, approximately 13.6 million tourists visited Lower Manhattan, up nearly eight percent from An estimated 17.4 million unique visitors (a figure that includes residents of New York City and the surrounding area who don t work or live in Lower Manhattan) visited the district in 2017 a 17 percent increase from Visitors from throughout the city and the tri-state area were likely drawn to well publicized new destinations such as the Oculus and Brookfield Place. As a whole, New York City welcomed a record number of 62.8 million tourists in This was an increase of 2.3 million over Hotels Check-in to Lower Manhattan At the end of the second quarter, there were 7,118 rooms in 33 hotels throughout Lower Manhattan. Two hotels opened in the past few months: In May, the Assemblage opened at 17 John Street with 79 hotel rooms. The former residential building was converted by Prodigy Networks into an extended-stay hotel with 44,000-square-feet of collaborative space, including coworking and event spaces, film screening room, outdoor terraces and a rooftop deck. Mr. C Seaport at 33 Peck Slip was unveiled in early July with 66 luxury hotel rooms, as well as it s signature Italian restaurant, Bellini. The former Best Western was converted by Atlantic Pearl, in partnership with the Cipriani family and the Howard Hughes Corporation. Courtesy of The Assemblage The Assemblage opened at 17 John Street with 79 extended-stay hotel rooms and 44,000 SF of collaborative communal space, coworking and event spaces and outdoor terraces. With 12 hotels and 1,900 hotel rooms currently under construction or in the development pipeline (including 658 rooms in three hotels expected to open in the remainder of 2018), inventory is expected to increase by up to 21 percent in the next few years. If all projects continue as planned, the hotel inventory in Lower Manhattan will reach 9,019 rooms in 45 hotels by % Increase in Hotel Rooms in Lower Manhattan by Source of Lower Manhattan tourism estimates: Audience Research & Analysis 2 Source of New York City-wide tourism figures: NYC & Company Courtesy of Mr. C Seaport Mr. C Seaport opened at 33 Peck Slip in the Seaport District with 66 luxury hotel rooms, as well as signature Italian & seafood restaurant, Bellini. Lower Manhattan Real Estate Market Overview Q

12 Average Daily Room Rate Up Year-Over-Year Lower Manhattan s average daily room rate (ADR) in the second quarter of 2018 was $284, up 2.4 percent year-over-year. New York City s ADR 1, only about $10 more than Lower Manhattan s ADR, also increased slightly, by 5.5 percent year-over-year to $295. The second quarter s average occupancy rate was 88.3 percent -- two percentage points below the citywide average 1. The occupancy rate of Lower Manhattan hotels decreased by 3.4 percentage points from Q Positive signs on the horizon include growing tourism, expanded retail and restaurant offerings, and new and repositioned office product which are expected to continue to drive business and leisure travel to Lower Manhattan. The positive outlook for demand generators and a slowdown in citywide hotel development are encouraging hotels to push room rates higher, despite a modest dip in occupancy year-over-year. Additionally, efforts to regulate the booming home-sharing industry, including legislation recently adopted by the New York City Council, could reduce the availability of units listed by companies such as Airbnb. This could shift some demand and pricing power back to the hotel market especially on key sellout nights. LOWER MANHATTAN HOTEL DEVELOPMENT PIPELINE Source: Downtown Alliance Hotel & Address 1 The Artezen Hotel 24 John Street 2 3 AC Hotel NYC Downtown 151 Maiden Lane Moxy NYC Downtown 26 Ann Street 4 The Fidi Hotel 11 Stone Street Marriott Residence Inn 215 Pearl Street Courtyard by Marriott 215 Pearl Street Hotel Indigo Water Street 8 Hotel Indigo 8-12 Maiden Lane Owner/ Developer Westbury Realty Associates Fortis Property Group Rooms Floors Open Date Tribeca Associates Premier Emerald LLC Lam Group Lam Group 120 (upper floors) 200 (lower floors) Atlas Hospitality MLane Inc $284 88% Average Daily Room Rate in Lower Manhattan, Q Hotel Occupancy Rate in Lower Manhattan, Q Aloft Hotel 50 Trinity Place Boutique Hotel Battery Maritime Building TBD Hotel 265 Broadway TBD Hotel American Stock Exchange Building Fit Investment Group Centaur Properties/ Cipriani Roe Corporation (of 42) 2020 Clarion Partners/ GHC Dev. Total Hotels in the Pipeline 12 Total Hotel Rooms in the Pipeline 1,901 1 Source of New York City-wide hotel figures: CBRE Hotels / STR TBD Lower Manhattan Real Estate Market Overview Q

13 RESIDENTIAL MARKET Inventory and Development Continue to Expand Lower Manhattan has over 31,897 units in 331 mixed-use and residential buildings. The estimated population of approximately 61,000 held steady over the past few quarters as several anticipated openings were delayed. Across existing residential buildings, approximately 58 percent are rentals, 35 percent are condos/co-ops and seven percent have an unknown tenure. Over 3,800 units in 22 buildings are either under construction or planned for development (56 percent condo and 44 percent rental). The 2018 pipeline of residential development includes over 1,350 units in seven buildings. This past quarter, the Woolworth Residences at 2 Park Place began closings on the top 30 floors of the Woolworth Building. Alchemy Properties historic conversion added 34 condo units to the market. Others buildings with anticipated openings this year include: 19 Dutch Street - Carmel Partners continues construction on a 64-story, 483-rental unit tower. The tower along Fulton Street will see its first residents moving in this summer and will continue to open in phases throughout the remainder of the year; 19 Park Place - The narrow 21-story, 24 condominium tower, developed by ABN Real Estate, is wrapping up construction and expects a temporary certificate of occupancy later in 2018; 20 Broad Street - MetroLoft is undertaking the conversion of a 27-story office building adjacent to the New York Stock Exchange into 533 rental apartments. The building will also include 70,000 square feet of retail; 111 Murray Street - Fisher Brothers and the Witkoff Group continue construction on a 62-story, 157-unit condo tower. The building, the site of a former St. John s University building, is expected to be completed in late 2018; One Beekman Street - Urban Muse s 25-story, 31-unit condo tower adjacent to City Hall Park, is anticipating a late 2018 completion; and 49 Chambers Street - The Chetrit Group s conversion of the the historic Emigrant Savings Bank will be completed later this year, adding 99 condo units to the market. Residential Rental Market Metrics According to residential statistics published by Miller Samuel/Douglas Elliman, the median rent in Lower Manhattan decreased slightly to $3,795, down 1.5 percent from last quarter, but up five percent from the prior year. Meanwhile, Manhattan s overall median rent trended down slightly, at 1.8 percent year-over-year to $3,414. LOWER MANHATTAN RESIDENTIAL DEVELOPMENT Source: Downtown Alliance Address & Building Name Lease & Building Type Units Rental Units Under Construction TOTAL 1, Dutch Street 2 20 Broad Street Condo Units Under Construction Open Date Rental Rental Conversion TOTAL 2, Park Place Condo 49 Chambers 2 Condo Street Conversion Murray Street 1 Beekman Street Condo Condo 5 30 Warren Street Condo Maiden Lane 1 Seaport 125 Greenwich Street Condo Condo 8 45 Park Place Condo Park Row Condo 69 West 10 Condo Broadway Greenwich Street Former Syms site Condo 12 1 Wall Street Condo Conversion William Street Condo Broad Street Condo Nassau Street Condo & Rental Units In Development Broadway Broadway John Street Rental/Condo TOTAL Hotel/Condo Rental Rental 92 TBD TOTAL UNITS IN THE PIPELINE 3,840 Note: Chart displays selected properties. For complete pipeline, please click here. Lower Manhattan Real Estate Market Overview Q

14 Residential Sales Market Cools Slightly Continued fluctuation in the residential sales market in Lower Manhattan reflected the expiration of the legacy contract pipeline for condos. Over the last several years, sales at large, super luxury properties like 30 Park Place have skewed overall neighborhood figures. Deals at those properties were signed 2-3 years ago and have since closed. The median sales price for co-ops and condos dropped to just above $1 million, down nearly nine percent from last quarter and 50 percent from the previous year. Similarly, while Lower Manhattan s average price per square foot (PPSF) of $1,430 saw a slight increase of two percent over the past quarter, the year-over-year decrease was around 39 percent. Sales prices are expected to trend closer to the normal patterns from a few years ago. LOWER MANHATTAN MEDIAN RESIDENTIAL RENT, 1Q Q 2018 Source: Miller Samuel/Douglas Elliman LOWER MANHATTAN MEDIAN CONDO SALES PRICE, 1Q Q 2018 Source: Miller Samuel/Douglas Elliman Lower Manhattan condo sales are returning to normal patterns as the luxury legacy contracts empty. Lower Manhattan condo sales are returning to normal patterns as the luxury legacy contracts empty. LOWER MANHATTAN AVERAGE SALES PRICE PER SQUARE FOOT (PPSF), 1Q Q 2018 Source: Miller Samuel/Douglas Elliman Lower Manhattan condo sales are returning to normal patterns as the luxury legacy contracts empty. Lower Manhattan Real Estate Market Overview Q

15 MAJOR PROJECTS UPDATE World Trade Center The World Trade Center Transportation Hub Three subway entrances opened on the east side of the World Trade Center Transportation Hub in late The new entrances provide increased access to the World Trade Center E station near Vesey Street and the Cortlandt Street R/W station from the Oculus and 4 World Trade Center. There is now a free connection between the E and R/W stations. The Cortlandt Street 1 Train station and an entrance to 3 World Trade Center are expected to open by late Trinity Place Trinity Real Estate s 74 Trinity Place, a new 26-story, 310,000-squarefoot office building, has begun to rise. The bottom five floors will be for community use, floors six through eight will be used for Trinity Church s offices and the remaining 17 floors will be rentable office space. The existing pedestrian bridge across Trinity Place will remain and eventually be reconnected to Trinity Church. The $350-milliontower anticipates a 2020 completion. The Ronald O. Perelman Performing Arts Center at the World Trade Center (The Perelman Center) The Ronald O. Perelman Center for Performing Arts at the World Trade Center, known as the Perelman Center, signed a 99-year lease with the Port Authority in February The Perelman Center has raised $295 million, or 82 percent of its expected $363 million construction cost. In conjunction with the lease signing, the Port Authority will also receive $48 million from the Lower Manhattan Development Corporation for below-grade construction. Additionally, the board of directors of the Perelman Center announced the appointment of its first artistic director, Bill Rauch of the Oregon Shakespeare Festival. The approximately 110,000-square-foot cube-shaped building will feature three theaters of varying sizes, which can be combined in different seating configurations and formats for an array of unique performance environments. The Perelman Center will be located at the intersection of Greenwich and Vesey streets. The project began construction in fall 2017 and anticipates opening for the 2021 season. The Ronald O. Perelman Performing Arts Center at the World Trade Center (The Perelman Center) Curious About Ongoing Construction? The Downtown Alliance continues to educate our constituents about ongoing construction developments throughout Lower Manhattan beyond our quarterly real estate reports. LM3D gives planners, investors, residents and all neighborhood stakeholders an unparalleled way to visualize the development taking place in Lower Manhattan. LM3D s tools allow users to search for information on an individual building, a select area or to analyze land use across the neighborhood. New on our website are a series of development maps that are divided by geography and include addresses, estimated height, potential uses and expected completion date for individual projects. These maps also highlight ongoing public construction projects. They include (links below): Fulton Street area Greenwich Street South area New York Stock Exchange area World Trade Center & Greenwich Street North area Lower Manhattan Real Estate Market Overview Q

16 3 World Trade Center Opens Silverstein Properties officially opened 3 World Trade Center on June 11, The 80-story, 2.5 million-square-foot office tower is now New York City s fifth-tallest tower. The office tower was designed by Pritzker prize-winning architecture firm Rogers Stirk Harbour + Partners. Approximately 38 percent of the tower has been leased to date. Anchor tenant GroupM began moving into its 690,000-square-foot space in July. IEX, a stock exchange and technology start up, announced it will move from a 13,000-square-foot space at 4 World Trade Center to a 45,000-squarefoot space at 3 World Trade Center at the end of Management consulting firm McKinsey & Company announced that it will be relocating from Midtown East to a 184,389-square-foot space in These three tenants will bring approximately 6,000 new employees to Lower Manhattan. Courtesy of Silverstein Properties, Inc. Retail at the base of the tower expects to open next year. Westfield will soon gain access to 75,000 square feet of retail space and anticipates opening as many as six eateries and bars. Direct access will be available from the building directly into the Transportation Hub s subway and PATH connections, and Westfield s underground shopping concourses by late In addition to the office tower opening, public open space surrounding 3 World Trade Center was also unveiled. The plaza just south of the Oculus (north of 3 WTC) and Cortlandt Way (between 3 WTC and 4 WTC) became available for pedestrian use. Additionally, the future site of 2 World Trade Center was enlivened as eight artists created murals on temporary building sheds. Photo by Jeenah Moon for the New York Times Lower Manhattan Real Estate Market Overview Q

17 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 other research reports, including: Lower Manhattan Real Estate 2017 Year in Review, an annual real estate report providing a review of commercial office, retail, residential, hospitality and development projects happening in Lower Manhattan: New York City s Premier Transit Hub, a report demonstrating the strength of Lower Manhattan as one NYC s premier multimodal hubs and needs/opportunities for future improvements. An Untapped Market: Lower Manhattan s Young Professionals, a residential survey highlighting Lower Manhattan as a neighborhood of choice for young professionals in New York City, as well as ways to capture residents robust appetite for dining out and entertainment. Surging Ahead: Lower Manhattan s Economic Revival and What It Means For New York, a report on the major advances in Lower Manhattan s economy expected over the next five years as a result of post-september 11 th investments and the area s status as a burgeoning center for some of New York City s highest value, most dynamic industries; The Brain Gain, 2015 Report, an updated report on how the region s shifting demographics continue to favor the Lower Manhattan Business District. Previously released in 2012, the updated data shows an even stronger trend; TAMI Takes Lower Manhattan, a report on the growth of technology, advertising, media, and information companies moving south of Chambers Street; Everything Old is New Again: Conversions of Historic Properties in Lower Manhattan, a report on historic properties preserved through significant investment and changes in use; The Golden Age of Transit in Lower Manhattan, a report released on Fulton Center s opening, describing how the more than $6.4 billion of transit investments made since 2005 benefit a large and growing labor force; Alliance for Downtown New York 120 Broadway Suite 3340 New York, NY DowntownNY.com Telephone: Research@DowntownNY.com