Lower Manhattan Real Estate Market Overview Q2 2016

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ALLIANCE FOR DOWNTOWN NEW YORK

LOWER MANHATTAN REAL ESTATE MARKET OVERVIEW

Q2 2016

COMMERCIAL OFFICE MARKET Lower Manhattan’s commercial market sent mixed signals through the second quarter of 2016, echoing trends also seen in other submarkets. Office leasing was on par with activity last year but still below the historical average, and news of new major tenant relocations remained quiet. Despite this, there were clear areas of strength. The vacancy rate is currently below 10 percent, and key Lower Manhattan companies committed to stay or expand in new locations south of Chambers Street. The arrival of new commercial tenants and the opening of hotels and retail has pushed Lower Manhattan’s private sector employment to grow, reaching a new post-2001 peak of more than 232,000 employees as of the end of 2015. 1

EMPLOYMENT Private sector employment climbed to nearly 232,200 employees as of the end of 2015, marking the sixth consecutive year of growth and the highest point since Lower Manhattan had 236,700 private sector employees at the end of 2001. This reflects a net growth of 5,100

Private Sector Employment Private 232,200 Total Sector Workers Workers 5,100 Additional Year Over Year workers or 2% growth year over year. The employment expansion cuts across all the key sectors that have been fueling Lower Manhattan’s economy and leasing activity.

The hotel, retail and restaurant sectors added the largest share of employees to Lower Manhattan over the course of 2015. These industries grew by more than 2,000 employees or 10%. More than 58 stores and restaurants were added to the retail market, including Brookfield Places’ offerings as well as three hotels with over 433 rooms.2 2 Reflects net growth in retailers and restaurants

1 Reflects latest data available. Source: New York State Department of Labor, Q4 2015 data

PRIVATE SECTOR EMPLOYMENT GROWTH, 2001 - 2015 Source: New York State Department of Labor

240,000

236,737

Peak Employment Since 2001

230,000

232,150

220,000

211,405

214,320

210,000

200,000

199,491

190,000

180,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Note: Reflects Q4 Data only.

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Lower Manhattan’s employment market also experienced growth in many of the sectors that have driven office leasing activity and the diversification of Lower Manhattan’s economy in recent years.

Education and Healthcare added more than 1,300 employees to the private sector. New schools from pre-K to colleges and professional programs have opened their doors, and new healthcare tenants (such as Planned Parenthood at 123 William Street and Progenics Pharmaceuticals at One World Trade Center) have made their headquarters south of Chambers Street. Other office-using industries, such as Professional Services and Information and Media, have also expanded. Significant media companies– such as TIME, which relocated in late 2015– are driving an increase in Information sector employment, which expanded by more than 1,100 employees in the final quarter of 2015 alone.

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Westfield World Trade Center, which includes 365,000 square feet of retail, shops and dining, will be one of Lower Manhattan’s major employers when it opens its doors on August 16th, 2016. More than 120 stores and restaurants in the Oculus, as well as Fulton Center, are expected to employ an estimated 10,000 full and part-time workers.

Westfield held a job fair as well as interview skill and resume-building seminars during late June at the Conrad Hotel to attract retail employees. Hotel, Retail and Restaurant employment currently totals more than 21,700 employees in Lower Manhattan and can only be expected to rise as Westfield and other major retail additions– such as the complex of stores and dining at Pier 17 and Saks Fifth Avenue at Brookfield Place– are unveiled over the next year. The Downtown Alliance published an economic impact study, Surging Ahead, detailing anticipated employment growth in the hotel, retail and restaurant sectors, as well as other sectors, in late 2015. To view, please click here.

Education & Healthcare Employment Up

1,300

Workers Year Over Year

GAINS IN PRIVATE SECTOR EMPLOYMENT BY INDUSTRY, Q4 2014 - Q4 2015 Source: New York State Department of Labor

Private Sector Employees

2,500 2,000

2,016

1,371

1,500 1,000

695

646

500

646

526 99

Hotel, Retail & Restaurants

Education & Social Services

Other Services

FIRE

Administrative Professional & Support Services

Information

Note: Other Services includes personal services, such as repair shops, launderies, hair salons, health clubs, as well as a variety of nonprofits, unions, trade associations, etc.

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LEASING ACTIVITY Lower Manhattan leasing activity was quiet through mid-year, mirroring the citywide trend of below average activity. Totaling 1.07 million square feet, according to CBRE, second-quarter leasing is down 20% from the five-year average but up 11.5% from a sluggish first quarter. Second quarter activity was buoyed by existing Lower Manhattan tenants signing large deals to expand or move to new spaces throughout the district.

Through mid-2016, Lower Manhattan’s leasing activity totals just over two million square feet, on par with last year’s pace at this time. Yearto-date leasing activity is still down 16% from the five-year average.

NEW LEASING ACTIVITY BY INDUSTRY IN LOWER MANHATTAN, Q2 2016* Source: Jones Lang LaSalle

Other Services 4%

Professional Services

10%

FIRE

37%

Education, Healthcare & Nonprofit

Q2 2016

New Leasing Activity by Industry

22%

Overall, second quarter leasing was largely driven by major FIRE and Government tenants either committing to stay or expanding. These include the New York City Department of Finance, which inked the largest deal of the quarter with a commitment for 182,750 square feet at the recently repositioned 375 Pearl Street. The city agency will be moving some executive level offices and relocating Brooklyn operations to the 1.1 million-square-foot property. The Department of Finance currently has a 400,000-square-foot lease at 66 John Street, not set to expire until 2024. QBE North America, an

TAMI

27%

*By square footage

LOWER MANHATTAN YTD LEASING ACTIVITY, 2012 - 2016 Source: CBRE

4.0 Million 3.5 MSF

3.5 Million 3 Million 2.46 MSF

SF

2.5 Million 2 Million

2.01 MSF

2.02 MSF

2.03 MSF

Q2

1.5 Million 1 Million

Q2 Q2

Q2

Q2

500,000 0

Q1

Q1

Q1

Q1

Q1

2012

2013

2014

2015

2016

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LOWER MANHATTAN TOP LEASES, Q2 2016 Source: Downtown Alliance, CBRE, JLL, CoStar, Colliers International

Tenant Name Location

SF Leased Transaction Type 182,750 Expansion & Relocation from Brooklyn offices to LM 97,228 Moving Within LM 69,000 Moving Within LM & Expansion

Sector

1

NYC Department of Finance 375 Pearl Street

2

QBE Insurance 55 Water Street

3

Hudson River Trading 4 World Trade Center

4

Paradigm Talent Agency 140 Broadway

50,604 Relocation

Other, Arts

5

The Port Authority of New York & New Jersey 115 Broadway

41,516 Renewal

Government

6

Ameriprise Financial One World Trade Center

FIRE

7

Premier Home Health Care Services 4 New York Plaza

37,704 Moving Within LM 34,274 New LM Location

Healthcare

8

Fitapelli and Schaffer 28 Liberty Street

28,329 Relocation

Professional Services, Law

9

Allied Advertising 233 Broadway

28,098 Relocation

TAMI, Public Relations

10

IPsoft 7 World Trade Center

27,199 New LM Location

TAMI, Technology

11

Radio One 4 New York Plaza

26,810 Relocation

TAMI, Media

12

Brennan Center for Justice at NYU School of Law 120 Broadway

25,476 Relocation

Nonprofit

13

AmWINS 88 Pine Street

21,760 Renewal

FIRE

14

Cornell University 88 Pine Street

21,750 New LM Location

Education

15

Clausen Miller 28 Liberty Street

21,039 Renewal

Professional Services, Law

16

EidosMedia 14 Wall Street

19,006 Expansion

TAMI, Media

17

Premier Home Health Care Services 42 Broadway

18,000 Renewal

Healthcare

18

Emerald Expositions 100 Broadway

17,107 Moving Within LM

Professional Services, Other

19

NYC Dept. of Sanitation 33 Whitehall Street

16,889 New LM Location

Government

20

National Institute for Reproductive Health 14 Wall Street

14,830 Relocation

Healthcare

Government

FIRE FIRE

Lower Manhattan Real Estate Market Overview| Q2 2016

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insurance company, is relocating from a 99,379-square-foot space in 88 Pine Street to 97,228 square feet in 55 Water Street, making it the second largest lease of the quarter.

The World Trade Center also made gains this quarter due to FIRE tenants choosing to stay in Lower Manhattan or expand operations.

Hudson River Trading, a financial technology company, signed a commitment to expand and move from 30,351 square feet in 32 Old Slip to a 69,000-square-foot space on floors 57 and 58 in 4 World Trade Center. Another current Lower Manhattan tenant, Ameriprise Financial, signed a lease for 37,000 square feet at One World Trade Center.

While there was a lack of blockbuster relocations, there were some healthy mid-size deals announced within the Education, Healthcare, and TAMI sectors. TAMI’s share of leasing activity held steady from past quarters, with a 27.1% share. Deals announced in this sector include Allied Advertising Public Relations’ relocation from Midtown to 28,098 square feet in 233 Broadway. In addition, Radio One, a cross-platform brand sales and marketing firm, will move to a 26,810-square-foot office in 4 New York Plaza. Finally, Paradigm Talent Agency, an entertainment and literary talent agency, signed a 50,604-square-foot lease to relocate to 140 Broadway from the Madison Square Park area. Paradigm’s clients are in many of the industries that have seen rapid growth in Lower Manhattan over the past several years, including digital media, book publishing and television.

Overall, Education and Healthcare accounted for 23% of new leasing this quarter, up from 6% in the first quarter, according to Jones Lang LaSalle. Healthcare, in particular, has been a key player in the market, with over 80,000 square foot of leases executed this quarter. Among these deals: ●● Premier Home Health Care Services completed two deals

this quarter with an 18,000-square-foot renewal at 42 Broadway and a commitment to a second Lower Manhattan location in 34,274 square feet in 4 New York Plaza. ●● The National Institute of Reproductive Health signed a

deal to relocate from Midtown South to 14,830 square feet in 14 Wall Street. ●● The Ronald Perelman and Claudia Cohen Center for

Reproductive Medicine Weill Cornell committed to relocate from Midtown South to a 10,547-square-foot facility in 255 Greenwich Street.

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RENTS

New York University and Cornell University will both be expanding their overall presence south of Chambers Street with deals signed this quarter. The NYU-affiliated, Brennan Center for Justice at NYU School of Law, is moving from Midtown South to 25,476 square feet in 120 Broadway. The Center joins two other NYU establishments south of Chambers Street, including the Polytechnic School of Engineering’s Manhattan Programs housed in 55 Broad Street and academic facilities for New York University’s School of Professional Studies located in 63,754 square feet in the Woolworth Building.

Cornell University executed a lease for 21,750 square feet in 88 Pine Street and will be relocating back offices from Midtown. This is Cornell’s second lease in Lower Manhattan; Cornell opened a satellite of its College of Architecture, Art and Planning in 11,000 square feet at 26 Broadway in Fall of 2014.

Lower Manhattan Average Asking Rent

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Lower Manhattan’s overall average asking rent was stable for the second consecutive quarter. The average held steady at about $59.14 and is now up just 1.5% year-over-year, according to Cushman & Wakefield. The overall average has been stable as a result of the availability of large blocks of Class A space with above average pricing holding firm and landlords preferring to maintain asking prices while offering concessions to tenants to negotiate deals.

Pricing in Class B and C office buildings had year-over-year growth in Lower Manhattan, but pricing growth showed signs of stabilizing this quarter. While Class A pricing has hovered at about $62 per square foot for the last six quarters, Class B and C rents are up 12.8% and 18.4% year over year. However, Class B pricing also steadied this quarter to $50.55 per square foot, and Class C pricing rose 3.6% but represents a small, 7.2% share of overall available space in

$59.14

Lower Manhattan.

LOWER MANHATTAN AVERAGE ASKING RENTS BY OFFICE CLASS, Q2 2012 - Q2 2016 Source: Cushman & Wakefield

$70

Class A Rents Flat Over Previous 6 Quarters

$65 $60

$62.24

$55

$52.73

$50 $45 $40 $35 $30 $25

$45.29

$50.55

$35.10

$30.85

Q2

Q3 2012

Q4

Q1

Q2

Q3

Q4

2013

Q1

Q2

Q3

Q4

Q1

2014 Class A

Lower Manhattan Real Estate Market Overview| Q2 2016

Class B

Q2

Q3

2015

Q4

Q1

Q2

2016

Class C

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VACANCY

●● 4 World Trade Center is also now 70% leased and now

Steady leasing has contributed to a modest decline in the vacancy rate, which reached 9.8% as of the second quarter, according to Cushman & Wakefield.

●● 375 Pearl Street posted the largest absorption of space

marketing 706,000 square feet after this past quarter’s 69,000 square foot deal with Hudson River Trading. among Lower Manhattan’s largest blocks in the second quarter, with the completion of the NYC Department of Finance transaction for 182,750 square feet. The newly repositioned building is now just under 50% leased with a total of 579,000 square feet currently being marketed.

While Lower Manhattan is currently working through more than 6.8 million square feet of Class A office space found in large blocks (over 180,000 square feet), including about 3.5 million currently available in the World Trade Center, the market continues to make progress in absorbing this space. Notably, the gap between Lower Manhattan’s and Midtown vacancy rate is closing. Midtown’s vacancy rate is 9.2%, just below Lower Manhattan’s 9.8% vacancy rate. In fact, Lower Manhattan’s 12-month outlook for vacant and available space is now just below Midtown’s 10.4% share. Among the large blocks and their continued lease-up:

Collectively, these leases as well as the major deal signed at 375 Pearl helped drop the Class A vacancy rate by 1 percentage point from last quarter to 11.7%.

VACANCY RATES BY SUBMARKET, Q2 2012 - Q2 2016 Source: Cushman & Wakefield 13%

12%

●● 28 Liberty Street currently has the third largest block of

Class A space in Lower Manhattan. During the second quarter, the building’s leasing team announced a deal with Fitapelli and Schaffer, a law firm, for 28,329 square feet and now has 1.09 million square feet on the market.

11% 10% 9% 8%

●● One World Trade Center is now 70% leased as a result of

7%

several leases this past quarter. Completed leases with Ameriprise Financial for 37,000 square feet and East Soft, a technology company, for 5,262 square feet brought the total available space below 1 million square feet to 996,000 square feet.

6% 5%

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012

2013

Lower Manhattan

2014 Midtown

2015

2016

Midtown South

LOWER MANHATTAN’S LARGEST BLOCKS OF SPACE & AVAILABILITY, Q2 2016 Source: Downtown Alliance, CoStar, JLL, Cushman & Wakefield, Silverstein Properties & Brookfield Properties

SF

67% Leased

3.0 Million 2.5 Million

31% Leased

59% Leased

67% Leased

82% Leased

88% Leased

2.0 Million 1.5 Million 1.0 Million

31% Leased

34% Leased

762k SF Available

725k SF Available

87% Leased

0.5 Million 0

1.81 M SF Available

3 WTC

1.05 MSF Available

1 WTC

911k SF Available

750k SF Available

28 Liberty 4 WTC

298k SF Available

148k SF Available

375 Pearl 180 Maiden 1 Liberty 200 Vesey 85 Broad

SF Leased Lower Manhattan Real Estate Market Overview| Q2 2016

421k SF Available

SF Available 6

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PROPERTY SALES3 Office Buildings According to Newmark Knight Grubb Frank, four office building transactions closed in the second quarter, totaling over 4.19 million square feet: ●● A minority (49%) interest in 1 New York Plaza, a

2.55-million-square-foot building, was purchased by China Investment Corporation, a sovereign wealth fund, for $700 million from Brookfield Property Partners. Brookfield purchased the property in 2006. This transaction values the building that is home to Revlon, Macmillan Science and Education and Fried, Frank, Harris, Shriver & Jacobson at $561 per square foot. ●● Allianz Real Estate of America, the equity investor arm of the

Allianz Insurance companies, purchased a 49% stake in 24 State Street, a 885,645-square-foot tower, from the Rudin Organization, for $178.9 million. The property is valued at $412 per square foot. ●● Tribeca Associates completed a $130 million deal for the

master leasehold of 30 Broad Street from Gotham Realty.

30 Broad Street is a 427,088-square-foot property adjacent to the New York Stock Exchange. ●● Blackstone purchased the 336,000-square-foot 44 Wall

Street from Obligo, a Norwegian investment management firm, for $100 million or $298 per square foot. 44 Wall Street is currently fully leased, and its largest tenant is Cullen and Dykman, a law firm occupying five floors of the 24-story property.

●● 124 Chambers Street, a 10,359-square-foot, six-story

Tribeca loft building, was purchased for $7 million or $676 per square foot by Michael Asch from Sandra Levitt. The property has one ground floor retail tenant, Ecco Italian restaurant.

Hotel Cindat Capital Management completed two partial interest investments in hotels east of Broadway from Hersha Hospitality Trust in the second quarter. ●● Cindat purchased a partial interest (70%) in Holiday Inn

Express New York City-Wall Street, a 112-key hotel located at 126 Water Street, for $30 million, valuing the total property at $382,548 per key. ●● Cindat paid $29.66 million for the 113-key Holiday Inn New

York City-Wall Street at 51 Nassau Street. This values the hotel at $374,959 by key.

Residential ●● Pace University closed on the purchase of a 30-year

leasehold interest in 33 Beekman Street, a 772-bed student housing tower, from a partnership between Naftali Group, SL Green and Harel Insurance for $196 million dollars. The student residence hall welcomed its first residents in fall 2015.

Office Condominiums ●● The purchase of the 524,500-square-foot condominium

at 125 Broad Street by Sullivan & Cromwell from Mack Cali closed in the second quarter for $202 million or $385 per square foot.

Retail Buildings and Condominiums ●● The Gindi Family, owner of the Lower Manhattan-based

Century 21 retail chain, purchased a 12,190-square foot retail condominium at 1 Coenties Slip from Northwind Group. The purchase price, $19 million dollars, values the retail property at $1,559 per square foot. Current tenants include three restaurants: La Dama, a Latin American restaurant; Guac Star; and Zigolini’s Fine Foods.

Courtesy of Brookfield Properties

1 New York Plaza

2 Rector Street

China Investment Corporation purchased a minority stake for $700 million from Brookfield Property Partners.

Courtesy of CoStar

3 Source: Newmark Knight Grubb Frank, reports on closed transactions. Properties listed by category and by descending order of transaction price.

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RETAIL MARKET Developments, New Openings and Announcements throughout the District The horizon in 2016 and beyond promises a flurry of momentous retail developments. By the end of 2019, Lower Manhattan will have more than 6.7 million square feet of retail, an expansion of 2.3 million square feet of new and repositioned space. This retail revolution is driven by major development projects at Westfield World Trade Center, Brookfield Place, Fulton Center and the Seaport District, along with other numerous projects throughout the district.

With an official opening date of August 16th, 2016, Westfield World Trade Center will become a magnetic and engaging destination with over 120 stores and restaurants located in the Santiago Calatravadesigned Oculus and at the base of the 3 and 4 World Trade Center buildings. Mario Batali’s Eataly will serve as the culinary anchor among a variety of other food, beverage and dining options. The 365,000-square-foot, fully-leased complex has a retail and dining roster that includes Hugo Boss, Kate Spade New York, Banana Republic, Forever 21 and H&M. This past June, Westfield held a job fair, where over 5,000 candidates attended and more than 65 retailers and restaurants participated. The World Trade Center and Fulton Center retail complexes, both overseen by Westfield, will add 10,000 full and part-time jobs to the local economy.

The 65,000 square feet of retail in Fulton Center began opening in 2016. Shake Shack opened this quarter on the second floor.

The debut of Fulton Center’s 65,000-square-feet of commercial and retail space began in late 2015 and will continue in phases throughout 2016. Shake Shack opened in mid-July on the second floor of Fulton Center, and WeWork will occupy office space in the Corbin Building and 3rd floor of Fulton Center beginning in August 2016. The transportation hub opened in November 2014, improving connections between nine subway lines and five subway stations. A total of 300,000 commuters, residents and tourists pass through each day. The final piece of the transit complex, the Dey Street Connector, an underground passageway that includes retail kiosks linking Brookfield Place, Westfield World Trade Center and Fulton Center, opened this past June.

At Brookfield Place, contemporary brands continued to roll out after the spring 2015 opening of the 375,000-square-foot repositioned retail space. This quarter saw Starbucks Reserve, Joie and Jo Malone London join the upcoming retail roster. Jose Garces’ Amada opened along Vesey Street in late April and will be followed by Del Frisco’s Grille, which will open in summer 2017. Lower Manhattan’s first luxury department store, Saks Fifth Avenue, is slated to open at the complex in early September 2016.

Lower Manhattan Real Estate Market Overview| Q2 2016

Over 120 stores and restaurants at Westfield World Trade Center are expected to open on August, 16th 2016.

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In the Seaport District, iPic Theaters is continuing construction and plans to open an eight-screen movie theater in early October in the Fulton Market Building. Recently, by CHLOE., the fast-casual vegan restaurant, announced it will join Jean-Georges Vongerichten and David Chang as the first restaurants to open in the revitalized Seaport District in summer 2017. Committed to creating a distinct destination, the Howard Hughes Corporation brought back seasonal programing like the Seaport Culture District, Seaport Design Market and Smorgasburg food market during the spring and summertime months. The new pier and revitalized historic area will provide 365,000 square feet of retail, dining and entertainment.

At the end of the second quarter, the district had 1,076 stores and restaurants. A total of 36 new stores and restaurants opened in Lower Manhattan, including:

●●

chilling, an Austrian-Mediterranean restaurant by Edi S Frauneder at 109 Washington Street;

Photo by Nick Solares for NY Eater

Amada opened at 250 Vesey Street in Brookfield Place.

●● Black Fox Coffee Co., an Australian coffee shop, at 70 Pine Street; ●● Sweetgreen, a fast-casual restaurant serving seasonal, healthy food, at 67 Wall Street;

●● ●●

Bluemercury, a luxury beauty retailer, at 275 Greenwich Street;

●●

T he announcement of Todd English’s launch of “The English” in the W Downtown at 123 Washington Street later this summer;

●●

lackTail, a Cuban-themed bar and restaurant from the team B behind the Dead Rabbit, opening this summer in Pier A Harbor House at 22 Battery Place; and

●●

lue Ribbon Federal Grill to open late fall in the AKA Wall Street B on 84 William Street.

ew York Sports Club, relocating from 30 Wall Street to 30 N Broad Street;

Courtesy of Schililng

Schilling debuted at 109 Washington Street.

2.3 Million SF of new & repositioned retail space

Courtesy of Black Fox Coffee

Black Fox Coffee Co. opened at 70 Pine Street.

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TOURISM & HOSPITALITY Record Year for Tourism

LOWER MANHATTAN HOTEL DEVELOPMENT PIPELINE

Lower Manhattan welcomed 14.2 million unique visitors1 in 2015, up 14% from 2014 and up 48% from 2013 (which felt the aftermath of Hurricane Sandy). This upward trend is sustained by strong visitation at the new One World Observatory, National September 11 Memorial Museum and the Statue of Liberty and Ellis Island.

Source: Downtown Alliance

Hotel & Address

Owner/ Developer

Rooms

Floors

Open Date

1

The Beekman Hotel 5 Beekman Street

GB Lodging Group

287

9

2016

2

Courtyard by Marriott 133 Greenwich Street

Hidrock Realty

317

31

2016

3

Four Seasons Downtown 27 Barclay Street

Silverstein Properties

189

21 (of 82)

2016

4

The Artezen Hotel 24 John Street

Westbury Realty Associates

89

21

2016

5

Fairfield Inn & Suites 100 Greenwich Street

Jiten Hotel Management

192

25

2017

6

Hilton Garden Inn 6 Water Street

McSam Hotel Group

250

29

2017

7

Marriott Residence Inn 215 Pearl Street

Lam Group

120 (upper floors)

40

2017

8

Courtyard by Marriott 215 Pearl Street

Lam Group

200 (lower floors)

40

2017

9

AC Hotel | Marriott 151 Maiden Lane

Fortis Property Group

271

33

2017

10

Hotel Indigo 8-12 Maiden Lane

10-12 MLane Inc.

190

25

2017

11

NYCEDC

70

5

2017

ourtyard by Marriott Manhattan/World Trade Center at C 133 Greenwich Street, 317 rooms;

Boutique Hotel Battery Maritime Building

12

TBD Hotel 11 Stone Street

Premier Emerald LLC

143

27

2018

our Seasons Hotel New York Downtown at 27 Barclay F Street, 189 rooms;

13

Extended Stay Hotel 17 John Street

Prodigy Networks

106

23

20188

14

Moxy Hotel 143 Fulton Street

Tribeca Associates

228

26

2018

15

TBD Hotel 130 William Street

Lightstone Group

TBD

12 (of 50)

2018

16

Hotel Indigo 120-122 Water Street

Atlas Hospitality

122

31

2018

17

TBD Hotel 50 Trinity Place

Fit Investment Group

188

29

TBD

Hotel Development Takes Off At the end of the second quarter, there were 5,837 hotel rooms in 28 hotels throughout Lower Manhattan — a 14 percent increase over the past year. This quarter, the AKA Wall Street opened at 84 William Street with 140 hotel rooms. While Lower Manhattan makes up around five percent of New York City’s total hotel inventory of 108,000 hotel rooms2, approximately 20 percent of hotel rooms under construction in all of New York City are in Lower Manhattan.

Some 3,000 hotel rooms in 17 hotels are currently in the development pipeline. In 2016, inventory is expected to grow by up to 25%, as nearly 900 rooms in four additional properties will come online in 2016. If all these projects meet current deadlines, the hotel inventory in Lower Manhattan will reach nearly 6,700 rooms by year-end 2016. Those remaining properties scheduled for completion in 2016 include:

●● ●● ●● ●●

The Beekman Hotel at 5 Beekman Street, 287 rooms;

The Artezen Hotel at 24 John Street, 89 rooms.

20%

of all hotel rooms under construction in NYC are in Lower Manhattan

Total Hotels in the Pipeline Total Hotel Rooms in the Pipeline 1 2

Lower Manhattan Real Estate Market Overview| Q2 2016

17 2,937

Source of tourism estimates: Audience Research & Analysis Source of New York City hotel figures: NYC & Company

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Occupancy and Average Daily Room Rate The second quarter’s average occupancy was 88%, a percentage consistent with trends in Lower Manhattan and citywide. The average daily room rate (ADR), however, has seen a decline over the past two years. Lower Manhattan’s ADR in the second quarter of 2016 was $266, down slightly year-over-year and 13% from 2014. New York City’s ADR has grown six percent year-over-year to $286.

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MAJOR PROJECTS UPDATE

LOWER MANHATTAN HOTEL PERFORMANCE, ACROSS SECOND QUARTER Source: Downtown Alliance

$310 94% $300

$301.66

92%

$290

$292.83

90%

90.7%

88.5%

88%

In looking at the second quarter hotel performance over the past four years, the Lower Manhattan hotel market had a mixed track record. Over the past four years, the number of hotel rooms in the district has grown 16%, while demand has yet to reach its full potential. While occupancy has held strong, expanding hotel room supply, especially in limited service hotels, has led to downward pressure in the overall average room rate–revealing a 10% decrease since 2013. Revenue per available hotel room is staying strong, as high occupancy rates are making up for decreasing room rates. While downtown hotel supply continues to increase, future demand is expected to grow with the recent addition of upgraded transportation infrastructure, new office product, residential buildings and retail destinations in the next several years.

86%

$270.14

86.1%

88.0%

$280 $270

$266.49

84%

$260

82%

$250

80%

Q2 2013

Q2 2014

Q2 2015

Average Daily Room Rate

25%

$240

Q2 2016 Occupancy Rate

Y-O-Y growth in hotel room inventory by year-end 2016

GROWTH IN LOWER MANHATTAN HOTEL ROOMS Source: Downtown Alliance 10,000 8,765

9,000 8,003

8,000 6,710

7,000 6,000 5,000 4,000

4,924

5,357

4,108

3,000 2,000 Courtesy of AKA Wall Street

The AKA Wall Street opened at 84 William Street with 140 rooms. Blue Ribbon Federal Grill will open this fall at the hotel.

Lower Manhattan Real Estate Market Overview| Q2 2016

1,000 0

2013

2014

Existing Hotel Rooms

2015

2016

New Hotel Rooms

2017

2018+

Projected Hotel Rooms

11

EMPLOYMENT & OFFICE

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RESIDENTIAL

MAJOR PROJECTS UPDATE

RESIDENTIAL MARKET Inventory and Development

HIGHLIGHTS OF LOWER MANHATTAN RESIDENTIAL DEVELOPMENT Source: Downtown Alliance Address & Building Name

Lower Manhattan, defined as the area south of Chambers Street, has 30,400 units in 318 mixed-use and residential buildings and an estimated population of approximately 60,000. There are

Lease & Building Type

Units

Open Date

Rental Units Under Construction

1

60 Fulton Street Exhibit

Rental New Construction

120

2017

construction or planned for development. Among the projects

2

180 Water Street

Rental Conversion

565

2017

under construction and in development, approximately 62 percent

3

20 Broad Street

Rental Conversion

521

2017

currently more than 4,400 units in 28 buildings that are under

are condos and 32 percent are rental units, while the remaining 6 percent having tenure yet to be determined.

The pipeline of residential development includes over 670 condo units in eight buildings under construction with plans to open in 2016, many of which have begun sales closings. Construction continues on several buildings, among them:

●●

The Beekman Residences at 5 Beekman Street, a 51-story tower with 68 condo units is wrapping up construction. The new residential tower will join the 287-room Beekman Hotel, both developed by GFI Development and GB Lodging. The Beekman Residences are scheduled for completion in fall 2016.

●●

Silverstein Properties’ Four Seasons Residences at 30 Park Place is scheduled to debut in summer 2016. The 82-story tower will offer 157 condo units and 189 hotel rooms.

●●

Magnum Real Estate is converting the top 22 floors at the former Verizon Building at 100 Barclay Street into 166 condo units. Approximately 100,000 square feet of retail is also planned at the base. The tower is expected to open in fall 2016.

●●

The Claremont Group’s 101 Wall Street is finalizing conversion of the office tower into 52 condo units and will be completed in fall 2016

●●

191-condo unit tower. The building, developed by Time Equities, will open in late 2016.

4,500

1,468

1

19 Park Place

Condo New Construction

21

2016

2

12 Warren Street

Condo New Construction

13

2016

3

5 Beekman Street The Beekman Residences

Condo/Hotel New Construction

68

2016

4

30 Park Place Four Seasons Residences

Condo/Hotel New Construction

157

2016

5

50 West Street

Condo New Construction

191

2016

6

101 Wall Street

Condo Conversion

52

2016

7

100 Barclay Street Ralph Walker Tribeca

Condo Conversion

161

2016

8

233 Broadway Woolworth Residences

Condo Conversion

34

2017

9

161 Maiden Lane 1 Seaport

Condo New Construction

80

2018

10

1 Beekman Street

Condo New Construction

29

2018

11

111 Murray Street

Condo New Construction

157

2018

12

125 Greenwich Street

Condo New Construction

275

2018

13

1 Wall Street

Rental/Condo Conversion

262/262

2018

14

112-118 Fulton Street

Condo New Construction

483

2019

TOTAL

Construction continues on 50 West Street, a 65-story,

over

TOTAL Condo Units Under Construction

residential units under construction in Lower Manhattan

Lower Manhattan Real Estate Market Overview| Q2 2016

2,120

Condo & Rental Buildings Planned for Development 1

130 William Street

Condo/Hotel New Construction

188

2018

2

45 Park Place

Condo New Construction

50

2018

3

75-83 Nassau Street

Rental/Condo New Construction

197

2018

4

23-31 Park Row

Condo New Construction

108

2019

5

45 Broad Street

Condo New Construction

150

2019

6

77 Greenwich Street Former Syms site

Condo New Construction

85

2019

TOTAL TOTAL UNITS IN THE PIPELINE

878 4,466

Note: Chart displays selected properties. For complete pipeline please click here.

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EMPLOYMENT & OFFICE

RETAIL

TOURISM & HOSPITALITY

RESIDENTIAL

MAJOR PROJECTS UPDATE

The second quarter saw plans proceed for two residential properties in Lower Manhattan.

●●

Soho Properties’ 45 Park Place began construction on a 43-story, 50-condo unit tower after receiving construction financing. Adjacent to the tower will be a three-story Islamic museum. Completion is expected in 2018.

●●

Madison Equities and Pizarotti IBC have filed plans for a 1,115-foot residential tower at the current vacant lot at 45 Broad Street. The tower will have 150 condo units and six floors of office space. A 2019 completion is anticipated.

MEDIAN RENTAL PRICE

Source: Miller Samuel/Douglas Elliman $3,800

$3,716

$3,700 $3,600

$3,646

$3,500 $3,400 $3,384

$3,300 $3,200

Residential Rental Market

$3,100

According to residential statistics published by Miller Samuel/ Douglas Elliman, median rents across several Manhattan neighborhoods remained relatively steady year-over-year. Lower Manhattan’s median rent, $3,646, saw the greatest increase across comparable neighborhoods, increasing almost five percent over the last quarter. That rise can be attributed to higher-end rental units becoming leased, like those at 70 Pine Street.

$3,000

Residential Sales Market The volume of Lower Manhattan sales picked up from last year’s second quarter with the total number of sales up by 8%. Lower Manhattan’s average price per square foot of $1,581 saw an increase of 14 and 20 percent over the past quarter and year, respectively. The jump in sales pricing can be attributed to closing activity beginning for a number of high-end residential projects in the neighborhood. The greatest annual increase in average price per square foot was seen in greater downtown (defined as south of W. 34th Street and E. 42nd to the Battery), growing by 39 percent year-over-year; this geography also includes the neighborhoods in Lower Manhattan.

$3,237

2 Q-2 0 1 5

3 Q-2 0 1 5

Lower Manhattan

4 Q-2 0 1 5

Downtown

1 Q-2 0 1 6 East Side

2 Q-2 0 1 6 West Side

AVERAGE SALES PRICE ($) PER SF Source: Miller Samuel/Douglas Elliman $2,000

$1,913

$1,800

$1,868 $1,581

$1,600

$1,537

$1,400 $1,200 $1,000

2Q-2015 Lower Manhattan

3Q-2015

4Q-2015

Downtown

1Q-2016 East Side

2Q-2016 West Side

1 Lower Manhattan defined as south of Chambers Street to the Battery. Downtown defined as south of W. 34th and E. 42nd Street to the Battery. East Side defined as east of 6th Avenue, between E. 96th and E 42nd Street. West Side defined as west of 6th Avenue, between W. 116th and W. 34th Street.

Lower Manhattan Real Estate Market Overview| Q2 2016

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EMPLOYMENT & OFFICE

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TOURISM & HOSPITALITY

RESIDENTIAL

MAJOR PROJECTS UPDATE

MAJOR PROJECTS UPDATE - Q2 2016 Momentum continues at the World Trade Center site and elsewhere throughout Lower Manhattan. In the second quarter, over 100,000 square feet of office leases were signed in 4 and One World Trade Center. The opening of the Dey Street connector provided the final link in a seamless underground pedestrian walkway from Fulton Center to the World Trade Center Transportation Hub, 4 World Trade Center, One World Trade Center and Brookfield Place. In mid-August, Westfield World Trade Center will debut its retail offerings at over 120 stores and restaurants. The Performing Arts Center at the World Trade Center received a $75 million gift from philanthropist Ronald Perelman, a major milestone for the project. On the east side of the district, the t City Council approved a Water Street zoning amendment allowing Stext on rris Ha for new investment in retail space and improved pedestrian plazas to enhance the office corridor’s appeal and vitality. Lastly, open space t yS continues to flourish with major openings atJaThe Battery, Governors Island and Liberty Park.

Servcorp, Beijing Vantone China Center and Mic. In the second quarter, financial services firm Ameriprise Financial inked a 37,000-square-foot lease on the 78th floor. The Durst Organization and Port Authority also announced plans to expand its pre-built and built-to-suit program to another three floors, growing to a total of nine floors.

3 World Trade Center The 2.5 million-square-foot office tower topped out at 80 floors in June 2016 and is scheduled to be completed in 2018. At the end of the fourth quarter of 2015, anchor tenant GroupM Worldwide finalized an expansion, adding 170,000 square feet to the existing 520,000 square feet signed in 2014, bringing the tower to 28 percent leased. t

eS

St

Centre

Pl ay es al H in

e St

Broadway

Centr

Rose St

ic

enw

Gre

Church St

LOWER MANHATTAN’S CONNECTIVITY TO TRANSIT MAP

Spr

Ro w

Brookfield Place

au S t

k

Nass

Pa r

Fulton St

Westfield WTC

WEST CONCOURSE

WTC TRANSPORTATION HUB DEY ST. CONNECTION

FULTON CENTER

WTC PATH TERMINAL John

3 WTC

225 LIBERTY

*

9/11 Memorial & Museum

rth Noove C

Ma

4 WTC

ide

From Brookfield Place & the Hudson River to the Seaport

Liberty Park

200 LIBERTY

Maide

n La

St

Lower Manhattan’s unparalleled connection to transit, featuring the newly opened: -Dey Street Connection & -WTC Transportation HUB

t Wes

*Cortlandt Street 1 Train Station Currently Closed and Under Construction

Rector

r Pl

Cedar St

Pine St

Wall S t

St

t

William St

Trinity Pl

St

Edgar St

dway

d St J.P. War

Exchange Pl

Exchange Al

B

St West Thames

wich Green

ingt h Was

South End Av

t on S

Recto

Pl Lower Manhattan Real Estate Market RectorOverview| Q2 2016

Joh Platt St

nL a

Nassau St

Liberty St

l

St

Cortlandt St

Liberty St

Fu

Al

200 VESEY

Ann St

St

Ryd ers

2 WTC

1 WTC

ma nS t

William St

250 VESEY

uce

Bee k

Gold St

World Financial Center Ferry Terminal

North End Av

300 VESEY

Broadway

Vesey St

Vesey St

Church St

st We

St

Source: Downtown Alliance

Gold S t

t hS

We

West Broadway

St

st We

t st S

The World TradeReade Center Transportation Hub St The 800,000-square-foot World Trade Center Transportation Hub officially opened in early March 2016, providing underground access to One World Trade Center, 4 World Trade Center, Brookfield Place and the PATH trains. Additional underground access became available to Warren St Church and Vesey Streets (base of future Tower 2) and to Fulton Center via the Dey Street Connector in June 2016. Underground connection to Murray the E train station fromStthe World Trade Center is anticipated to open at the end of 2016. The temporary PATH station is now closed and will be deconstructed inPark latePlsummer. Westfield’s 365,000-square-foot retail complex will open on August 16th, 2016.

Elk St

St

North End Av

Pearl St

Ca rd

on

River Te

tt aye

Elk St

ds

Hu

4 World Trade Center The 72-story, 2.3 million-square-foot office tower was completed in November 2013. The building is over 70% leased to MediaMath, Chambers St Chambers St PadillaCRT, SNY (SportsNet New York), Silver Suites, IEX, Morningstar, the Port Authority and the City of New York. In the second quarter, fintech firm Hudson River 69,000 square feet on the 57th Warren St St Trading leased Warren and 58th floors, including the 5,000-square-foot outdoor terrace.

One World Trade Center The 104-story, 3.1 million-square-foot office tower opened on November 3rd, 2014. One World St Trade Center is nearly 70 percent ray Mur leased; tenants include Condé Nast, High 5 Games, Moody’s, xAd,

Laf

Trimble Pl

St

ple Sta

Duane St

World Trade Center (WTC)

Church St

Worth St 2 World Trade Center After over a year of negotiation between Silverstein Properties and St Corp to anchor 1.3 million square feet, Thomas 21st Century Fox and News the deal was called off in early 2016. Silverstein has postponed work on the tower until an anchor Duane tenant agrees to lease a St substantial portion of the space.

Worth St

er av Be

St

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EMPLOYMENT & OFFICE

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Vehicle Security Center The Vehicle Security Center (VSC) is the World Trade Center’s main entry point for automobiles, trucks and buses. Operated by the Port Authority, the VSC will provide deliveries, tenant and bus parking for those with affiliations with the World Trade Center and is scheduled to be fully operational in early 2017.

Performing Arts Center at the World Trade Center (PAC WTC) The Performing Arts Center at the World Trade Center is in the design phase. There will be three theaters of varying sizes, with the potential to be combined to create one theater accommodating 1,200 people; the TriBeCa Film Festival will also call PAC WTC home upon its completion.

This quarter, philanthropist Ronald Perelman announced he was donating $75 million to the project. With Perelman’s donation, the project makes a significant stride towards its estimated $240 million cost. The Lower Manhattan Development Corporation (LMDC) committed $100 million in federal funds awarded after September 11th for the project’s design, construction and administrative costs. The site for the PAC WTC is currently occupied by the temporary PATH entrance at Greenwich Street and West Broadway, which closed this summer when the World Trade Center Transportation Hub opened with additional entry points. The project’s completion is anticipated in 2020.

Water Street Rezoning In June, the City Council took a major step toward realizing the Downtown Alliance’s vision for a vibrant, pedestrian-friendly Water Street when it approved the Water Street text amendment. This innovative zoning proposal was a collaborative effort between the Downtown Alliance, the New York City Department of City Planning and the New York City Economic Development Corporation. The new zoning incentivizes Water Street property owners to make significant upgrades to nearly a quarter million square feet of privately-owned public plazas along the street, while allowing for the conversion of underused pedestrian arcades into nearly 110,000 square feet of new retail space.

RESIDENTIAL

MAJOR PROJECTS UPDATE

Infrastructure & Resiliency Federal, State & City Investment This past spring, the de Blasio administration announced that $100 million in City capital funds would be allocated to coastal resiliency 3 World Trade in Lower Manhattan as part of a larger resiliency project funded by Center the U.S. Department of Housing and Urban Development’s National Disaster Resilience Competition. The money will help build With financing in a network of flood walls, berms and deployable flood barriers to protect place, the building the tip of Manhattan from flooding. Theis project will extend scheduled tofrom be the Lower East Side, around the tip of the island, all the way to Battery completed in 2018.

Park City. Separately, the City set aside nearly $15 million, including GroupM signed a and $6.75 million from the City and State, for preliminary design lease forfor515,000 environmental review and another $8 million first-phase flood square feetPark. in the protection design and implementation in Battery The 2.5 City’s Economic Development Corporationmillion-square-foot plans to begin design work for the tower.

Lower Manhattan coastal resiliencyoffice initiative later this year.

South Ferry station The main entrance to the South Ferry station has been closed for several months as Sandy-damaged equipment is replaced and flood mitigation measures are put into place. During construction, the old South Ferry station will remain operational and accessible from alternative entrances. The construction is part of a $194 million contract to rebuild the South Ferry subway station that was damaged in Hurricane Sandy. The station will get permanent flood protection measures and become wheelchair accessible and will allow entry and exit for all ten cars along the No. 1 line. Completion is expected in fall 2016.

Broadway Reconstruction The Department of Design and Construction’s (DDC) $42 million capital reconstruction project on Broadway, referred to as Broadway 1, stretching from Ann Street to Rector Street began in 2014. This project will replace all underground infrastructure, including water mains, sewers, electric, gas and other utilities, as well as construct new streets and curbs. Crews will focus on two blocks at a time, moving northward on the west side, then southward on the east side. The full project is scheduled to be finished in late fall 2016.

Water Street Rezoning Map Arcade Plaza Building Ground Floor Water Street Subdistrict

Seaport

Pier 17 Pier 15

Whitehall BMB

Lower Manhattan Real Estate Market Overview| Q2 2016

Pier 11

15

EMPLOYMENT & OFFICE

RETAIL

TOURISM & HOSPITALITY

RESIDENTIAL

MAJOR PROJECTS UPDATE

Lower Manhattan’s open space comes alive Over the past few years, several acres of parkland in Lower Manhattan have been created or reimagined. The neighborhood features over 90 acres of open space, playgrounds, plazas and sports fields. During the summer months of 2016, several open spaces became newly available to the public. In the next couple years, additional open space will be unveiled in the Seaport District and at Elizabeth Berger Plaza.

Liberty Park The 1.5-acre elevated park, located on the roof of the World Trade Center Vehicle Security Center (VSC), opened in late June 2016. The Port Authority also announced the return of Fritz Koenig’s “Sphere for Plaza Fountain” to the World Trade Center site, to be set at Liberty Park. The Liberty Street Bridge, also opening at the same time on the west side of the park, can now connect pedestrians to Brookfield Place in Battery Park City. The eastern side of the new park will feature the new $35 million, Santiago Calatrava-designed St. Nicholas Greek Orthodox Church. The church broke ground in late 2014 and is expected to be completed in 2017.

Seaport District The Howard Hughes Corporation continues with its reimagining of the Seaport District. By 2017, the development plan will integrate the site into the East River waterfront and connect to the street grid. Pier 17 was topped out in early April and is expected to open in summer 2017, highlighted with a 1.5-acre multipurpose rooftop for concerts, films and special events. Additional components of the Seaport redevelopment plan include space for the South Street Seaport museum, a reconstructed Tin Building (relocated away from the FDR and out of the floodplain), lighting and pavilions under the FDR and an extension of Fulton and Beekman Streets onto Pier 17. When completed in summer 2017, the new pier and revitalized historic area will provide 365,000 square feet of retail, dining and entertainment.

The Battery The Battery Conservancy unveiled The Battery Oval, a two-acre lawn, to the public in late June 2016 by debuting 300 moveable Battery Chairs.

Plans are now being finalized for an expanded 1.4-acre playground that will feature climbing nets, a slide mountain and kid-oriented performance spaces. Design and construction on the new playground is expected to be complete in late 2019/ early 2020 and will be funded with $8 million through the Parks Department, $6 million through the Lower Manhattan Development Corporation and $2 million from donors of The Battery Conservancy.

Liberty Park

Governors Island The Hills, a $71 million public-private project, opened on Governors Island in July 2016. The four man-made hills range in height from 25 to 70 feet and include slides, art installations and never-beforeseen views of New York Harbor. The Hills are the newest feature at Governors Island, where 30 acres of additional park space were previously unveiled in 2014. The park is now accessible seven days a week, tripling public access from 40 days to 120 days. The next goal for Governors Island is to become a 365-day destination by activating historic buildings and another 30 acres of land for commercial purposes.

The Battery Oval Courtesy of The Battery Conservancy

Elizabeth H. Berger Plaza Located between Trinity Place and Greenwich Street at the exit of the Brooklyn-Battery Tunnel, Elizabeth H. Berger Plaza will be created by joining two disconnected plazas into one. The new plaza will have a cohesive design with increased pedestrian safety, plush landscaping and space for public programming. The project is going through approval processes and is scheduled to be completed in 2018.

The Hills at Governors Island Photo by Timothy Schenck, courtesy of The Trust for Governors Island

Lower Manhattan Real Estate Market Overview| Q2 2016

16

Visit www.downtownny.com/research 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:

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 postSeptember 11th 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, updated report on how the region’s shifting demographics continue to favor the Lower Manhattan Business District. Previously released in 2012, 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 changs 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; Going to the Head of the Class: The Growth of Higher Education in Lower Manhattan, a report on the growth of higher education in Lower Manhattan; A Surge of Bits and Bytes: The State of Tech and Innovation in Lower Manhattan, a report on Lower Manhattan’s growing technology industry.

Alliance for Downtown New York 120 Broadway Suite 3340 New York, NY 10271 212.566.6700 DowntownNY.com Telephone: 212-835-2787 Email: Research@DowntownNY.com