Overview of Manhattan Real Estate-Year End 2011

1. Manhattan
Commercial
Real Estate
Market
Indicators
February 2012

2. Manhattan Real Estate Market Overview
• The anticipated recovery of the Midtown market which began in the second half of 2010 and into the first and second quarters of 2011 has
slowed. More than 50% of the 2011 leasing activity was completed in the first six months of the year.
• Renewal activity represented 29% of leasing activity in Midtown compared to 25% in 2010, but less than the 34% we witnessed in 2009.
• Average asking rents in Midtown increased by 11.5% in 2011, but the pace of growth slowed in the second half of the year from June
through October. Rental growth in higher quality buildings has continued to outpace the broader market, particularly for space on higher
floors. Downtown rents have seen only marginal increases (3.4%) over the past year further widening the pricing delta versus Midtown.
• Although Midtown’s leasing activity was up nearly 26% in the first half of 2011, activity in 3 of the past months was below the 5-year
monthly average (with 2 months only slightly above) and leasing for the entire year was essentially on par with 2010. By contrast,
Downtown’s 2011 leasing activity nearly doubled last year’s (with positive absorption for the first time since 2007), although the majority of
activity was centered on Class A large blocks (including new development), with older buildings competing largely on price.
• Midtown South is on fire as the tech, d
d h f h h digital media companies flood the market place. Leasing activity was up 20% year over year and was
l d fl d h k l d
the highest its been since 2000. The market is so tight that it now boasts the lowest office space availability rate in the United States!
• As a result of positive absorption Downtown, the availability rate has declined from 13.4% at the beginning of 2011 to 10.5% today.
However, much of the space anticipated to be available Downtown (including 1 and 4 World Trade, as well as 2 and 4 World Financial
Center, among others) falls outside of the statistical definition of being ready for occupancy in the next 12 months; including the 5 million
sq. ft of th
ft. f these k
known l large bl k would i
blocks ld increase DDowntown’s availability to over 17%.
t ’ il bilit t 17%
• Any Downtown market recovery will lag Midtown, and overall sentiment is mixed as the limited large-block activity is centered on Class A
buildings and new development. The balance of the activity Downtown has been on buildings with lower pricing.
• A number of large firms are taking advantage of the market conditions to pursue long-term strategic alternatives, including the
consolidation of new developments slated for delivery in 2014-2017 which could provide a large tenant with a block of contig o s space
de elopments deli er 2014 2017 co ld pro ide contiguous
(Hudson Yards, World Trade Center, 250 West 55th Street, SL Green project at 42nd Street, Minskoff’s Astor Place).
• With the lingering European debt crisis and new regulations hitting Wall Street it is anticipated that the financial industry could lose 10,000
jobs in 2012. For every job lost on Wall Street there are 2 others that are lost. This could mean that more financial firms shed space which
could put pressure on further price increases, particularly in Midtown . Counter balancing this will be the continued flow of tech deals in
Midtown South and Downtown. All in all we expect 2012 to be a bit better than 2011 and 2013 to be a bit better than 2012. Stay tuned
Downtown 2012 tuned…..

3. Historical Statistics

4. Midtown Pricing
Top MT Buildings v Class “A” Proxy v Class “B” Proxy

5. Downtown Pricing
Average Asking Rents – Top Downtown Buildings vs. Rest of Market

6. “Feet on the Street”
Top Lease Transactions for the month ended December 31, 2011:
p ,
• Young & Rubicam signed a 339,132 sq. ft. deal at 3 Columbus Circle. Of that
214,000 sq. ft. represented commercial condo interest and 125,000 sq. ft. was
leased.
• City of New York renewed and expanded to 302,405 sq. ft at 330 West 34th Street.
• Guggenheim Partners LLC inked a 186,151 sq. ft. deal at 330 Madison Avenue.
• Limited Brands, Inc. Renewed and expanded to 96,539 sq. ft. at 1740 Broadway.
• Digital Generation completed an 86,137 sq ft. deal at 1633 Broadway
86 137 sq. ft Broadway.
• City University of New York inked a 95,746 sq. ft. deal at 205 Hudson Street.
• Chandler Chicco Agency renewed and expanded to 81,266 sq. ft. at 450 West 15th
Street.
• AppNexus signed a 66,000 sq. ft. deal28 West 23rd Street.
• Vente-Privee USA, Inc closed a 60,667 sq. ft. deal at 345 Hudson Street.
• Express renewed and expanded to 60,500 sq. ft. at 111 Fifth Avenue.
• Municipal Credit Union of New York renewed 120 296 sq ft at 22 Cortland Street
120,296 sq. ft. Street.
• Duane Reade Inc. signed a 54,500 sq. ft. deal at 1 Liberty Plaza.
• Getco, LLC inked a 44,513 sq. ft. lease at 1 Liberty Plaza.
• Odyssey America Reinsurance did a 41,854 sq. ft. at 100 William Street