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NEW YORK CAPITAL New York Quarterly

Snapshot 4Q2015

MARKETS GROUP

New York Quarterly

Snapshot

1

DRAFT 10-13-2010 Market Overview

New York Capital Markets Group New York Quarterly

Snapshot

Fourth Quarter 2015


Snapshot 4Q2015

MARKETS GROUP 2

Market Snapshot

- Manhattan Capital Markets - Manhattan Leasing Market

MANHATTAN CAPITAL MARKETS


Snapshot 4Q2015

MARKETS GROUP 3


Overview

• Record Breaking Year: There were 589 sales totaling $60.3 billion in 2015, a nearly 50% increase in volume year-over-year and by far the most active year on record. With 232 deals totaling $13.5 billion, the multifamily segment of the market was the leader by number of transactions, while the 101 office deals totaling $24.1 billion led the market in dollar volume.

• Foreign Investment in NYC Skyrockets: Foreign investors accounted for 45% of Manhattan investment activity (dollar volume) in 2015, a new record as foreign participation in the market has ranged from 10% to 20% over the last five years. Canadian and Chinese acquisitions comprised 62% of 2015’s foreign investment, with 21 other countries accounting for the remaining 38%.

• Large Transactions Dominate Across All Sectors: There were 23 deals greater than $500 million in 2015 totaling $25.7 billion (43% of the market). This activity was diversified across product types as investors, both foreign and domestic, were seeking the safety and security of NYC real estate. Office accounted for 13 deals totaling $12 billion of this activity followed by three multifamily deals at $6.6 billion, four hotel deals at $4.6 billion, one retail deal for $1.2 billion and one land deal for $870 million.

• Appreciating Values: Asset values witnessed exceptional appreciation with a 21% year-over-year average increase in price per square foot.

• Residential Market Continues Unprecedented Growth: The average sale price for Manhattan condominiums and co-ops reached a record $2,000,000 and $1,645 per square foot at the end of 2015. Despite the record pricing, there is softening in the ultra luxury segment of the market and increased inventory heading into 2016.

• Rising Interest Rate Environment: The Federal Reserve raised interest rates by 25 basis points at the December meeting, the first rate hike in nearly 10 years. Economists predict additional quarter point hikes in 2016 predicated on higher inflation and wage growth. Despite the rise in interest rates, buyers are still able to borrow with positive leverage.


Snapshot 4Q2015

MARKETS GROUP 4

YTD Closed Manhattan Investment Sales Activity The following details a summary of the year-to-date closed investment sales activity in Manhattan:

Total Size

Product Type # of Deals

% of Deals

Square Feet

Units / Keys

Total Dollars

% of Dollars

Avg Deal Size

Avg / SF or Unit or Key

Multifamily 232 40% 22,883,633 24,289 $13,471,526,052 22% $58,066,923 $751 / $658,847

Land 135 23% 14,471,789 $8,459,661,830 14% $62,664,162 $639

Office 101 17% 39,103,809 $24,132,246,573 40% $238,933,134 $867

Retail 73 12% 1,508,437 $5,270,147,318 9% $72,193,799 $3,671

Hotel 22 4% 8,482 $7,233,281,519 12% $328,785,524 $888,870

Other 26 4% $1,715,773,040 3% $65,991,271

TOTAL 589 100% 77,967,668 32,771 $60,282,636,332 100% $102,347,430

Under Contract 27 $7,092,200

Closed & Under Contract 616 $67,374,836,332



Snapshot 4Q2015

MARKETS GROUP 5


2015 Manhattan MF Investment Sales Activity

By Submarket

Uptown properties are north of 125th Street

Midtown Midtown South Downtown Uptown Total

Total # of Deals 71 97 4 60 232

Total Units 3,544 15,142 814 4,789 24,289

Total Dollar Volume $3,021,228,188 $8,410,264,764 $711,907,184 $1,328,125,916 $13,471,526,052

Avg Price Per Unit $852,491 $749,282 $874,579 $316,608 $658,847

Total Square Feet Sold 3,334,345 14,190,429 884,332 4,474,527 22,883,633

Avg Deal Size $42,552,510 $86,703,670 $177,976,796 $22,135,432 $58,066,923

Avg Price PSF $901 $1,007 $804 $345 $751

Peter Cooper Village / Stuyvesant Town ($5,456,596,787 sale price and $471,866 per unit) and Riverton Houses ($201,000,000 sale price and $163,681 per unit) were excluded from the average price per unit and per square foot calculations.


Snapshot 4Q2015

MARKETS GROUP 6 Uptown properties are north of 125th Street


2015 Manhattan Office Investment Sales Activity By Submarket

YTD 2015 Manhattan Land/Redevelopment Investment Sales Activity By Submarket

Midtown Class A Midtown Class B Midtown South Downtown Total

Total # of Deals 18 36 39 8 101

Total Sq Ft 13,437,014 7,438,298 14,863,610 3,364,887 39,103,809

Total Dollar Volume $9,754,735,767 $4,443,226,919 $8,112,001,887 $1,822,282,000 $24,132,246,573

Avg Price PSF* $1,096 $770 $866 $542 $867

Avg Deal Size $541,929,765 $123,422,970 $208,000,048 $227,785,250 $238,933,134


Total # of Deals 51 59 20 5 135

Total Sq Ft 7,038,457 3,983,586 3,238,633 211,113 14,471,789

Total Dollar Volume $3,623,527,593 $3,168,239,876 $1,588,420,111 $79,474,250 $8,459,661,830

Avg Price PSF* $601 $795 $517 $376 $639

Avg Deal Size $71,049,561 $53,698,981 $79,421,006 $15,894,850 $62,664,162

* Excludes Bush Tower (130 West 42nd Street), a repositioning opportunity; 209 East 43rd Street, a leasehold position and 1407 Broadway, a consolidation of the leasehold and sub‐leasehold positions, that remains subject to a ground lease.

* Price psf does not include the sale of 514 Eleventh Avenue as the property was put under contract in 2011, and 20 Broad Street as it is a leasehold.


Snapshot 4Q2015

MARKETS GROUP 7 Uptown properties are north of 125th Street


2015 Manhattan Retail Investment Sales Activity By Submarket


Total # of Deals 30 37 5 1 73

Total Sq Ft 899,978 517,071 76,124 1,508,437 1,508,437

Total Dollar Volume $3,248,792,322 $1,888,741,307 $120,113,689 $12,500,000 $5,270,147,318

Avg Price PSF $3,883 $3,846 $1,594 $819 $3,671

Avg Deal Size $108,293,077 $51,047,062 $24,022,738 $12,500,000 $72,193,799

Midtown Midtown South Downtown Total

Total # of Deals 14 7 1 22

Total Keys 6,846 1,408 228 8,482

Total Dollar Volume $6,115,967,519 $967,314,000 $150,000,000 $7,233,281,519

Avg Price Per Key $1,236,441 $687,013 $657,895 $888,870

Avg Deal Size $436,854,823 $138,187,714 $150,000,000 $328,785,523

2015 Manhattan Hotel Investment Sales By Submarket


Snapshot 4Q2015

MARKETS GROUP 8 Source: Moody’s.com


Unemployment Rate – US/NYC MSA/Manhattan

US: 5.0%

NYC MSA 4.8%

Manhattan: 5.2%

% U

nem

ploy

men

t

The December jobs report came in at +292,000 new jobs vs an expected 200,000. The Department of Labor expects the labor market to continue its strong pace into 2016 with an eye towards an uptick in wage growth.

3.5

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United States NYC Metropolitan Statistical Area Manhattan


Snapshot 4Q2015

MARKETS GROUP 9

71

62 58

10

21

11.56

1960s 1970s 1980s 1990s 2000s 2010 - Present

Net addition to supply over past 3 decades (1990’s + 2000 + 2010-Present) = 3.9 MSF per decade. Long term, new development will deliver product to Downtown and the Far West Side.

Squa

re F

eet (

milli

ons)

11 Times Square – 1,100,000 200 West Street – 2,000,000 450 W 14th Street – 135,000 51 Astor Place – 430,000 50 W 47th Street – 745,000 540 Madison – 300,000 1 WTC – 3,500,000 4 WTC – 2,300,000 250 West 55th Street – 1,050,000 7 Bryant Park – 470,000

Note: Total construction square footage includes all new office buildings above 100,000 SF. Source: JLL Research


New York Market Perspective New Office Building Construction by Decade

Average = 63.6 MSF per decade

Average = 14.2 MSF per decade

Inventory reduced by 31 MSF due to World Trade Center (15 MSF) and residential

conversions (16 MSF)

270 Park Ave - 1,132,460

1285 Sixth Avenue - 1,473,950

643 West 43rd St - 1,128,000

1 Chase Manhattan Plaza- - 1,898,158

399 Park Ave - 1,250,000

60 Broad St - 1,014,041

200 Park Ave - 2,254,274

1290 Sixth Avenue - 1,987,328

277 Park Ave - 1,529,945

1301 Sixth Avenue - 1,764,411

59 Maiden Ln - 1,043,007

245 Park Ave - 1,611,046

26 Federal Plaza- 1,109,969

140 Broadway - 1,200,000

909 Third Ave - 1,125,000

767 Fifth Ave - 1,637,379

1345 Sixth Avenue - 1,640,000

2 Penn Plaza- - 1,500,000

1 NY Plaza- -2,103,750

345 Park Ave - 1,600,519

450 West 33rd St - 1,500,000

153 East 53rd St - 1,492,860

1166 Sixth Avenue- 1,430,000

1211 Sixth Avenue- - 1,734,105

1 Bankers Trust Plaza- - 1,363,334

1633 Broadway - 2,240,000

1 Penn Plaza- - 2,072,136

1 Liberty Plaza- - 2,121,437

55 Water St - 3,600,000

9 West 57th St - 1,500,000

1114 Sixth Avenue- - 1,310,000

1185 Sixth Avenue- - 1,000,000

1221 Sixth Avenue- - 2,200,000

1251 Sixth Avenue- - 1,893,652

1515 Broadway - 1,417,450

1 WTC - 3,958,091

2 WTC - 3,958,091

2 NY Plaza- - 1,345,919

237 Park Ave - 1,142,196

55 East 52nd St - 1,050,000

101 Park Ave - 1,137,000

590 Madison Ave - 1,016,413

335 Madison Ave - 1,046,984

85 Broad St - 1,040,000

101 Barclay St - 1,140,000

787 Seventh Ave - 1,429,610

1 WFC - 1,461,365

3 WFC - 2,300,000

4 WFC - 1,600,000

2 WFC - 2,200,000

7 WTC - 1,855,000

Financial Sqr - 1,000,301

825 Eighth Ave - 1,550,212

388 Greenwich St - 1,600,000

60 Wall St - 1,587,849 1585 Broadway - 1,220,732

4 Times Square - 1,477,631

383 Madison Ave - 1,200,000 745 Seventh Ave - 1,036,741 5 Times Square - 1,062,203 Columbus Center - 1,016,000 731 Lexington Ave – 1,300,000 300 Madison Ave - 1,200,000 7 Times Square - 1,000,000 7 WTC - 1,700,000 1101 Sixth Avenue- - 2,100,000 620 Eighth Ave - 1,500,000


Snapshot 4Q2015

MARKETS GROUP 10

F I R S T A V E N U E

S E C O N D A V E N U E

T H I R D A V E N U E

L E X I N G T O N A V E N U E

P A R K A V E N U E

M A D I S O N A V E N U E

F I F T H A V E N U E

S I X T H A V E N U E

S E V E N T H A V E N U E

34TH

STR

EET

23R

D S

TREE

T

14TH

STR

EET

42N

D S

TREE

T

1

E I G H T H A V E N U E

N I N T H A V E N U E

T E N T H A V E N U E

E L E V E N T H A V E N U E

57TH

STR

EET

9

8

13

15

16

17

18

21

22

23 19 26 10

27

2 4

5

6

11 24

25

20 14 28 7

3

12


Manhattan Office Space Deliveries


Snapshot 4Q2015

MARKETS GROUP 11

7 Bryant Park Hines 473K s.f.

Floorplate: 15-25K Bank of China (288K)

Deliv

ered

1

75 Rockefeller Pl. RXR Realty 623K s.f.

Floorplate: 14-30K BoA ML (311K)

Deliv

ered

3

390 Madison Avenue L&L Holding 858K s.f.

Floorplate: 19-47K Under renovation BCG (300K) 20

16

7

860 Washington St. Romanoff Equities 114K s.f.

Floorplate: 13K

Deliv

ered

2

430 West 15th Street Atlas Capital Group 99K s.f.

Floorplate: 12K Palantir Tech. (99K)

Deliv

ered

4

One SoHo Square Imperium Capital/Stellar Management 700K s.f.

Floorplate: 26-33K Warby Parker (54K)

Deliv

ered

6

125 West 25th Street Normandy/ Waterbridge Capital

138K s.f. Floorplate: 11K De

liver

ed 5

10 Hudson Yards Related Companies 1.7M s.f. Floorplate: 30-45K

Under construction Coach (738K), L’Oreal (402K), SAP (115K), BCG (250K), VaynerMedia (90K)

2016

9

855 Avenue of the Americas Durst Organization 204K s.f.

Floorplate: 10-48K Under construction Nike (148K) 20

16

8

55 Hudson Yards Related Companies 1.5M s.f.

Floorplate: 28-40K Under construction Boies, Schiller & Flexner (83K), MLB.com (225K)

2018

13

510 West 22nd St. Vornado Realty/ Albanese Organization

163K s.f. Under Construction

2017

10

61 Ninth Avenue (400 West 15th St.) Vornado Realty Trust/Aurora 158K s.f.

Floorplate: 13-20K Under construction

2017

11

3 WTC Silverstein 2.9M s.f.

Floorplate: 29-68K Under construction McGraw Hill (S&P) (1.0M), GroupM (516K)

2018

14

Pier 57 (SuperPier) RXR/Youngwoo 300K s.f.

Floorplate: TBD Under renovation Google (250K) 20

17

12

1 Vanderbilt SL Green 1.5M s.f.

Floorplate: TBD Planned TD Bank (200K) 20

21

22

511 West 35th St. Spitzer Enterprises 1.1M s.f.

Floorplate: 30-40K Potential

TBD

26

555 West 34th St. Moinian Group 1.8M s.f.

Floorplate: 35-48K Proposed

TBD

23

20 Times Square Vornado Realty Trust & Port Authority of NY & NJ

1.6M s.f. Potential

TBD

27

75 Ninth Avenue Jamestown 300K s.f.

Floorplate: 144K Planned expansion

TBD

24

300 Lafayette St. LargaVista 83K s.f.

Floorplate: TBD Proposed

TBD

25

5 WTC Port Authority of NY & NJ 1.3M s.f.

Floorplate: 31K Potential

TBD

28

1 Manhattan West Brookfield Office 2.1M s.f.

Floorplate: 30-35K Under construction Skadden (535K), Fried Frank

2018

15

30 Hudson Yards Related Companies 2.6M s.f. Floorplate: TBD

Construction begins 2015 KKR (300K), Time Warner (1M), Oxford (80K), Related (72K)

2018

+

16

425 Park Avenue L&L Holding 650K s.f.

Floorplate: TBD Under renovation Citadel (100K)

2018

+

17

50 Hudson Yards Related Companies 2.3M s.f.

Floorplate: TBD Planned

2019

18

2 Manhattan West Brookfield Office 3.0M s.f.

Floorplate: TBD Planned

2020

21

435-449 Tenth Ave. Tishman Speyer 2.6M s.f.

Floorplate: 30-40K Proposed

2019

19

2 WTC Silverstein 3.1M s.f.

Floorplate: 41-65K Planned 20th Century Fox/News Corp. (1.2M) 20

20

20

Those noted as delivered were opened in 2015 Tenants in red are signed

Tenants in black are rumored


Manhattan Development


Snapshot 4Q2015

MARKETS GROUP 12

Sales Activity Price PSF

US $

billio

ns

Source: JLL New York Capital Markets Group Numbers in parentheses represent the number of Class A transactions each year .

In 2015, 8 of the 21 Class-A transactions were for a partial interest share.


Annual Investment Sales Activity

# of Class A Transactions

111 78 58 83 165 170 259 346 191 66 136 245 275 223 442 589

$10.3 $12 $8.5 $10 $15 $21 $35 $48.5 $19.6 $3.5 $12.4 $25 $25 $30.2 $39.8 $60.3

12

# OF DEALS

VOLUME ($B)

$340 (12)

$421 (9)

$443 (15)

$475 (17)

$434 (14)

$549 (15)

$749 (28)

$875 (41)

$941 (15)

$335 (2)

$590 (10)

$836 (7)

$743 (7)

$1,083 (15)

$1,344 (6)

$1,096 (21)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$0

$10

$20

$30

$40

$50

$60

$70

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Midtown and Midtown South Downtown Weighted Average Midtown Class A Office Price PSF


Snapshot 4Q2015

MARKETS GROUP 13

REIT 13%

Foreign 16%

Private Capital

61%

Pension Fund 10%

REIT 15%

Foreign 19%

Private Capital

63%

Pension Fund 3%

REIT 20%

Foreign 10%

Private Capital

46%

Pension Fund 19%

Corporate / User 5%

REIT 11%

Foreign 45%

Private Capital

44%

Based on 2015 Sales of $60.3 Billion

Demand for NYC real estate continues from investors domestically and globally. Foreign investors are now participating in all product types, no longer just seeking trophy office product.

Based on 2014 Total Sales of $39.8 Billion



Source: JLL New York Capital Markets Group


Annual Investment Sales by Investor Profile


Snapshot 4Q2015

MARKETS GROUP 14



Foreign Capital Inflows

$1.585 B

$975 M

$615.5 M

$552.5 M $525 M

$491.7 M $385.2 M

$334.95 M $284.2 M

$205.8 M $193.3 M

$163.5 M $150 M $148.4 M $120.3 M $109.5M $99 M $98.3 M

$48 M $37.2 M $25.6 $18.5 M $14.5 M

Average Deal Size by Country

Foreign Transactions YTD

$27 B

45% of $

Invested

10% of Deal Flow

59 Deals


Snapshot 4Q2015

MARKETS GROUP 15

Percent of foreign investment activity by dollar volume

$1.155 B 4%

$150 M 0.56%

$120.3 M 0.45%

$9.512 B 35.26%

$7.376 B 27.32%

$99 M 0.37%

$580 M 2.15%

$1.231 B 4.56%

$14.5 M .05%

$445.3 M 1.65%

$51.2 M 0.19%

$1.029 B 4%

$98.28 M 0.36%

$1.945 B 7.2%

$669.892 M 2.48%

$163.5 M 0.6%

$1.105 B 4%

$284.235 M 1.05%

$525 M 1.94%

$328.5 M 1.22%

$48 M 0.18%

$37.2 M 0.14%

$18.5 M .07%

Dollars Invested by Country of Origin

Abu Dhabi 3 Bahrain 1 Brazil 1 Canada 6 China 15 England 1 Germany 3 Hong Kong 2India 1 Israel 3 Italy 2 Japan 5 Kuwait 1 Norway 2 Qatar 2 Singapore 1South Korea 2 Spain 1 Sri Lanka 1 Sweden 3 Switzerland 1 Taiwan 1 Turkey 1

China



Foreign Capital Inflows

Number of Deals per Country

China Canada

Norway Qatar


Snapshot 4Q2015

MARKETS GROUP 16 Source: JLL New York Capital Markets Group


Midtown Class A Cap Rates vs. Rent Growth & 10-Yr Treasuries Weighted Average Cap Rates, 2000 – 2015

Cap Rate

Cap rates have remained steady at just shy of 4% for Midtown Class-A office. Even with the 25 basis point increase by the Federal Reserve in Q4, there remains ample room for investors

to continue borrowing with positive leverage.

7.30% 7.58% 7.34%

6.34%

4.93% 4.64%

4.04% 3.55%

4.45%

5.85% 5.24%

4.40% 4.60% 4.30% 3.88% 3.79%

6.20%

5.40% 5.10%

3.40%

4.70%

3.90% 5.10%

4.90% 3.90% 3.70% 3.30%

2.90%

1.50% 2.10%

2.50% 2.19%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Note: 10-Yr Treasury as of June for each year (does not include the spread) except 2015 which is year-end.

10-Yr Treasury

Y-O-Y rent growth 24% (4%) 11% (7%) 7% 4% 18% 29% 1% (27%) 1% 8% 3% 4% 2% 3%

16


Snapshot 4Q2015

MARKETS GROUP 17

1568 Broadway (Doubletree Guest Suites Times Square)

• Hotel • 468 Keys • 304,584 SF • Seller: Sunstone Hotel • Buyer: Maefield

Development • $540,000,000 • $1,153,846 Per Key • $1,773 PSF • 3.4% going-in cap rate • The hotel includes 6,000

square feet of meeting space.

• The buyer plans on expanding the room count, retail space and adding additional digital signage.

151 West 54th Street (Leasehold Interest in the London Hotel)

• Hotel • 564 Keys • 334,125 SF • Seller: Blackstone Group • Buyer: ADIA • $382,000,000 • $677,305 Per Unit • $1,143 PSF • The property includes a

9,000 square foot carriage house.

Peter Cooper Village & Stuyvesant Town

• Multifamily • 11,200 Units • Seller: CW Capital • Buyer: The Blackstone

Group JV Ivanhoe Cambridge

• $5,456,596,787 • $487,196 Per Unit • As part of the transaction,

the buyers will reserve 4,500 units at the complex for middle-income families for the next 20 years and an additional 500 units for low income families.

206-208 Amsterdam Avenue

• Development Site • 400,000 BSF • Seller: American

Continental Properties • Buyer: SJP JV Misui

Fudosan • $275,000,000 • $688 PBSF • Located between West 69th

& West 70th Streets. • Zoning allows for a 600 foot

tall residential tower.

.

Notable Manhattan Transactions 4Q2015

December 2015 December 2015 December 2015 October 2015 October 2015

120 West 45th Street (Tower 45)

• Office-A • 458,446 SF • Seller: SL Green • Buyer: Kamber

Management • $365,000,000 • $796 PSF • 3.2% going-in cap rate • 99% occupied • Major tenants include DE

Shaw Research, Schrodinger, DeVry Education Group and Curex Group.



Snapshot 4Q2015

MARKETS GROUP 18

1710 Broadway • Development Site • 367,377 BSF • Seller: C&K Properties • Buyer: Extell Development • $247,163,900 • $673 PBSF • Located on the NE corner

of West 54th Street & Broadway.

• The development site will likely be a mixed-use project including residential condominiums, a hotel component, retail and signage. There are no height restrictions.

445 Fifth Avenue • Retail Condominium • 18,371 SF • Seller: Thor Equities

Buyer: Harbor Group International

• $68,000,000 • $3,701 PSF • 4.3% going-in cap rate • Charming Charlie's

occupies 16,171 square feet through 1/30.


Notable Manhattan Transactions 4Q2015

December 2015 December 2015 December 2015 December 2015 December 2015

250 West 39th Street • Office • 207,895 SF • Seller: Lincoln Property • Buyer: Alduwaliya • $123,500,000 • $594 PSF • 4.3% going-in cap rate • 99% occupied • Two tenants occupy 32% of

the space with no other tenant leasing more than 10% of the space.

• Weighted average rent is $39.60 per square foot..

210 West 70th Street (The Bradford) • Multifamily • 173 Units • 171,085 SF • Seller: RREEF Funds • Buyer: Stonehenge

Partners • $133,000,000 • $768,786 Per Unit • $789 PSF • 3% going-in cap rate. • The property includes

11,000 square feet of ground floor retail space.

660-676 Columbus Avenue • Retail Condominium • 67,001 SF • Seller: Starret Company • Buyer: The Klein Group • $60,500,000 • $903 PSF • 2.2% going-in cap rate • Newly constructed with

17,921 square feet of ground floor selling space.

• Two existing tenants include Party City and Icon Parking, with one vacant storefront.


Snapshot 4Q2015

MARKETS GROUP 19

Market Snapshot

- Manhattan Capital Markets - Manhattan Leasing Market



Snapshot 4Q2015

MARKETS GROUP 20 Source: Economy.com/JLL Research Services

Overview

With the jobs number reaching over 4.25 million, employment remained at record levels.

Though 2015 employment will not surpass the record 121,000 job additions in 2014, the net addition to the employment market will reach nearly 100,000 by the time the final figures are released for 2015.

At 4.8 percent, the city’s unemployment rate through November was at its lowest since the recession and will likely hover near this low through the end of the year.

With the near-term delivery of several Class-A assets, tenants were cautious about early renewals or executing large block leases given the new supply coming online. As a result, large block leasing activity was down in 2015, however, 2016 will likely see an uptick in large block leasing activity.

Financial services recaptures market lead from TAMI as four of the top ten leases were financial services compared with only two last year. Midtown Trophy & “Super Trophy” buildings outperform the rest of the market, with the Midtown Trophy average asking rent increasing 6.5 percent in 2015 to $99.42 per square foot. Demand for Manhattan’s premier space rose to pre-recession levels.

After outperforming Midtown the last two years, Downtown leasing activity dropped in 2015. Higher rent growth in Downtown versus the rest of the market may have contributed to this slowdown—the discount between Downtown and Midtown overall asking rents fell to its slimmest margin since 2000, or approximately 20 percent.

MANHATTAN LEASING MARKET

New York City’s Economy

Real Estate Trends


Snapshot 4Q2015

MARKETS GROUP 21

Current Office Market Statistics 4Q2015


MARKET SEGMENT INVENTORY (R.S.F.) VACANCY ASKING RENT

Midtown Trophy* 72,610,281 7.7% $99.43

Midtown Class A 188,461,673 10.4% $80.24

Midtown Class B 96,664,951 8.9% $56.74

Midtown Overall 285,126,624 9.9% $73.19 Downtown Trophy* 32,991,214 16.3% $67.20 Downtown Class A 57,896,842 12.0% $62.54 Downtown Class B 40,027,480 9.9% $48.74 Downtown Overall 97,924,322 11.1% $57.60 Midtown South Class A 25,994,294 5.6% $78.41

Midtown South Class B 37,728,769 6.7% $62.11

Midtown South Overall 63,723,063 6.3% $68.06 MANHATTAN OVERALL 446,774,009 9.6% $68.73


Snapshot 4Q2015

MARKETS GROUP 22

$64.97

$56.44

$47.17

$59.44

$67.65

$57.88

$50.19

$61.81

$70.31

$60.78

$54.43

$65.25

$73.19

$68.06 $57.60

$68.73

$0

$10

$20

$30

$40

$50

$60

$70

$80

Midtown Midtown South Downtown Manhattan

4Q2012 4Q2013 4Q2014 4Q2015

11.70%

7.20%

12.40%

11.20%

11.10% 8.40%

12.70%

11.10%

9.70% 6.90%

10.70%

9.50%

9.90%

6.30%

11.10%

9.60%

0%

2%

4%

6%

8%

10%

12%

14%

16%


4Q2012 4Q2013 4Q2014 4Q2015

$72.78

$70.15 $51.31

$66.18

$75.38

$74.58

$54.77

$68.83

$77.11

$71.15 $58.60

$71.68

$80.24

$78.41 $62.54

$75.71

$0$10$20$30$40$50$60$70$80$90


4Q2012 4Q2013 4Q2014 4Q2015

12.30% 9.60%

14.30%

12.60%

11.70%

6.10%

14.30%

12.10%

10.70%

3.90%

11.60%

10.50%

10.40%

5.60%

12.00%

10.30%

0%

2%

4%

6%

8%

10%

12%

14%

16%


4Q2012 4Q2013 4Q2014 4Q2015

Manhattan Class A Vacancy Rates

Manhattan Class A Asking Rents

Manhattan Overall Vacancy Rates

Manhattan Overall Asking Rents PSF PSF

Yearly Comparison by Major Market



Snapshot 4Q2015

MARKETS GROUP 23

$40.64

$42.42

$37.22

$61.39

$58.09

$56.82

$10.00

$46.67

$47.06

$56.82

$64.03 $50.80

$0

$10

$20

$30

$40

$50

$60

$70

2Q2010 4Q2011 4Q2012 4Q2013 4Q2014 4Q2015

Midtown Downtown

$32.89 $26.56

$36.23

$38.58

$14.00

$37.78

$14.33

$30.00

$30.11

$47.50 $38.25

$33.05 $26.25

$34.37

$34.53

$38.00

$18.89

$32.60

$0$5

$10$15$20$25$30$35$40$45$50

1Q2010 4Q2011 4Q2012 4Q2013 4Q2014 4Q2015

Midtown Downtown Midtown South

5.1

5.1

9.0

8.8

7.0

6.7

6.6

9.1

8.9

6.9

0123456789

10

4Q2011 4Q2012 4Q2013 4Q2014 4Q2015

Midtown Downtown

Tenant Improvements Free Rent

CLASS

A

4.1

4.9

7.8

3.3

5.0 4.7

5.0

6.3

3.9

5.6

6.1

4.7

6.2 5.2

0123456789

4Q2011 4Q2012 4Q2013 4Q2014 4Q2015

Midtown Downtown Midtown South

PSF

PSF Months

Months

Landlord Concessions by Year


CLASS

B


Snapshot 4Q2015

MARKETS GROUP 24

$52.94

$62.54

$48.69 $43.58

$20

$25

$30

$35

$40

$45

$50

$55

$60

$65

4Q20

081Q

2009

2Q20

093Q

2009

4Q20

091Q

2010

2Q20

103Q

2010

4Q20

101Q

2011

2Q20

113Q

2011

4Q20

111Q

2012

2Q20

123Q

2012

4Q20

121Q

2013

2Q20

133Q

2013

4Q20

131Q

2014

2Q20

143Q

2014

4Q20

141Q

2015

2Q20

153Q

2015

4Q20

15

Asking Rent Net Effective Rent (NER)

$90.04 $80.31

$76.94

$75.46

$20

$30

$40

$50

$60

$70

$80

$90

$100

4Q20081Q20092Q20093Q20094Q20091Q20102Q20103Q20104Q20101Q20112Q20113Q20114Q20111Q20122Q20123Q20124Q20121Q20132Q20133Q20134Q20131Q20142Q20143Q20144Q20141Q20152Q20153Q20154Q2015

Asking Rent Net Effective Rent (NER)

Net Effective Rent (-10%)

Asking Rent (+18% )

Downtown - Class A

Asking Rent (-11% )

Net Effective Rent (-2%)

Midtown - Class A

Asking Rent vs. Net Effective Rent Peak 4Q2008 to 4Q2015 (Direct/Renewal/Expansion)



Snapshot 4Q2015

MARKETS GROUP 25

Absorption (MSF) Leasing Activity (MSF)

Historical Absorption and Leasing Activity


0

5

10

15

20

25

30

35

40

45

50

199519961997199819992000200120022003200420052006200720082009201020112012201320142015

Millio

n Sq

uare

Fee

t

Millio

n Sq

uare

Fee

t

4

8 12 10

6

-1

-19

-2

3

7 9

7

2

-13 -10

4 2

-3

4 9

-0.2

-23.0

-18.0

-13.0

-8.0

-3.0

2.0

7.0

12.0

199519961997199819992000200120022003200420052006200720082009201020112012201320142015


Snapshot 4Q2015

MARKETS GROUP 26

•Inflation adjusted rent (from 2000) is 16.7% higher than 4Q2015 asking rents.

Midtown Class A Asking Rent Adjusted for Inflation (CPI)


$67.94

$53.74

$90.57

$77.11

$93.17

$50

$55

$60

$65

$70

$75

$80

$85

$90

$95

$100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Recorded Asking Rent CPI Adjusted 2000 Rent


Snapshot 4Q2015

MARKETS GROUP 27

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Midtown Downtown

Midtown and Downtown – Class A Asking Rents


1997-2000 rent increase Midtown 67%

Downtown 42%

2004-2007 rent increase Midtown 57%

Downtown 54%

2008-2009 rent decrease Midtown -28%

Downtown -24%

CLASS A ASKING RENTS Midtown Downtown 2015 $80.24 $62.54 2014 $77.11 $58.60 2013 $75.38 $54.77 2012 $72.78 $51.31 2011 $70.80 $42.33 2010 $65.81 $40.95 2009 $65.19 $40.17 2008 $90.04 $52.94 2007 $90.57 $51.21 2006 $70.28 $49.14 2005 $59.71 $32.67 2004 $57.58 $33.09 2003 $53.74 $35.36


Snapshot 4Q2015

MARKETS GROUP 28

42%

31%

14%

8%

5%

Leasing Activity by Block Size


Manhattan Deals Greater Than 100,000 s.f. New and Renewal Transactions

4Q2015 Leasing Activity By Block Size New and Renewal Transactions (# of deals)

Less than 10,000 sf (42%)

10,000-24,999 sf (31%)

25,000-49,999 sf (14%)

50,000-99,999 sf (8%)

100,000 + sf (5%)

20 25 23 22 20 25 27 23 19 27

18

2

27

16 16 26

24 17 22 24

16

8 22

52

39 38 46 49

44 45 41 43

26

0

10

20

30

40

50

60

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

New Renewals


Snapshot 4Q2015

MARKETS GROUP 29

Top-Tier Transactions Number of deals with starting rents greater than $80

MANHATTAN LEASING MARKET Top 5 Leases (Rent PSF) 2011 to 2015 2015 Address S.F. Starting Rent AQM Capital 375 Park Avenue 3,000 $177.00 CRG LP 375 Park Avenue 2,082 $175.00 DAK Investments 375 Park Avenue 2,941 $172.00 Berkley Insurance 375 Park Avenue 18,214 $170.00 Perez-Llorca US LLP 375 Park Avenue 1,927 $170.00 2014 Address S.F. Starting Rent Artemus Capital Management 667 Madison Avenue 8,500 $185.00 Glenview Capital Management 767 Fifth Avenue 41,000 $185.00 Icahn Enterprises 767 Fifth Avenue 43,000 $180.00 Berkley Insurance Company 375 Park Avenue 7,187 $165.00 Tenantwise 375 Park Avenue 1,927 $163.00 2013 Address S.F. Starting Rent Banco Itau 767 Fifth Avenue 16,000 $195.00 Fintech 375 Park Avenue 6,375 $163.00 Temasek 375 Park Avenue 16,979 $160.00 SPG Partners 667 Madison Avenue 14,250 $150.00 Wellspring Capital Management LLC 390 Park Avenue 10,726 $150.00 2012 SSC 9 W 57th Street 5,200 $185.00 Icahn & Company 767 Fifth Avenue 27,808 $178.00 Princeton Holdings 375 Park Avenue 5,700 $140.00 InvestIndustrial 375 Park Avenue 3,700 $140.00 Clayton, Dubilier & Rice 375 Park Avenue 34,245 $136.00

14 35

57 80 69

17 33 46

69 58 88

103

14

18

50

81 91

14

19

46

51 81

64 64

0

20

40

60

80

100

120

140

160

180

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$80 to $99 $100 and Greater

Num

ber o

f dea

ls


Snapshot 4Q2015

MARKETS GROUP 30

Jones Lang LaSalle 330 Madison Avenue New York, NY 10017 (212) 812-5700

Richard Baxter Vice Chairman +1 212 812 6443 [email protected]

Jonathan Caplan Vice Chairman +1 212 812 6440 [email protected]

Yoron Cohen Vice Chairman +1 212 812 6442 [email protected]

Scott Latham Vice Chairman +1 212 812 6441 [email protected]

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JLL New York Capital Markets Group

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