THE OFFICE MARKET REPORT LEE NYC

THE OFFICE MARKET REPORT LEE NYC NEW YORK OFFICE 3Q218

W EST SIDE HIG HWAY 1 1TH AV E FDR DRIVE SUBMARKETS 12TH AVE MIDTOWN WEST W 57TH ST 1TH AVE 1TH AVE W 49TH ST W 42ND ST W 65TH ST TIMES SQUARE ROCKEFELLER CENTER PENN STATION GARMENT DISTRICT W 34TH ST CHELSEA W 23RD ST CENTRAL PARK WEST 8TH AVE 8TH AVE CENTRAL PARK SOUTH AVENUE OF THE AMERICAS AVENUE OF THE AMERICAS 5TH AVE PLAZA DISTRICT GRAND CENTRAL 5TH AVE E 65TH ST E 57TH ST E 49TH ST E 42ND ST E 34TH ST E 23RD ST LEXINGTON AVE LEXINGTON AVE MIDTOWN EAST MURRAY HILL 1ST AVE 1ST AVE 1ST AVE GRAMERCY FLATIRON FDR DRIVE MIDTOWN MIDTOWN SOUTH DOWNTOWN W 14TH ST E 14TH ST GANESEVOORT ST 5TH AVE EAST RIVER 1ST AVE AVE A HUDSON RIVER HUDSON SQ. TRIBECA HUDSON ST W HOUSTON ST W 4TH ST W HOUSTON ST SOHO NOHO BOWERY ALLEN ST E 4TH ST E HOUSTON ST DELANCEY ST WEST ST CANAL ST VARICK ST AVENUE OF THE AMERICAS W DELANCEY ST FRANKLIN ST WORTH ST CHAMBERS ST PARK PL CENTRE ST CANAL ST CITY HALL INSURANCE DISTRICT PARK ROW VESEY ST VESEY ST WORLD TRADE CENTER TRINITY PL BATTERY PL WALL ST WILLIAM ST GOLD ST FINANCIAL DISTRICT BEAVER ST WATER ST 2 MANHATTAN TREND TRACKER 3RD QUARTER 218

OFFICE METRICS Third Quarter 218 New York Office Market New York Office Metrics Market Inventory Measured (SF) Under Availability Construction Rate (SF) Midtown 224,664,49 2,818,74 11.8% 7.7% 1,96,39 11,341,345 $82.6 $64.8 $79.53 Grand Central 72,8,497 1,732,955 1.8% 7.9% 1,384,718 3,761,617 $76.4 $61.35 $74.79 Midtown East 25,675,29 29,55 13.% 6.6% (13,144) 1,519,133 $78.58 $59.1 $76.3 Midtown West 2,963,179 9, 8.1% 4.8% (272) 52,542 $76.82 $63.1 $73.15 Plaza District 38,449,692 75,244 14.8% 11.5% 322,417 1,776,713 $112.87 $82.69 $11.66 Rockefeller 29,48,42 7.9% 5.1% 378,99 1,693,914 $83.23 $72. $82.6 Times Square 38,518,971 15.% 7.5% (49,589) 2,69,426 $73.14 $58.77 $66.76 Midtown South 155,362,963 13,479,812 9.9% 6.1% 1,99,851 9,749,326 $75.48 $6.23 $68.7 Chelsea 19,92,413 263,835 9.5% 6.3% 689,53 935,569 $65.32 $5.28 $6.39 Gramercy & Flatiron 31,527,675 73,323 7.6% 3.6% 245,15 2,373,72 $71.49 $65.19 $69.59 Hudson Square & Tribeca 21,756,443 193,484 15.5% 8.7% 183,141 869,653 $85.47 $69.76 $82.5 Murray Hill 13,388,866 9.8% 6.7% (29,816) 62,862 $61.67 $55.24 $58.7 Penn Station & Garment 55,927,26 12,639,885 9.4% 6.2% 764,546 3,783,58 $59.33 $49.1 $56.36 SoHo & NoHo 12,842,54 39,285 8.9% 5.8% 138,3 1,166,32 $73.97 $6.45 $71.43 Downtown 17,51,856 19,412 13.1% 2,84,46 3,741,167 $62.91 $45.34 $61.29 City Hall & Insurance District 26,493,657 19,412 8.5% 3.% 491,525 379,33 $55.41 $44.25 $53.2 Financial District 43,487,31 13.4% 9.6% 115,467 1,58,71 $61.43 $48.34 $58.76 World Trade Center 37,529,889 16.1% 15.4% 1,477,414 1,853,433 $63.51 $49.57 $63.14 Manhattan 487,537,868 16,317,928 11.5% 7.7% 5,981,296 24,831,838 $73.42 $62.31 $71.27 Vacancy Rate Net Leasing Direct Sublet Overall Absorption Volume Asking Rent Asking Rent Asking Rent (SF) (YTD) (SF) (YTD) Arrows are indicative of quarterly changes. 3 MANHATTAN TREND TRACKER 3RD QUARTER 218

ANALYSIS $78. $76. $74. $72. $7. $68. $88. $86. $84. $82. $8. $78. $76. $8. $75. $7. $65. Manhattan Asking Rent and Availability Rate Asking Rent Availability Rate 5Y Rate Avg. Midtown Asking Rent and Availability Asking Rent Availability Rate 5Y Rate Avg. Midtown South Asking Rent and Availability Asking Rent Availability Rate 5Y Rate Avg. Downtown Asking Rent and Availability 12.% 11.5% 11.% 1.5% 12.5% 12.% 11.5% 11.% 1.5% 12.% 8.% 6.% 4.% 2.%.% Manhattan direct asking rents in the third quarter averaged out to $73.42, down $.63 from the second quarter and $.82 from a year ago. Leasing volume continues to be strong with approximately 25 million square feet leased yeartodate, causing a decrease in both the available and vacant supply of office space below 65th Street. The availability rate decreased slightly by 1 basis points to 11.5% (also the fiveyear average in Manhattan) from 11.6% over the quarter. With net absorption positive for the third consecutive quarter, vacancy is at the lowest it's been since 29, when it was averaging 7.2%. Although still distant from reaching such an annual average, the third quarter finished with a vacancy of 7.7%, and we forecast this to continue to remain the same or decrease endofyear. Nine of the twelve submarkets saw an availability rate decrease, with all six submarkets comprising Midtown South (with a quarterly decrease of 9 basis points from 1.8% to 9.9%). Large blocks of space were signed by coworking giants WeWork and Spaces spread across the Penn StationGarment, Grand Central, GramercyFlatiron, Midtown West, Murray Hill, Chelsea, Times Square and Midtown East submarkets. Approximately five to six million square feet need to be leased in the next three months, to sustain the current availability rate of 11.5% or have it slightly decrease. The expected delivery of 55 Hudson Yards by Related Companies and 441 Ninth Avenue by Cove Property Group in the fourth quarter is expected to add approximately 85, square feet onto the market. There is currently 16.3 million square feet of office construction below 65th Street; with 46 buildings in some planning or construction phase, we're looking at 29.1 million square feet of future availability. TAMI giant GroupM Worldwide signed a 513,98 square foot deal at Silverstein Properties recently delivered 3 World Trade Center, taking an additional nine floors. The media company initially signed a lease in early 216 for approximately 17, square feet, which increases their footprint to 684,593 square feet and bringing the occupancy rate at the class A property to 43%. Additionally, Silicon Valley's LinkedIn Corporation renewed and expanded their operations of approximately 313, square feet at the Empire State Building (35 Fifth Avenue). FIRE tenants such as Evercore Partners and Bessemer Trust Company led Midtown in two of the top three largest leases signed. Investment banking company, Evercore Partners signed a 1year renewal and expansion on 282,673 square feet at Park Avenue Plaza (55 East 52nd Street), making it the largest lease signing by a FIRE tenant and the largest lease signing in the Plaza District, in the third quarter. Bessemer Trust Company signed a 15year new lease at Rockefeller's 1271 Avenue of the Americas for 239, square feet across seven floors, with a starting base rent in the low $1s. Nearby at 666 Fifth Avenue, Brookfield Asset Management purchased a 99year leasehold on a 1.45 million square foot office condominium from Kushner Companies for approximately $1.3 billion or $887 per square foot at a 4.9% capitilization rate. Brookfield paid up the entire lease through the 99 year term. Additionally in the office investment sales market, Normandy Real Estate Partners in joint venture with L&L Holding and JPMorgan Chase (on behalf of CalSTRS), are in the process of closing on the Terminal Stores (224 Twelfth Avenue) building for $9 million or $853 per square foot. $64. $63. $62. $61. $59. $58. 15.% 5.%.% AVAILABILITY VACANCY ASKING RENTS DIRECT AVAILABILITY SUBLET AVAILABILITY SUBLET ASKING RENTS Asking Rent Availability Rate 5Y Rate Avg. 4 MANHATTAN TREND TRACKER 3RD QUARTER 218

STARTING BASE RENTS Midtown Starting Base Rents $12. $1. $8. $4. $2. $. Midtown Grand Central Midtown East Midtown West Plaza District Rockefeller Times Square 218 Q3 $76.15 $67.9 $68.39 $74.17 $98.91 $77.8 $59.32 218 Q2 $76.77 $73.22 $71. $74.33 $95.71 $77.6 $67.46 217 Q3 $72.26 $67.17 $63.36 $75.28 $81.14 $76.25 $66.73 $8. $7. $5. $4. $3. $2. $1. $. Midtown South Chelsea Midtown South Starting Base Rents Gramercy Flatiron Hudson Sq. Tribeca Murray Hill Penn Station Garment SoHoNoHo 218 Q3 $64.1 $54.86 $7.6 $62.6 $57.93 $58.56 $67.17 218 Q2 $63.94 $61.84 $69.18 $73.13 $55.75 $57.17 $71.21 217 Q3 $57.98 $57.77 $62.19 $7.3 $54.3 $54.88 $64.36 Downtown Starting Base Rents $7. $5. $4. $3. $2. $1. $. Downtown City HallInsurance Dist. Financial District World Trade Center 218 Q3 $54. $52.13 $55.9 $53.36 218 Q2 $57.38 $58.6 $54.98 $58.89 217 Q3 $51.31 $53.43 $48.93 $54.25 5 MANHATTAN TREND TRACKER 3RD QUARTER 218

FREE RENTS Midtown Free Rent M O N T H S 12 1 8 6 4 2 218 Q3 218 Q2 217 Q3 Midtown South Free Rent M O N T H S 12 1 8 6 4 2 218 Q3 218 Q2 217 Q3 Downtown Free Rent M O N T H S 1 8 6 4 2 Downtown City HallInsurance Dist. Financial District World Trade Center 218 Q3 218 Q2 217 Q3 6 MANHATTAN TREND TRACKER 3RD QUARTER 218

MIDTOWN Asking Rents Availability Vacancy Net Absorption Leasing Activity Sublet Availability $82.6 11.8% 7.7% 1,433,681 3,48,938 4,616,336 /Q /Y /Q /Y /Q /Y /Q /Y /Q /Y /Q /Y Availability continues to remain high and is on par to reach 12% Net absorption positively increased 174% quartertoquarter Two of the top three largest deals signed by banking tenants Leasing volume continues to stay strong Vacancy lowest in five years Asking rents grew at approximately 2% over the quarter. Bessemer Trust fills out the top of 1271 Avenue of the Americas Financial advisory giant with plans to relocate to Park Avenue Plaza Midtown Asking Rent Trend Leasing Activity Trend $88. 8, $86. $84. $82. $8. $78. $76. $83.35 Thousands 6, 4, 2, Asking Rent Trend Leasing Activity 5Y Avg. 1Y Avg. Vacancy Trend Availability Trend 9.% 12.5% 8.5% 12.% 8.% 7.5% 8.4% 11.5% 11.% 1.5% 11.6% 7.% 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 Vacancy Rate 5Y Avg. Availability Rate 5Y Avg. Potential Available Direct Space Delivery Forecast Net Absorption Five Year Trend 2,5 2, 2,132 2, 1,5 Thousands (SF) 1,5 1, 5 1 3 917 4 6 87 7 9 661 1 12 795 13 15 Thousands 1, 5 (5) (1,) (1,5) Top Notable Signed Leases Pfizer Evercore Partners Inc. 219 East 42nd Street 55 East 52nd Street 35, SF 282,673 SF Floors: 1 1 Floors: 221, 23, 3538, 4244 New 5 Year Lease New 15 Year Lease 7 MANHATTAN TREND TRACKER 3RD QUARTER 218

MIDTOWN SOUTH Asking Rents Availability Vacancy Net Absorption Leasing Activity Sublet Availability $75.48 9.9% 6.1% 367,932 2,747,322 3,646,487 /Q /Y /Q /Y /Q /Y /Q /Y /Q /Y /Q /Y All six Midtown South submarkets availability decreases Vacancy remained stagnant at 6.1% & continues to be lowest in years Availability rate finally drops below 1%, where it's been at since 216 Midtown South asking rents have increased 12.4% yearoveryear Construction activity continues in five of the six submarkets (Murray Hill) WeWork & Spaces continued to grow their presence across the market TAMI industry continues leasing demand with LinkedIn renewing & expanding at Empire State Building Midtown South Asking Rent Trend Leasing Activity Trend $8. 8, $75. $7. $65. $69.44 Thousands 6, 4, 2, Asking Rent Trend Leasing Activity 5Y Avg. 1Y Avg. Vacancy Trend Availability Trend 8.% 12.% 7.5% 7.% 6.5% 6.% 5.5% 6.5% 11.% 9.% 8.% 9.7% 5.% 7.% 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 Vacancy Rate 5Y Avg. Availability Rate 5Y Avg. Potential Available Direct Space Delivery Forecast Net Absorption Five Year Trend 2,5 2,31 1,5 2, 1, Thousands (SF) 1,5 1, 5 1 3 57 4 6 838 7 9 257 172 1 12 13 15 Thousands 5 (5) (1,) (1,5) Top Notable Signed Leases LinkedIn Corporation WeWork Companies, Inc. 35 Fifth Avenue 21 Penn Plaza 312,947 SF 229,9 SF Renewal & Expansion 2 Year New Lease 8 MANHATTAN TREND TRACKER 3RD QUARTER 218

DOWNTOWN Asking Rents Availability Vacancy Net Absorption Leasing Activity Sublet Availability $62.91 13.1% 565,18 9,791 2,396,943 /Q /Y /Q /Y /Q /Y /Q /Y /Q /Y /Q /Y Largest lease of the quarter at 3 WTC with GroupM Worldwide for 513,98 SF City Hall & Insurance District vacancy (3%) lowest of all NY submarkets Positive net absorption for four consecutive quarters Vacancy increased 5.3% Y/Y due to available supply in WTC area Asking rents have been decreasing for two consecutive quarters Availability would have been back at 215 rates, if not for leasing at 3 WTC WeWork talks fall apart for 2, SF space at 1 WTC The London Stock Exchange relocates to 28 Liberty Street Downtown Asking Rent Trend Leasing Activity Trend $64. $63. $62. $61. $59. $58. $62.44 Thousands 4, 3, 2, 1, Asking Rent Trend Leasing Activity 5Y Avg. 1Y Avg. Vacancy Trend Availability Trend 15.% 17.% 13.% 11.% 9.% 1.6% 15.% 13.% 11.% 13.3% 7.% 9.% 5.% 7.% 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 Vacancy Rate 5Y Avg. Availability Rate 5Y Avg. Potential Available Direct Space Delivery Forecast Net Absorption Five Year Trend 2, 4, 1,5 1,528 3, Thousands (SF) 1, 5 1 3 81 98 4 6 7 9 379 399 1 12 13 15 Thousands 2, 1, (1,) (2,) Top Notable Signed Leases GroupM Worldwide School Construction Authority 3 World Trade Center 11 William Street 513,98 SF 85, SF Floors: 1112, 1416, 2831 Floors: 1416 New Lease 15 Year New Lease 9 MANHATTAN TREND TRACKER 3RD QUARTER 218

LEASES Notable Third Quarter Leases Tenant Submarket Office Class $ SF Floors Type Years Group M Worldwide World Trade Center 3 World Trade Center A Pvt. 513,98 1112, 1416, 2831 New Pvt. Pfizer Inc. Grand Central 219 East 42nd Street A Pvt. 35, 11 New 5 LinkedIn Corporation Penn StationGarment 35 Fifth Avenue A Pvt. 312,947 Pvt. Ren. & Exp. Pvt. Evercore Partners Inc. Plaza District 55 East 52nd Street A Pvt. 282,673 221, 23, 3538, 4244 Ren. & Exp. 1 Bessemer Trust Company Rockefeller 1271 Avenue of the Americas A $1s 239, 4248 New 15 WeWork Companies, Inc. Penn StationGarment 21 Penn Plaza B $8s 229,9 46, 91, 12, 1417 New 2 Spell Inc. Hudson Sq. Tribeca 2 Gansevoort Street C Pvt. 181,55 Pvt. New Pvt. Convene Grand Central 53 Fifth Avenue A Pvt. 116,55 71 New 5 Spaces (IWG) Grand Central 45 Lexington Avenue A $6s 19,364 79 New 15 Spaces (IWG) Gramercy Flatiron 287 Park Avenue South B $7s 11,256 29 New 15 ICBC (Ind. & Com. Bank of China) Times Square 1185 Avenue of the Americas A $7s 98,594 1618, 42 New Pvt. Spaces (IWG) Midtown West 787 Eleventh Avenue B Pvt. 97,442 67 New Pvt. WeWork Companies, Inc. Gramercy Flatiron 35 East 21st Street B Pvt. 97, 11 New 12 KBRA Holdings, Inc. (Kroll Bond) Midtown East 85 Third Avenue A $5s 95,2 2629 Sublease 8 Carlyle Group, The (GMS Finance) Grand Central 1 Vanderbilt Avenue A $1s 94,365 3638 New 15 Duff & Phelps Plaza District 55 East 52nd Street A $8s 9,975 1517 New 16 Golub Grand Central 2 Park Avenue A $8s 89, 2425 New 1 School Construction Authority City Hall Insurance 11 William Street A $5s 85, 1416 New 15 WeWork Companies, Inc. Murray Hill 4546 Park Avenue South B $6s 83,25 23, 6, 8, 112 New 15 WeWork Companies, Inc. Chelsea 511 West 25th Street B $7s 8,463 29 New 15 WeWork Companies, Inc. Times Square 1619 Broadway B Pvt. 76,144 57, 111 New 15 London Stock Exchange PLC Financial District 28 Liberty Street A $7s 74,822 5758 New 15 Signature Bank Penn StationGarment 14 Broadway B $6s 71,788 67 New 16 WeWork Companies, Inc. Midtown East 88 Third Avenue A $5s 69,659 56, 913 New 15 Broadcast Music, Inc. World Trade Center 7 World Trade Center A $8s 61,39 331 New 16 King & Spalding Times Square 1185 Avenue of the Americas A $6s 58,728 3637 New 7.5 Perkins Coie LLP Times Square 1155 Avenue of the Americas A $8s 57,971 223 New 15 $ (Price reflects the base rent) Leases confirmed to have been signed in prior quarters but recently announced are not included in this list. For office comp reports and comprehensive consultation on market knowledge and analytics, or more information on any of these transactions; please consult a Lee & Associates NYC broker. Square Feet Leased 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, 218 YeartoDate Leasing Volume 1 MANHATTAN TREND TRACKER 3RD QUARTER 218

CONSTRUCTION Construction Pipeline Featuring the top fifteen projects either under construction, fully renovating and proposed. 5 Hudson Yards 66 Hudson Boulevard 2 World Trade Center 3 Hudson Yards 27 Park Avenue 2,9, SF 2,85, SF 2,8, SF 2,6, SF 2,5, SF Proposed Construction Begins 219 Delivering 222 Q4 Construction Begins 219 Delivering 219 Q2 Under Demolition Related Companies Tishman Speyer Silverstein Properties Related Companies JPMorgan Chase Hudson Yards Hudson Yards World Trade Center Hudson Yards Grand Central One Two Manhattan West 3 Hudson Boulevard One Vanderbilt 55 Hudson Yards 511 West 35th Street 2,216,69 SF 1,95,14 SF 1,9, SF 1,732,955 SF 1,556,136 SF 95, SF Delivering 219 Q4 223 Construction Begins 219 Delivering 22 Q3 Delivering 218 Q4 Construction Begins 219 Brookfield Properties Moinian Group SL Green Realty Corp. Related Companies Spitzer Enterprises Hudson Yards Hudson Yards Grand Central Hudson Yards Hudson Yards 55 Madison Avenue 39 Ninth Ave (Farley Bldg) 425 Park Avenue 441 Ninth Avenue 57 Eleventh Avenue (SuperPier) 85, SF 767, SF 75,244 SF 7, SF 263,835 SF Full Renovation for 219 Delivering 22 Q2 Delivering 219 Q1 Delivery end of 218 Delivering 219 Q1 Olayan America Vornado & Related L&L Holding Company Cove Property Group RXR Realty PANYNJ Plaza District Penn Station Plaza District Penn Station Chelsea 46 Buildings in the Pipeline 16.3M SF Currently Under Construction 1 Buildings Proposed 29.1M SF of Future Availability 11 MANHATTAN TREND TRACKER 3RD QUARTER 218

Henry Abramov Research Director habramov@leeassociates.com Carly Farkas Research Associate cfarkas@leeassociates.com James Wacht President jwacht@leeassociates.com Lee & Associates NYC 6 Madison Avenue, Third Floor New York, NY 122 212.776.12 www.leeassociatesnyc.com With offices across the nation, the Lee & Associates group of independently owned and operated companies is the largest provider of regional commercial real estate services in the United States and the fourthlargest fullservice commercial real estate organization overall.