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Q2 2015

LOWER MANHATTAN REAL ESTATE MARKET OVERVIEW

COMMERCIAL OFFICE MARKET Leasing Activity Rising private sector employment and large, pending commercial leases indicate a strong commercial market in Lower Manhattan in the months ahead, even as year-to-date leasing drops from record levels in 2013 and 2014. Despite this, the vacancy rate has remained steady year over year at 10.3%.

moving to Lower Manhattan: Gucci finalized a lease for 83,964 square feet at 195 Broadway. The luxury retailer will be moving from Midtown in the first quarter of 2016. Several other large deals were announced in the second quarter at the World Trade Center but are not yet finalized. In June, 21st Century Fox and News Corp. signed a letter of intent with Silverstein Properties to anchor 1.3 million square feet in the future 2 World Trade Center. As part of the deal, Bjarke Ingels has been hired to redesign the proposed 80-story, 2.8 million square foot office tower in order to best serve the needs of the media and television companies. This deal has the potential to be the largest transaction in Lower Manhattan in 2015, and the company’s relocation would further cement Lower Manhattan’s status as a media center in New York City. At One World Trade Center, Moody’s is expected to announce a lease for 80,000 square feet, an addition to its current 836,902 square-foot Lower Manhattan footprint in the 100% leased 7 World Trade Center. A Moody’s expansion deal would mean that One World Trade Center is 66% leased (it is currently 63% leased).

According to CBRE, Lower Manhattan’s second quarter leasing activity totaled 860,000 square feet, 38% below the five-year average. Year-to-date leasing is also lagging historical averages; at 2.01 million square feet, activity is 24% below the five-year average. However, leasing activity is expected to accelerate in the second half of the year and to bolster 2015 annual totals. Several large deals have already closed in July, and several more are still pending. In early July, Ironshore finalized its lease for 101,958 square feet in 28 Liberty Street, which was previously announced in April 2015. Ironshore will be relocating and expanding from 50,000 square feet in 1 State Street. July also brought news of a major fashion icon

LOWER MANHATTAN LEASING ACTIVITY, Q2 2011 - Q2 2015 Source: Downtown Alliance, CBRE

2.0 Million 1.8 Million

5-Year Quarterly Average: 1.38 Million 5-Year Quarterly Average: 1.38SF Million SF

1.6 Million

SF SF Leased Leased

1.4 Million 1.2 Million 1.0 Million

860,000

0.8 Million 0.6 Million 0.4 Million 0.2 Million 0.0 Million

Q2

Q3 2011

Q4

Q1

Q2

Q3

2012

Lower Manhattan Real Estate Year in Review | Q2 2015

Q4

Q1

Q2

Q3

2013

Q4

Q1

Q2

Q3

2014

Q4

Q1

Q2 2015

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Second Quarter Leasing Trends The second quarter’s top deals reflected the growing diversity of the Lower Manhattan office market, with activity in new growth industries — such as coworking providers — as well as the traditional FIRE sector. According to Jones Lang LaSalle, the FIRE sector and Professional/Business Services sector, which includes coworking, accounted for 27% and 42% of all new leasing activity, respectively. TAMI (growth industries including Technology, Advertising, Media and Information) uncharacteristically lagged this quarter, accounting for less than 2% of all new activity. With below-average leasing activity, the absence of TAMI this quarter was a drag on the market and demonstrated the importance of these sectors to Lower Manhattan’s commercial market. Morgan Stanley Smith Barney signed the largest deal in the second quarter, committing to an expansion space of 68,325 square feet in 1 New York Plaza where it already occupies more than 747,000 square feet. In addition, Dixon Advisory, a Jersey City-based REIT advisor, committed to opening its first New York City office in a 25,391 square-foot space in 140 Broadway. The coworking and flex office space industry continued to expand its stake in Lower Manhattan with two new leases signed this quarter by Cowork|rs. Cowork|rs committed to a total of 70,000 square feet at two Lower Manhattan locations this quarter, including 40,000 square feet at 60 Broad Street and 30,000 square feet at 55 Broadway. Currently, the company has one other Manhattan location in the Flatiron neighborhood and a future location in the Gowanus neighborhood in Brooklyn. These leases reflect the second consecutive quarter of top deals among the coworking industry – last quarter, WeWork committed to 240,000 square feet in 85 Broad Street.

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LOWER MANHATTAN TOP 15 LEASES, Q2 2015 Source: Downtown Alliance, CBRE, CoStar, Colliers International, Newmark Grubb Knight Frank

Tenant Name Location

SF Leased Transaction Type

Sector

1

Morgan Stanley Smith Barney 1 New York Plaza

68,325 Expansion

FIRE

2

Port Authority of NY & NJ 115 Broadway

62,250 Renewal

Government

3

Globe Tax 1 New York Plaza

60,000 Moving Within LM

FIRE

4

Cowork|rs 60 Broad Street

40,000 Expansion

Professional Services

5

Cowork|rs 55 Broadway

30,000 Expansion

Professional Services

6

Holborn Companies 180 Maiden Lane

29,878 Moving Within LM

FIRE

7

Dixon Advisory USA 140 Broadway

25,391 1st NYC office

FIRE

8

MCIC Vermont, Inc. 125 Broad Street

22,255 Moving Within LM

FIRE

9

United Synagogue of Conservative Judaism 120 Broadway

16,331 Relocation

Nonprofit

10

Banco Popular, FSB 85 Broad Street

15,111 Expansion

FIRE

11

Icahn School of Medicine at Mount Sinai 225 Greenwich Street

14,600 Relocation

Education

12

Refinery29 225 Broadway

12,805 Expansion

TAMI

13

Gilbane Building Co. 88 Pine Street

12,707 Expansion

FIRE

14

Loeb Partners Corporation 100 Wall Street

11,540 Expansion

FIRE

15

Catholic Medical Mission Board 100 Wall Street

11,406 Relocation

Nonprofit

LMHQ On July 1, 2015, the Downtown Alliance opened LMHQ, a cross sector collaboration space created to foster the ongoing evolution of Lower Manhattan into a bustling tech and creative center. LMHQ opened in 12,500 square feet on the 20th floor of 150 Broadway and offers opportunities to work, take meetings, network and learn about industry trends. It features a 140-seat event space available for meet ups, hackathons and other networking opportunities. LMHQ also provides leadership events and original programming from a robust partner network that includes New York Tech Meetup, New York Technology Council, Center for an Urban Future, TheLi.st, and Uncubed Wakefield; Pace University will serve as an education partner. LMHQ offers both individual and company memberships as well as drop-in opportunities. For more information or for membership options, please visit www.lmhq.nyc.

Lower Manhattan Real Estate Year in Review | Q2 2015

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Rise in Employment

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SHARE OF LOWER MANHATTAN EMPLOYMENT GROWTH BY SECTOR, Q4 2013 - Q4 2014

In the fourth quarter of 2014, private sector payroll employment in Lower Manhattan reached its highest level since December 2001, with its fifth consecutive quarter of growth.1 The number of private sector employees is up by more than 2,200 since the third quarter of 2014 and more than 13,000 year-over-year.

Source: New York State Department of Labor

A collection of industries is driving this major gain, including Professional Services, Information, Education and Social Services and Hospitality and Retail. Nearly 50% of all jobs added during this period were in Education and Social Services, followed by 21% in Information and 13% in Professional Services. Several large corporate relocations over the past year, many of them in the TAMI sector, fueled rises in both Information and Professional Services employment in Lower Manhattan. In 2014, companies such as Condé Nast (which relocated to One World Trade Center) and HarperCollins Publishers (which moved into 195 Broadway) drove employment gains. Future moves from other large TAMI firms will extend this trend over the next several years; these include TIME Inc.’s planned relocation to a new headquarters in Brookfield Place and GroupM’s relocation in 3 World Trade Center, among many others.

Other Other 7% Services 7% Hotel, Retail & Restaurants 7%

Education & Social Services 41%

+14,177 ADDED JOBS

Professional Services 14% Information 24%

More than

TAMI Tenants

Technology, Advertising, Media, & Information 1 Source of employment totals: New York State Department of Labor, Q4 2014 reflects most current data available

LOWER MANHATTAN PRIVATE SECTOR PAYROLL EMPLOYMENT, Q4 2001-Q4 2014 Source: New York State Department of Labor

240,000 236,745 227,051

Number of Private Sector Employees

230,000

220,000

210,000

200,000 198,878 190,000

180,000

170,000 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001

2002

2003

2004

2005

Lower Manhattan Real Estate Year in Review | Q2 2015

2006

2007

2008

2009

2010

2011

2012

2013

2014

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Rents Lower Manhattan commercial Overall Asking Rents up rents continued their steady, upward climb. In the second quarter, overall average asking rents reached a new level of from Q2 2014 $58.25 — the highest in the market’s history — and are now up 18% over this time last year, according to Cushman & Wakefield. This rise in rents spans office classes. Class B rents are up 17.7% year-over-year, reaching an average of $44.82. Class A rents increased by 15.1%, reaching an average of $62.26.

LOWER MANHATTAN CLASS A AND B ASKING RENTS, Q2 2014 -Q2 2015

18%

Source: Cushman & Wakefield

$65

$62.26

$60 $55

$54.08

$50 $44.82

$45 $40

Commercial rents have also increased in other submarkets, reflecting a competitive office market and an economy with record employment levels. Meanwhile, Lower Manhattan retains an advantage with competitive pricing. On average, Lower Manhattan’s overall asking rents are $8.60 less than in Midtown South and $18.20 less than in Midtown, with premium Lower Manhattan properties competing at an even better bargain when compared to asking prices at comparable properties in Midtown and Midtown South.

$38.08

$35 $30 $25

Q2

Q3

Q4

Q1

2014

Q2 2015

Class A

Class B

MANHATTAN OVERALL ASKING RENTS BY SUBMARKET Source: Cushman & Wakefield

$80 $75

$76.45

$70 $65

$66.86

$60 $58.25

$55 $50 $45 $40 $35 $30 Q1

Q2

Q3

2010

Q4

Q1

Q2

Q3

Q4

Q1

2011 Lower Manhattan

Lower Manhattan Real Estate Year in Review | Q2 2015

Q2

Q3

Q4

Q1

2012 Midtown South

Q2

Q3

Q4

2013

Q1

Q2

Q3

2014

Q4

Q1

Q2

2015

Midtown

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Vacancy While leasing activity is down, the vacancy rate held steady through the second quarter, as little additional space became available in Lower Manhattan. The vacancy rate is 10.3%, steady year-over-year and from last quarter.

100 Wall Street

The Class A market in Lower Manhattan has the highest vacancy rate, 12.7%, with 6.7 million square feet available to lease.

Cornerstone Real Estate Advisers purchased the 29-story, 520,000-square-foot office tower from Savanna for $275 million.

Commercial Sales Cornerstone Real Estate Advisers has purchased 100 Wall Street, a 29-story, 520,000-square-foot office tower, from Savanna for $275 million. The deal set a new record for price per square foot Downtown, East of Broadway: $528. Savanna bought the building in 2011 from Lehman Brothers for $120 million and has invested roughly $26 million in renovating the property.

At $528 PSF, the sale was the highest price per square foot record Downtown, East of Broadway.

Among office sales closed in Q2, RXR completed its $675 million purchase of 32 Old Slip from Beacon Capital Partners. GE Capital provided $325 million in financing. Beacon Capital bought the 1.16 million-square-foot property from Paramount Group in 2007 for $751 million. RXR simultaneously sold the property’s land in a 150-year leaseback arrangement to a partnership involving David Werner.

LOWER MANHATTAN VACANCY RATES BY CLASS TYPE, Q2 2011 - Q2 2015 Source: Cushman & Wakefield

16%

14% 12.7% 12%

10%

11.6%

9.5%

9.3% 8%

7.1%

6%

4%

6.6%

Q2

Q3 2011

Q4

Q1

Q2

Q3

Q4

2012

Q1

Q2

Q3

Q4

2013 Class A

Lower RealReal Estate Year inYear Review | Q2 2015 LowerManhattan Manhattan Estate in Review | Q2 2015

Class B

Q1

Q2

Q3 2014

Q4

Q1

Q2 2015

Class C

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RETAIL MARKET Development Brookfield Place’s extensive renovation of 375,000 square feet of retail and public space was officially unveiled on March 26. Among its roster of curated retail, restaurant and lifestyle options, Brookfield features luxury fashion labels, contemporary brands, chef-inspired restaurants and gourmet food markets. Many more restaurants and shops will open throughout the next year, including a 75,000-square-foot Saks Fifth Avenue. Opening in the next year, Westfield World Trade Center will become an iconic destination with 150 stores and restaurants in Santiago Calatrava’s Oculus and at the base of both the 3 and 4 World Trade Center buildings. The 365,000-square-foot complex previewed its retail and dining offerings, which include Hugo Boss, Michael Kors, Banana Republic and Desigual. Mario Batali’s Eataly will serve as the culinary anchor among many other food, beverage and dining options. In other Westfield news, the fit-out of Fulton Center’s 65,000 square feet of commercial and retail space is underway with a completion date in early 2016. Shake Shack announced plans last quarter to open a location on the second floor. The transportation hub opened in November 2014 and has improved connections between nine subway lines and five existing subway stations. More than 300,000 commuters, residents and tourists are expected to cross through the station each day. The Dey Street connector, which is the last piece of a continuous underground passageway between Fulton Center, the World Trade Center and Brookfield Place, is still in progress and expected by 2016.

Courtesy of Turner Construction

The 375,000-square-foot retail complex opened March 26, 2015. Additional stores and restaurants will open throughout the summer and fall.

The Howard Hughes Corporation continues with construction of the revamped Pier 17 at the South Street Seaport. The new pier and revitalized historic area will provide 365,000 square feet of retail, dining and entertainment by 2017. Nearby to Pier 17, iPic Theaters is planning to open an eight-screen movie theater in early 2016 in the Fulton Market Building. Additional components of the Seaport redevelopment plan are yet to be determined.

2 Million SF of new & repositioned retail space

Lower Manhattan Real Estate Market Overview| Q2 2015

Over 150 stores and restaurants at Westfield World Trade Center are expected to open in the next year.

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New Openings and Announcements throughout District At the second quarter’s end, the district had 1,060 stores and restaurants – a 6 percent increase over last year. Lower Manhattan saw 30 new stores and restaurants open this quarter and 75 since the beginning of 2015. At Brookfield Place, luxury and contemporary brands continued to roll out after the March opening of the repositioned retail space. Salvatore Ferragamo, Burberry, Scoop NYC and Vilebrequin were added to the shopping roster. Parm welcomed guests with their favorite Italian dishes, while Beaubourg and L’Appart opened with flair in Le District, the 30,000-square-foot French marketplace. The Institute of Culinary Education revealed its new 74,000-square-foot facility, the largest culinary school to be built in America in more than 10 years. In the Seaport, Smorgasburg made its summer return with eight food kiosks along Fulton Street. Industry Kitchen opened along the East River Esplanade, featuring wood-oven pizzas, while VBar brought its Mediterranean cuisine to Front Street. The Howard Hughes Corporation, in partnership with Women’s Wear Daily, launched Seaport Studios, a retail concept space dedicated to showcasing emerging fashion designers, in the restaurant space formerly occupied by Red at 19 Fulton Street. Eateries opened district-wide: Malt House, an American tavern, at 9 Maiden lane; Neapolitan Express, the first brick and mortar location of the pizza food truck, at 40 Wall Street; and Gunbae, Lower Manhattan’s first Korean BBQ and karaoke spot, at 67 Murray Street. Retail momentum also continued to build along Broadway, as Anthropologie signed a 20,000-square-foot lease in the grand lobby of 195 Broadway. The retailer will join Nobu, the famed Japanese restaurant relocating from Tribeca. Both are scheduled to open in early 2017.

Courtesy of Nick Solares for NY Eater

Parm, an Italian-American eatery, was unveiled at 250 Vesey Street in Brookfield Place.

Courtesy of L.O.L. Kids Courtesy of Malt House

Malt House, an American tavern, opened at 9 Maiden Lane.

Lower Manhattan is attracting more and more marquee restaurant talent. April Bloomfield and Ken Friedman announced they will operate a four-level dining and drinking venue, with outdoor terraces, at the top of 70 Pine Street. The former AIG tower is being converted to 644 luxury rental apartments. Trailblazing chef Wylie Dufresne will open a hotel restaurant in the AKA Wall Street, which is currently under development at 84 William Street.

75

New stores and restaurants have opened in the first half of 2015

Lower Manhattan Real Estate Market Overview| Q2 2015

Courtesy of Jane Kratochvil

Seaport Studios, a retail concept store featuring emerging fashion designers, opened at 19 Fulton Street. 7


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Lower Manhattan emerges as a premier waterfront dining destination If you fancy dining on the water, Lower Manhattan is the place for you. The district boasts more than 10 waterfront eateries, all offering exquisite views along with their delicious cuisine. Pier A, which opened in late 2014, is a 28,000-square-foot bar, restaurant and event space in Battery Park overlooking the Hudson River. The first floor features a large bar and oyster bar and is surrounded by a promenade of outdoor tables. The second floor boasts a multi-room fine-dining experience with private cocktail bars. The third floor is dedicated to special events. The landmarked building is brimming with history. It was built in 1886 and has served as the headquarters of the New York Harbor Police and Department of Docks, as well as the main station for the Marine Division of the New York City Fire Department. Brookfield Place’s repositioning of its restaurant and retail space — with great views of the Hudson River and North Cove Marina— is a boon for Lower Manhattan’s flourishing restaurant scene. P.J. Clarke’s, a favorite watering hole, was joined by the popular Hudson Eats, a 600-seat gourmet food hall. Le District, the 30,000-square-foot French marketplace, recently unveiled the al fresco dining portion of its restaurants Beaubourg and L’Appart – providing over 7,000 square feet of outdoor dining. Later this year, L’Atelier de Joel Robuchon will provide world-class dining with spectacular views of the Statue of Liberty. The Howard Hughes Corporation’s revamping of Pier 17 at the South Street Seaport will provide 365,000 square feet of retail, dining and entertainment. The new space, with magnificent views of the Brooklyn Bridge and Lower Manhattan, will feature a oneand-a-half-acre rooftop that will include a world-class restaurant, two outdoor bars and an amphitheater that can hold up to 4,000 people for concerts and special events. The project is expected to be completed in 2017.

Photo by Pete Thompson

The Battery Maritime Building, a Beaux-Arts landmarked building built in 1909, is being transformed into a 61-room boutique hotel featuring a rooftop restaurant and event space. The Dermot Company is working with the Poulakakos Family to bring a premier dining and catering business to the historic building.

“ The neighborhood in the last few months has just exploded with people.” - Kevin Richer, North End Grill

Lower Manhattan Real Estate Market Overview| Q2 2015

Courtesy of Industry Kitchen

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TOURISM & HOSPITALITY Record Year for Tourism 2014 was a banner year for tourism in Lower Manhattan, as the district welcomed 12.4 million unique visitors — a 30% increase since 2013 and a 10% gain over 2012. The National September 11 Memorial Museum, which opened in May 2014, has already welcomed over 3 million visitors. Tourism is expected to continue growing throughout 2015, spurred in part by the recent opening of the 120,000-square-foot One World Observatory on May 29 (see callout).

Hotel Development Takes Off There are currently 5,100 hotel rooms in 22 hotels throughout Lower Manhattan — a 25% increase in hotel rooms since 2010. Some 2,400 hotel rooms in 14 hotels are under construction, with another 1,200 hotel rooms at seven hotels in the planning stages. This quarter, Tribeca Associates announced plans for a 26-story, 228-room hotel to be built at 143 Fulton Street. Cipriani-owned luxury boutique hotel Mr. C made plans to convert the 72-room Best Western Seaport at 33 Peck Slip. Fortis Property Group will build a 33-story, 217-room AC Hotel by Marriott at 151 Maiden Lane. Over the course of the remainder of 2015, Lower Manhattan will see almost 700 hotel rooms open in five hotels – resulting in an 18% hotel room increase over 2014. Among the new and upcoming hotels: • Aloft Hotel at 49 Ann Street, 125 rooms (opening late July);

Courtesy of Hidrock Realty

The Aloft Manhattan Downtown, at 49 Ann Street, opens in late July. The hotel has 125 rooms.

12.4 MILLION estimated number of visitors in 2014

• Four Points by Sheraton at 6 Platt Street, 262 rooms; •Q &A Residential Hotel, at 70 Pine Street, 132 rooms; • Riff Hotel at 102 Greenwich Street, 36 rooms; • AKA Wall Street at 84 William Street, 141 rooms.

Occupancy and Average Daily Room Rate Lower Manhattan hotels rebounded from a weaker first quarter, seeing a 16 percentage point increase in occupancy and a 14 percent increase in average daily room rate (ADR). In addition, New York City saw a 14 percentage point increase in occupancy and a 32 percent ADR increase from last quarter. Lower Manhattan’s average occupancy during the second quarter was 89%, down two percentage points from this time last year. The district’s hotel occupancy rate remained on par with New York City’s. Lower Manhattan’s second quarter ADR was $270, as was the New York City-wide ADR (down 11% from last year). The city’s ADR was down only 3% from last year. Source of citywide hotel figures: NYC & Company Source of tourism estimates: Audience Research & Analysis

Lower Manhattan Real Estate Market Overview| Q2 2015

Courtesy of AKA

AKA Wall Street opens this fall at 84 William Street with 141 rooms. Chef Wylie Dufresne announced the opening of a new restaurant in the hotel.

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LOWER MANHATTAN HOTEL DEVELOPMENT PIPELINE Source: Downtown Alliance

Source: Downtown Alliance Hotel & Address

Owner/ Developer

Rooms/ Floors

Open Date

Hotel & Address

Owner/ Developer

Rooms/ Floors

Open Date

249/29

2016

1

Aloft Hotel 49 Ann Street

107 W. Broadway Realty Corp

125/18

2015

12

Hilton Garden Inn 6 Water Street

McSam Hotel Group

2

Four Points by Sheraton 6 Platt Street

Lam Group

262/30

2015

13

Residence Inn 215 Pearl Street

Lam Group

3

Q&A Hotel 70 Pine Street

Rose Associates

132/ 4(of 66)

2015

14

Courtyard by Marriott 215 Pearl Street

Lam Group

4

Riff Hotel 102 Greenwich Street

Royal United Builders

36/5

2015

15

Hotel Indigo 10-12 Maiden Lane

10-12 MLane Inc.

190/25

2017

5

AKA Wall Street 84 William Street

Prodigy Networks

141/19

2016

16

AC Hotel | Marriott 151 Maiden Lane

Fortis Property Group

271/33

2017

6

The Beekman Hotel 5 Beekman Street

GB Lodging Group

287/9

2016

17

TBD Hotel 11-13 Stone Street

Premier Emerald LLC

143/27

2018

7

Courtyard by Marriott 133 Greenwich St

Hidrock Realty

317/31

2016

18

Extended Stay Hotel 17 John Street

Prodigy Networks

194/23

2018

8

Boutique hotel Battery Maritime Building

The Dermot Group

61/5

2016

19

TBD Hotel 130 William Street

Lighstone Group

TBD/12

2018

9

The Artezen Hotel 24-26 John Street

Westbury Realty Associates

89/21

2016

20

TBD Hotel 50 Trinity Place

Fit Investment Group

188/29

TBD

10

TBD hotel 100 Greenwich Street

Jiten Hotel Management

192/25

2016

21

TBD Hotel 120-122 Water Street

NY Times Square Hotel Group

150/31

TBD

11

Four Seasons 30 Park Place

Silverstein Properties

189/ 21 (of 82)

2016

22

TBD Hotel 143 Fulton Street

Tribeca Associates

228/26

TBD

120/40 (upper floors) 200/40 (lower floors)

2017 2017

One World Observatory Opens Named one of the “world’s hottest new travel experiences” by Lonely Planet, the 120,000-square-foot One World Observatory opened to the public on May 29th. Operated by Legends Hospitality, the observatory offers iconic views from the 100-102nd floors of the 1,776-foot-tall One World Trade Center. At the base, guests learn about the personal stories of those who built One World Trade Center. Five dedicated elevators bring visitors to the 102nd floor in 60 seconds, featuring a virtual time-lapse of the development of the New York City skyline. At the top, the See Forever Theater and City Pulse present imagery of the city, neighborhoods and landmarks. Ticketed guests are also able to visit three distinct dining options from casual café fare to seated fine dining. Since its opening, the Observatory has welcomed hundreds of thousands of guests. It projects 3 million annual visitors. Courtesy of One World Obsevatory

Lower Manhattan Real Estate Market Overview| Q2 2015

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RESIDENTIAL MARKET Inventory and Development Lower Manhattan boats nearly 31,000 residential units in 323 buildings with an estimated population of approximately 60,000 residents. The number of housing units continues to expand as construction moves ahead on over 3,500 residential units in 18 properties, while another 2,000 units in 13 properties are in the planning stages. Among the projects under construction and in development, 44% of the units will be rental and 41% will be condominiums. In 2015, 927 units will come onto the market, 865 of which are rental units at 70 Pine Street and 20 Exchange Place. At 70 Pine Street, plans include opening the rental gallery for the 644 rental units in October, in anticipation of a late 2015 debut. DTH Capital is wrapping up phase II of the conversion of 20 Exchange Place, adding 221 additional luxury rental units to the existing 556 rental units it completed in 2008. This quarter, plans were announced for: • Six buildings along West Broadway between Warren and Murray Streets, collectively known as 71 West Broadway. The buildings were purchased by Cape Advisors for $50 million, or $1,000 per square foot. The developer plans to construct a 46,000-square-foot condo building at the site.

2 Rector Street Kushner Companies and CIM Group plan to convert the 26-story office building at 2 Rector Street into a 452-unit apartment building.

• Kushner Companies and CIM Group’s conversion of 2 Rector Street into 452 apartments. The 470,000-square-foot office building was purchased two years ago for $140 million. • The Moinian Group’s construction of a 29-story, mixed-use residential building at 102 John Street. The existing five-story building will get a vertical enlargement. The development will have 92 residential units, 59,000 square feet of commercial space and a new 44-car parking garage.

More than

60,000 residents

Lower Manhattan Real Estate Market Overview| Q2 2015

Image via Google Maps

71 West Broadway

Cape Advisors bought six buildings along West Broadway for $50 million and plans to construct a 46,000-square-foot condo building at the site.

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HIGHLIGHTS OF LOWER MANHATTAN RESIDENTIAL DEVELOPMENT Source: Downtown Alliance

Address & Building Name

Lease & Building Type

Units

Open Date

Rental Buildings Under Construction 1

70 Pine Street

Rental Conversion

644

2015

2

20 Exchange Place Phase II

Rental Conversion

221

2015

3

60 Fulton Street Exhibit

Rental New Construction

120

2016

4

110 Wall Street WeWork/WeLive

Rental Conversion

232

2016

5

180 Water Street

Rental Conversion

565

2017

Condo Buildings Under Construction 1

19 Park Place

Condo New Construction

21

2015

2

87 Chambers Street Reade Chambers

Condo New Construction

17

2015

3

12 Warren Street

Condo New Construction

24

2015

4

5 Beekman Street The Beekman Residences

Condo New Construction

68

2016

5

30 Park Place Four Seasons Residences

Condo New Construction

157

2016

Condo New Construction

191

2016

7

101 Wall Street

Condo Conversion

52

2016

8

100 Barclay Street Ralph Walker Tribeca

Condo Conversion

161

2016

9

233 Broadway Woolworth Residences

Condo Conversion

34

2016

10

151 Maiden Lane One Seaport

TBD New Construction

80

2017

11

111 Murray Street

Condo New Construction

154

2018

12

112-118 Fulton Street

Condo New Construction

460

2018

Strong Sales and Rental Market The Lower Manhattan sales market slowed throughout the first half of 2015, with the total number of sales down by 47% over a year ago. While sales totals decreased, the median sales price in Lower Manhattan rose 5% year over year. Meanwhile, Manhattanwide sales activity saw a 20 percent decrease year over year and a median sales price increase of 8 percent. Lower Manhattan’s average sales price per square foot remained flat at $1,300 but experienced a year-over-year increase of 4%. The Manhattan average price per square foot rose over last quarter by 6% and also saw a 6% increase from last year. Meanwhile, the Lower Manhattan rental market also experienced a rise in pricing year over year, with the median rent rising 2.5% to $3,639. The Manhattan median rent trended similarly, rising 2.8% year over year to $3,374.

AVERAGE SALES PRICE ($) PER SF Source: Miller Samuel/Douglas Elliman $1,400 $1,340

$1,350 $1,300

$1,317

$1,250 $1,200 $1,150 $1,100

$1,103

$1,050

$1,036

$1,000 $950 $900

Condo Buildings Planned for Development 68-74 Trinity Place

Condo New Construction

2

125 Greenwich Street

Condo New Construction

300

2018

3

1 Wall Street

TBD Conversion

TBD

2018

4

130 William Street

Condo New Construction

188

2018

5

71 West Broadway

Condo New Construction

35

TBD

6

2 Rector Street

TBD Conversion

452

TBD

7

102 John Street

TBD New Construction

92

TBD

1

CAPITAL IMPROVEMENTS

Source of rental and sales market data: Miller Samuel/Douglas Elliman

50 West Street

6

RESIDENTIAL

111

Lower Manhattan Real Estate Market Overview| Q2 2015

2017

Q1

Q2

Q3

Q4

Q1

2013

Q2

Q3

Q4

Q1

2014 Lower Manhattan

Q2 2015

Manhattan

LOWER MANHATTAN RESIDENTIAL UNITS UNDER CONSTRUCTION & IN DEVELOPMENT Source: Downtown Alliance

TBD 11%

Rental/Condo Units 4%

Residential Units Under Construction & In Development

5,500 Unit Pipeline: • 3,500 Under Construction • 2,000 In Development

Condo Units 41%

Rental Units 44%

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OFFICE

RETAIL

TOURISM & HOSPITALITY

RESIDENTIAL

CAPITAL IMPROVEMENTS

CAPITAL IMPROVEMENT PROGRESS World Trade Center (WTC) 4 World Trade Center The 72-story, 2.3 million-square-foot office tower was completed in November 2013. The building is 62% leased to the Port Authority, the City of New York, MediaMath, IEX and Morningstar. Silver Suites, a short-term office provider, signed a 47,000 square-foot lease at the beginning of the second quarter, along with PadillaCRT, the first public relations firm to move to the new World Trade Center.

One World Trade Center The tallest building in the western hemisphere opened in 2014. The 104-story, 3 millionsquare-foot tower is currently 64% leased.

One World Trade Center The 104-story, 3 million-square-foot office tower opened on November 3, 2014. Condé Nast is now fully installed in the building and occupies 1.2 million square feet. One World Trade Center is currently 63% leased, with other tenants including Beijing Vantone China Center, the U.S. General Services Administration, Servcorp, KiDs Creative, High Five Games, xAd, Incandescent Technologies, Cushman & Wakefield, BMB Group, Westfield and Legends Hospitality Group. TAMI-sector firms now comprise nearly half of the building’s leaseholders. Moody’s is expected to sign an 80,000-square-foot expansion from 7 World Trade Center in the third quarter.

Condé Nast has fully occupied its 1.2 millionsquare-foot lease. Other tenants: High Five Games, xAd, & KiDS Creative.

Courtesy of Silverstein Properties

One World Observatory, Legends Hospitality’s 120,000-squarefoot observation facility on floors 100, 101 and 102, opened May 29th; over three million visitors are expected annually.

Legends Hospitality opened One World Observatory on May 29.

Two World Trade Center

Three World Trade Center The 2.5 million-square-foot office tower is tentatively scheduled to top out in December 2016 and to be completed in 2018. Group M Worldwide finalized a lease for 515,000 square feet in the fourth quarter of 2014.

Anticipated to open 2021. Bjarke Ingels Group replaced Norman Foster as the architect of the 88-story, 2.8 millionsquare-foot office tower.

Two World Trade Center 21st Century Fox and News Corp signed a letter of intent with Silverstein Properties to anchor 1.3 million square feet, or about 46%, of the tower. This would mean that both firms would relocate from Midtown Manhattan.

21st Century Fox and News Corp signed a letter of intent with Silverstein Properties to anchor 1.3 million square feet, or about 46%, of the tower.

The redesign of the 88-story, 2.8 million-square-foot office tower was announced this quarter with Bjarke Ingels Group (BIG) replacing Norman Foster as the tower’s architect. The planned tower will incorporate studios and newsrooms rather than trading floors (the original tower was designed with financial tenants in mind). Courtesy of DBOX for Silverstein Properties

Lower Manhattan Real Estate Market Overview| Q2 2015

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OFFICE

RETAIL

TOURISM & HOSPITALITY

National September 11 Memorial Museum The 100,000-square-foot National September 11 Memorial Museum officially opened a year ago, on May 21, 2014, and has since welcomed over 3 million visitors. The National September 11 Memorial, which opened in September 2011, has drawn more than 20 million visitors. The World Trade Center Transportation Hub The 800,000-square-foot space will house the PATH station and Westfield’s 350,000-square-foot retail complex and connect to Fulton Center on the east and Brookfield Place on the west. In advance of the opening of the World Trade Center Transportation Hub, the temporary PATH station deconstruction is scheduled to begin in the third quarter of 2015; and new entrances and exits will be relocated to WTC Towers 2 and 4. Platform B opened in early May, connecting the World Trade Center PATH station to the Newark-bound line. Pedestrian traffic was officially opened at the intersection of Greenwich and Fulton Streets, connecting Vesey Street and the current PATH station to the memorial plaza. Pier 17 Redevelopment The Howard Hughes Corporation completed the deconstruction of Pier 17; pier replacement and superstructure will continue through 2015. Plans include 365,000 square feet of retail, dining, and entertainment space, as well as a new food market in the Pier 17 building.

RESIDENTIAL

CAPITAL IMPROVEMENTS

Transportation Infrastructure Fulton Center

3 World Fulton Center officially opened in November 2014. TheTrade 65,000-squarefoot commercial space at Fulton Center isCenter fully leased, and tenants are expected to include beauty salons, drugstores and grab-n-go eateries. With financing in The retail portion is expected to open in early 2016. place, the building

The Dey Street connector, which is theis last piece of a continuous scheduled to be underground passageway between Fulton Center, the Trade completed inWorld 2018. Center and Brookfield Place, is still in progress and expected to open GroupM signed a by 2016.

lease for 515,000 square feet in the 2.5 South Ferry station million-square-foot The MTA awarded a $194 million contract to rebuild the South Ferry office tower.The station will subway station that was damaged in Hurricane Sandy. get permanent flood protection measures, will become wheelchair accessible and will allow entry and exit for all ten cars along the No. 1 line. Completion is expected in 2017. Broadway Reconstruction

The Department of Design and Construction (DDC) launched a $42 million capital reconstruction project on Broadway, referred to as Broadway 1, stretching from Ann Street to Rector Street. 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 2017.

The Battery Phase I of the Battery Bikeway opened with expanded pedestrian sidewalks and seating. Phase II, continuing through the summer, will connect Manhattan’s east and west bike paths. The SeaGlass Carousel and the surrounding Woodland Gardens will open on August 20th. The Battery Oval, a three-acre lawn, will reopen to the public later this summer. The space has an audience capacity of 5,000 people. In the fall, the Oval will be populated by 300 chairs chosen in a design competition. Designs are now being finalized for an expanded new playground of 1.4 acres, which is scheduled to open in 2017. In March 2015, the Mayor’s Office announced that $8 million would go to flood protection design and the first phase of implementation at Battery Park. Another $6.75 million was put toward advanced planning and environmental review for comprehensive flood protection from the Manhattan Bridge along the tip of Lower Manhattan until the north end of Battery Park City. In total, the city and state have devoted $14 million to plan and build resiliency infrastructure in Lower Manhattan.

Lower Manhattan Real Estate Market Overview| Q2 2015

The 800,000-square-foot facility will house the PATH station and Westfield’s 350,000Courtesy of Sara Cedar Miller for the Battery Park Conservancy square-foot retail complex, as well as offering The Battery underground connections to Fulton Center and Brookfield The SeaGlass CarouselPlace. and the surrounding Woodland Gardensiswill open on for August 20th. The Completion scheduled late 2015. Battery Oval, a three-acre lawn, will reopen to the public later this summer.

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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:

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 the more than $6.4 billion of transit investments since 2005 and how these investments 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; The Brain Gain, a report on how the region’s shifting demographics are favoring the Lower Manhattan business district;

If you have questions or require additional information, please contact research@downtownny.com

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