hedge fund report - 082011

8/3/2019 Hedge Fund Report - 082011

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-28%

-23%

-20%

11%

27%

37%

49%

70%

$ 4 0

. 5 3

$ 4 6

. 8 3

$ 4 8

. 6 2

$ 6 2

. 2 9

$ 7 0

. 1

4 $ 8 0

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$ 8 7

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$ 9 7

. 0 8 $

1 1 0

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$ 5 0

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$ 5 7

. 0 0

$ 7 1

. 0 9

$ 7 9

. 4 9 $

9 0

. 8 1

$ 9 7

. 8 7

$ 1 0 6

. 4 1 $

1 2 0

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$0

$20

$40

$60

$80

$100

$120

$140

Third Avenue

Class A

Seventh Avenue

Class A

Grand Central

Class A

Midtown Class

A

Plaza District

Class A

Midtown Trophy Plaza District

Trophy

Midtown Trophy

(Tower)

Plaza District

Trophy (Tower)

October 2010The Premium Curve

In this month's report, we evaluate the starting rents achieved in Midtown as of the end of the summer 2011. Using

Midtown's Class A leasing transactions as a benchmark, the average transaction’s starting rent was just over $71.00 per sq. ft. In assessing the premium (above Class A Midtown space) for Plaza District space, trophy buildings, and tower floor units, the data reveals the following:

The scarcity in tower floor units (those above the 25th floor) has contributed to a significant increase in rental rates. Witha vacancy rate of just 3.5% for these tower floor units, the completed lease data reflects a tremendous premium paid bytenants:

Rents by Submarket

July-August 2011

the premium for Plaza District Class A space was 11% - average starting rent of $79.49 per sq. ft.

for trophy space within Midtown generally, the premium was 27% - average starting rent of $90.81per sq. ft.

for trophy space in signature Plaza District buildings, the premium in starting rent jumps to 37% -average starting rent of $97.87 per sq. ft.

tower floor units within midtown trophy build ings garnered a 49% premium - average startingrent of $106.41 per sq. ft.

tower floor units wi th the Plaza District's trophy building subset saw a premium of nearly 70%

above Midtown Class A - average starting rent of $120.25 per sq. ft.

NER

Starting Rent



October 2010At the opposite end of the spectrum were opportunities in specific submarkets such as Grand Central Class A, whichshowed a discount of approximately 20% to Midtown Class A. In 2011, the average starting rent was $57 per sq. ft.

More value-driven opt ions were apparent in corridors such as Third Avenue, where the average Class A starting rentwas nearly $51 per sq. ft. This represents a28% discount to Midtown Class A. Similarly, Seventh Avenue (below 55thStreet) had an average starting rent of $54.33 per sq. ft., 23% below the Midtown Class A average.

Thenet effective rents, shown in grey, take into account base rent less concessions for free rent and tenantimprovement allowance. On average across the various submarkets, the difference between starting rents and neteffective rents is approximately $8 - 10 per sq. ft.

Asking Rents Correlation to Stock Market Index

The commercial office market typically reacts once there is a sustained shift in economic conditions. As shown below,asking rents tend to lag the stock market by approximately one year at both market peaks and troughs. While thestock market peaked in 2007, Class A asking rents did not peak until 2008. Conversely, the S&P hit a recent low in thefirst quarter 2009, while asking rents troughed one year later, in the first quarter of 2010. It is important to note, however,that net effective rents or taking rents often react more quickly than market averages for asking rents, as landlordconcessions are negotiated in real time.

:

July-August 2011

$20

$30

$40

$50

$60

$70

$80

$90

$100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

0

200

400

600

800

1000

1200

1400

1600

1800

Midtown Class A Rents S&P 500 Close

Asking rents appear to lag the

stock market by approximatelyone year.



Midtown Asking Rent Forecast

Growth in office-using employment growth is expected to remain relatively flat over the next 12 months with only modestgains forecast into early 2013. Sustained growth will begin in 2014 after which employment levels are likely to reachpre-recessionary levels. Asking rents for Class A space in Midtown could spike by as much as 15% as increases in the

job market push vacancy levels below equilibrium.

As a point of reference, in May 2008, Class A rents peaked at $96.96 per sq. ft. while trophy rents reached $122.00 per sq. ft.

July-August 2011

$67.44

$99.57

$81.69

$128.18

800

850

900

950

1000

1050

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2Q11 2011 2012 2013 2014 2015 2016

O f f i c e - U s i n g E m p l o y e e

s ( t h o u s a n d s )

$25

$45

$65

$85

$105

$125

$145

A s k i n g R e n t ( P S F )

Employment Class A Trophy

Midtown (Class A & Trophy) Asking Rent Forecast

with Manhattan office-using employment



Newly Available Sublease Spaces

Floorplan

Through November 2018Through February 2016Through November 2012Term

Built with 16 offices, 2conference rooms, 42workstations, and openarea for 56 tradingpositions. Furniture canbe made available.

Built with 1 executive office,open area for 6 workstationsand conference room.Furniture and phones can bemade available.

Built with 27 tradingpositions, 130 workstations, 1boardroom (capacity for 50seats), 2 conference rooms.Furniture and phones areavailable.

Comments

Landesbank Baden-Wurttemberg

Nikkei BusinessISI GroupSublandlord

$80.00/rsf $42.00/rsf $60.00/rsf Asking Rent

Entire 31 –20,272Part 29 –1,740 rsf Entire 18 – 25,000 rsf Floor / sq.

ft .

Broadway Partners FundManager, LLC

The Durst OrganizationLeFrak OrganizationOwnership

280 Park Avenue West

Between Park andMadison Avenues

655 Third Avenue

Between 41st and 42nd Streets

40 West 57th Street

Between Fifth and SixthAvenues

Building

and Address

Building

Photo

July-August 2011




Floorplan

Through January 2017Through June 2015Through April 2017Term

Built with 9 offices, open areafor 8-10 people, 2 conferencerooms and pantry. Furnitureis available.

Built with 8 offices, openarea for 4-6 people,conference room, andpantry. Exceptional CentralPark views.

Built with 26 offices,100trading positions, 4conference rooms andpantry. Exceptional CentralPark views.

Comments

Forty North CapitalSilver Creek CapitalCitadel Investment GroupSublandlord

$125.00/rsf $100.00/rsf $85.00/rsf Asking Rent

Entire 12 –8,900 rsf Part 59 –5,001 rsf Entire 48 – 30,529 rsf Floor / sq.

ft .

Hartz Mountain Industries,Inc.

Boston Properties, IncBoston Properties, IncOwnership

667 Madison Avenue

S/E/C East 61st Street

601 Lexington Avenue

Between 53rdand 54th

Streets

601 Lexington Avenue

Between 53rd and 54th

Streets

Building

and Address

Building

Photo

July-August 2011




Shared space built with 2offices, open area for 2-4people, conference room,pantry and direct presenceoff the elevator.

Asperion Group

Through July 2013

$5,000.00 per office, includesopen area

Part 18 -2,000 rsf

TF Cornerstone Inc.

152 West 57th Street

Between Sixth and SeventhAvenues

Floorplan

Through December 2017Through May 2013Term

Installation built for LehmanBrothers with 20 offices, 156workstations and 4 conferencerooms. Furniture and phonescan be made available.

New installation built with 4offices, conference room andpantry. Furniture and phonescan be made available.

Comments

Hearst PublicationsEMR US HoldingsSublandlord

$63.00/rsf $50.00/rsf Asking Rent

Entire 41 – 40,688 rsf

Entire 42 – 40,786 rsf

Part 43 –24,327 rsf

Part 8 –3,100 rsf Floor / sq.

ft .

Rockefeller GroupDevelopment Corp.

SL Green Realty Corp.Ownership

1271 Avenue of the Americas

Between 50th and 51st Streets

1350 Avenue of the Americas

S/E/C West 55th Street

Building

and Address

Building

Photo

July-August 2011




Recently built high endinstallation with 13 offices, 2conference rooms andwindowed reception area.Furniture can be madeavailable.

Highside CapitalManagement

Through November 2013

$60.00/rsf

Part 32 –7,175 rsf

Tishman Speyer

200 Park Avenue

Between 44th and 45th

Streets

Floorplan

Term

Comments

Sublandlord

Asking Rent

Floor / sq.

ft .

Ownership

Building

and Address

Building

Photo

July-August 2011



Square Feet AddressTenantType

Recently Completed Transactions – Financial Service Firms

For further information, please contact:

Cynthia Wasserberger at 212.812.5816 or [email protected]

July-August 2011

New Cerberus Capital Management 875 Third Avenue 109,573

Sublease Forex 55 Water Street 67,000

New Abbott Capital Management 1290 Avenue of the Americas 35,000

Renewal Luxor Capital 1114 Avenue of the Americas 31,285

Expansion Ziff Brothers 350 Park Avenue 26,000

Expansion TPG Capital 888 Seventh Avenue 25,118

Expansion Elliott Management 40 W 57th Street 24,000

Renewal Levin Capital 595 Madison Avenue 23,147

Expansion William Blair & Company 666 Fifth Avenue 16,689

New NCH Capit al 452 Fifth Avenue 16,000

New Edgewood Management Company 535 Madison Avenue 14,375

Expansion Raymond James 277 Park Avenue 11,000

New Cliffwater LLC 545 Madison Avenue 9,264

New Glenhill Capital 600 Fifth Avenue 8,000

Expansion Hutchin Hill Capital 142 W 57th Street 6,206

New Capricorn Investment 660 Madison Avenue 5,800

Renewal Charterhouse Group 535 Madison Avenue 5,667

New Nakoda Capital 1330 Avenue of the Americas 4,525

hedge fund report - 082011

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