office - cynthia a. ramirez · going-in manhattan office investment yields have generally shifted...

New York | Q1 2018

Office

Tight labor market conditions continued in the first quarter of 2018, with a Manhattan unemployment rate of just 3.9 percent as of February. This reinforced office occupiers’ desire to upgrade their offices, oftentimes by consolidating their footprints into more efficient, dynamic workspaces.

JPMorgan Chase will tear down and redevelop its headquarters at 270 Park Avenue, promoting further short- and long-term stability in the Midtown core.

Google’s acquisition of Chelsea Market propelled first-quarter investment volume to $7.5 billion, outpacing the prior 10-year quarterly average.

Quarterly Office Outlook

Class A market tightens, though vacancies in commodity product will emerge in Midtown and Downtown

Major announcements by JPMorgan Chase and Google in the first quarter were the latest indicators of how office occupiers have combatted tightened, competitive labor market conditions. According to the BLS, the Manhattan unemployment rate was just 3.9 percent as of February, a decrease of 30 basis points year-over-year, while the total number of jobs reached a new record of nearly 914,000. Now more than ever, office users have made strides towards creating dynamic workplace environments to attract talent, oftentimes by consolidating into a single structure or campus-like environment.

JPMorgan Chase finalized plans to tear down and redevelop its headquarters at 270 Park Avenue. The existing 1950s-vintage building will be replaced by a state-of-the-art structure that is expected to be approximately 1.2 million square feet larger and will accommodate the needs of a modern workforce. This will be accomplished through the acquisition of additional development rights through the recently enacted Midtown East rezoning, which allows for air rights transfers throughout a 78-block radius anchored by Grand Central Terminal. Over time, the building improvements made as a result of this program could help curb the recent relocation activity away from the Midtown core—the city’s largest CBD. In the meantime, JPMorgan Chase leased the 418,241 square feet of available space at 390 Madison Avenue, a completely redeveloped tower delivering later in 2018.

Google acquired 75 Ninth Avenue (Chelsea Market) for $2.4 billion in the first quarter—the second-largest single-building office purchase in the history of New York City.

JLL | New York | Office Outlook | Q1 20182

New York overview

The tech giant effectively reestablished its campus environment in the Meatpacking District, where the company also owns 111 Eighth Avenue and leases space at 85 Tenth Avenue and the soon-to-be-delivered 57 Eleventh Avenue (SuperPier).

Leasing activity was relatively subdued in the first quarter, totaling 7.1 million square feet. Midtown, Midtown South and Downtown reported quarterly decreases, though activity was in line with the first quarter of 2017 total. The dip in leasing velocity did not affect vacancy rates, however, which decreased by 30 basis points quarter over quarter to 8.5 percent. Manhattan overall asking rents decreased for just the third time in the last 29 quarters, declining by $0.43 to $72.48 per square foot. This was largely attributable to the Class B segment, which recorded a quarterly decrease in pricing of $0.91 to $56.83 per square foot.

The ‘flight to quality’ trend persisted, particularly in Midtown, where 15 of the top 20 leases were inked at Class A buildings. Publishing company Simon & Schuster signed a 283,000-square-foot renewal at 1230 Avenue of the Americas. Greenberg Traurig will be moving from 200 Park Avenue to a 140,000-square-foot suite at One Vanderbilt once the tower is completed.

Google was not the only active tech company in Midtown South, as Facebook expanded its presence at 770 Broadway by 78,000 square feet in the first quarter. Also of note, Roc Nation committed to the 73,000 square feet of available office space at the recently delivered 540 West 26th Street in Chelsea.


In the Downtown market, Bank of America signed a renewal at 225 Liberty Street for 189,127 square feet. At the end of 2017, the bank finalized leases at 1100 Avenue of the Americas and 1114 Avenue of the Americas totaling 485,365 square feet to establish a Midtown campus adjacent to its New York City headquarters located at One Bryant Park. Omnicom restacked 288,000 square feet at 195 Broadway in the Financial District, making available the tower floors in the building.

Looking ahead, upward pressure on vacancy rates is anticipated, especially in Midtown and Downtown. Impending large-block availabilities from tenants that have relocated and consolidated is expected in both markets. Additionally, the delivery of 3 World Trade Center should put additional upward pressure on the vacancy rate in Lower Manhattan. However, reasonably priced, efficient office product should continue to attract an outsized share of demand, putting pressure on landlords to upgrade commoditized properties to remain competitive—or offer more attractive concessions packages.

Sean CoghlanSenior Director, New York Research

Craig LeibowitzDirector, New York ResearchMidtown & Midtown South

Stefan WeissManager, New York ResearchDowntown

Highlighted by a few major transactions, Manhattan investment sales dollar volume reached $7.5 billion in the first quarter. This was the highest amount recorded since the third quarter of 2016 and it outpaced the rolling 10-year quarterly average of $7.1 billion. However, transaction velocity did not match the levels observed in recent quarters: just 63 transactions closed in the first quarter, a decline compared with the 72 transactions that closed per quarter on average in 2017. Office remained the most active property segment by dollar volume, contributing $4.0 billion or 53.2 percent of the total in the first quarter, surpassing the 48.6 percent share reported over the rolling 10-year period. At $390.4 million, the first-quarter retail dollar volume was on pace to more than double the dollar volume recorded in 2017 of $731.1 million.

Alphabet, Google’s parent company, acquired 75 Ninth Avenue (Chelsea Market) for $2.4 billion in March, the second-largest single-building office purchase in the history of New York City. This transaction further entrenched Google’s footprint in the Meatpacking District, where the tech giant also owns 111 Eighth Avenue and leases space at 85 Tenth Avenue and the SuperPier development site. Also in Midtown South, an Oxford Properties and CPPIB joint venture purchased the southern portion of the St. John’s Terminal development site for $700.0 million, which represented the second-largest deal that closed in the first quarter.

The Federal Open Market Committee (FOMC) raised the target federal funds rate to 1.50 - 1.75 percent in March, the sixth 25-basis-point increase since December 2015.


Capital Markets overview

Ten-year Treasury rates have also recently trended upward, increasing by 32 basis points to 2.74 percent in the past six months. However, this rate remained comparable with the rolling 10-year average of 2.47 percent and recently demonstrated signs of stabilizing. Going-in Manhattan office investment yields have generally shifted in line with 10-year Treasuries and the spreads between the two metrics have generally remained steady throughout the post-recessionary period.

Looking ahead, investment activity in 2018 is expected to surpass what had been observed in the anomalously-slow 2017. The uncertainties immediately following the Presidential election that contributed to slower-than-anticipated investment activity last year have since subsided. Additionally, local economic fundamentals remained strong, as demonstrated by record levels of total employment and unemployment rates that hovered near historic lows. The composition of overseas investors circling Manhattan opportunities has shifted in recent quarters, though interest by these entities should continue to be elevated. As a result, year-end 2018 total dollar volume should approach the historical 10-year annual average of 27.8 billion, as opposed to the $22.7 billion recorded in 2017.

MoBelerHead of NYC Investment Sales

AnthonyLedesmaManagingDirector

Yoav OelsnerManagingDirector

GlennTolchinManaging Director

Peaking market Falling market

Rising market Stabilizing market

Clock description

• This diagram illustrates our estimate of the location of each prime office market within its individual rental cycle at the end of the quarter.

• Markets can move around the clock at different speeds and directions.

• The diagram is a convenient method of comparing the relative position of markets in their rental cycle.

• The position is not necessarily representative of investment or development market prospects.

• The position refers to prime face rental values.


New York property clock

Q1 2018 positions

• Midtown: Impending large-block availabilities from occupiers that have relocated and consolidated to comparatively efficient properties will begin to impact the market in the coming quarters, likely putting upward pressure on Midtown vacancy rates. In a tale of two markets, the demand for new and renovated space is expected to continue to outpace that of comparatively older product. This phenomenon could ultimately put added pressure on concessions at commoditized buildings.

• Midtown South: The war for talent—especially among tech firms vying for a limited supply of highly skilled employees—is expected to continue in the near term, as economic conditions showed few signs of a slowdown and unemployment rates remained near historic lows. Heightened demand, however, could be partially offset by new boutique developments entering the market.

• Downtown: Class A product is expected to account for the majority of absorption in 2018, as tenant demand appears to be concentrated on higher-quality offerings. For more commoditized office spaces, pending move-outs will likely provide opportunities for large users to capitalize on attractive leasing concessions.

Midtown, DowntownMidtown South

Midtown submarkets: Columbus Circle, Grand Central, Penn Plaza/Garment District, Plaza District, Times Square

Midtown South submarkets: Chelsea, Gramercy Park, Greenwich Village, Hudson Square, SoHo

Downtown submarkets: Financial District, TriBeCa/City Hall, World Trade Center, Water Street Corridor

The Manhattan market is comprised of three major submarkets: Midtown, Midtown South and Downtown. These markets are further divided into five, five and four submarkets, respectively.


New York market definitions


New York space statistics

Current inventory

(SF)

Under construction

(SF)

YTD completion

(SF)

Overall net absorption

(SF)

YTD overall net absorption

(SF)

YTD overall net absorption (%

of inventory)

Overall vacancy

Overall asking rent

(gross $ PSF)

Midtown

Columbus Circle 23,847,963 560,000 0 39,927 39,927 0.2% 5.0% $72.74

Grand Central 71,070,135 2,595,109 0 -36,807 -36,807 -0.1% 9.0% $65.51

Penn Plaza/Garment District 46,027,021 7,139,745 0 15,967 15,967 0.0% 7.6% $71.55

Plaza District 101,300,813 670,000 136,428 365,553 365,553 0.4% 9.4% $88.37

Times Square 40,429,798 0 0 450,429 450,429 1.1% 10.3% $72.08

Midtown market totals 285,675,730 10,964,854 136,428 835,069 835,069 0.3% 8.7% $75.83

Midtown South

Chelsea 22,974,985 873,492 363,037 432,361 432,361 1.9% 6.3% $77.56

Gramercy Park 21,927,005 173,985 106,453 255,839 255,839 1.2% 4.1% $79.64

Greenwich Village 5,833,147 40,381 77,480 196,655 196,655 3.4% 3.0% $85.13

Hudson Square 10,876,931 156,938 0 45,362 45,362 0.4% 8.4% $82.02

SoHo 4,746,149 317,615 0 36,573 36,573 0.8% 9.8% $82.73

Midtown South market totals 66,358,217 1,562,411 546,970 966,790 966,790 1.5% 5.9% $80.18

Downtown

Financial District 37,832,410 0 0 -98,870 -98,870 -0.3% 11.7% $53.98

TriBeCa/City Hall 17,839,836 0 0 124,520 124,520 0.7% 5.6% $51.84

Water Street Corridor 23,000,384 0 0 -199,762 -199,762 -0.9% 9.0% $56.07

World Trade Center 18,402,964 2,861,402 0 10,518 10,518 0.1% 10.4% $78.14

Downtown market totals 97,075,594 2,861,402 0 -163,594 -163,594 -0.2% 9.7% $60.68

Market totals 23,847,963 15,388,667 683,398 1,638,265 1,638,265 0.4% 8.5% $72.48


Midtown

Columbus Circle

South of West 66th Street, west of Central Park West and Avenue of the Americas, north of West 50th Street and east of the Hudson River.

Grand Central

South of East 47th Street, north of East 30th Street andeast of Fifth Avenue.

Penn Plaza/Garment District

South of 40th Street, west of Fifth Avenue, north of 30th Street and east of the Hudson River.


Midtown boundaries

Plaza District

South of East 65th Street, west of the East River, north of 47th Street and east of Avenue of the Americas.

Times Square

South of West 50th Street, west of Avenue of the Americas, north of West 40th Street and east of the Hudson River.

MidtownQuarter in review

JPMorgan Chase’s announcement that it will tear down and redevelop its headquarters at 270 Park Avenue was arguably the New York City highlight of the first quarter. The current 1.35-million-square-foot structure will be redeveloped into a new glass-and-steel tower that could measure approximately 2.5-million square feet after the acquisition of air rights from landmarked properties through the Midtown East rezoning. Deutsche AWM and MRP Realty became the second property owners to take advantage of the rezoning, as they announced plans to expand and redevelop 405 Park Avenue. These projects—and several others potentially in the pipeline—could help to curb the migration activity out of the Midtown core over time.

The majority of the largest deals of the quarter were signed by tenants in the traditional Midtown industries—finance and legal services. JPMorgan Chase leased the balance of the available space at 390 Madison Avenue in a 418,241-square-foot transaction, bringing the newly redeveloped asset to full occupancy. Publishing company Simon & Schuster signed a 283,000-square-foot renewal at 1230 Avenue of the Americas. CIT Group also renewed its 150,000-square-foot lease at 11 West 42nd Street. Nasdaq will be relocating its global headquarters from One Liberty Plaza in Downtown to 4 Times Square, where the world’s second-largest stock exchange already has its MarketSite location. To round out the top five deals, Greenberg Traurig will be moving from 200 Park Avenue to One Vanderbilt once the tower is completed. The law firm will occupy 140,000 square feet.

Leasing activity this quarter indicates that the ‘flight to quality’ trend has persisted, as 15 of the 20 largest deals were signed at Class A and trophy assets. Tenants have demonstrated a strong desire to occupy new or renovated space that offers efficient floorplates and more amenities within the building and in the immediate area. Landlords have responded with 10.5 million square feet of construction activity in Midtown, of which 68.7 percent was pre-leased. Approximately 2.8 million square feet of new product was expected to be delivered by year-end 2018. 432 Park Avenue’s boutique office condominium totaling 136,000 square feet was the only delivery in the first quarter.

The total vacancy rate for Midtown in the first quarter was 8.7 percent, a 30-basis-point quarter-over-quarter decrease. Total asking rents were $75.83 per square foot, a 1.2 percent decrease quarter over quarter but a 1.0-percent increase year over year. Midtown recorded 4.7 million square feet of leasing activity in the first quarter, just shy of the prior five-year quarterly average.


Submarket boundaries map

Key market indicators | Q1 2018

Stock 282,675,730 SF

Overall net absorption 835,069 SF

Overall vacancy rate 8.7%

Average asking rent $75.83 PSF

Under construction 10,964,854 SF

Market outlook

In an increasingly competitive leasing environment, the demand for new and renovated space is expected to continue to outpace that of comparatively vintage product, putting added leasing pressure on the latter segment. Impending large-block availabilities from occupiers that have relocated and consolidated to comparatively efficient properties will begin to impact the market in the coming years, likely putting upward pressure on Midtown vacancy rates as a result. However, the supply of new and renovated product is somewhat limited in the near-term; the next wave of new product in the Hudson Yards/Manhattan West district will not be available until 2022, leaving only a select few options for anchor tenants in the interim.


Midtown

Large vacancies

601 Lexington Avenue (annex space) Class A

194,181 SF

805 Third Avenue Class A

189,094 SF

299 Park Avenue Class A

178,017 SF

1540 Broadway Class A

111,883 SF

0%

4%

8%

12%

16%

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18

SF

in m

illio

ns

Mill

ions

New deliveries YTD Net absorption YTDVacancy Class A YTD Vacancy Class B YTD

Significant lease transactions

JPMorgan Chase

390 Madison Avenue

Class A

418,241 SF

Simon & Schuster

1230 Avenue of the Americas

Class A

283,000 SF

CIT Group

11 West 42nd Street

Class B

150,000 SF

NASDAQ

4 Times Square

Class A

149,175 SF

Greenberg Traurig

One Vanderbilt

Class A

140,000 SF

Recent sales transactions

1700 Broadway

626,000 SF

Class A

$724 PSF


386,921 SF

Class B

$788 PSF

600 Lexington Avenue

303,500 SF

Class A

$1,005 PSF

Average rental rates PSF (Class A vs. Class B)

Overall new deliveries/overall net absorption/ overall vacancy rates

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

PS

F

Class A rental rate Class B rental rate


Midtown South

Chelsea

South of 30th Street, west of Fifth Avenue, north of 14th Street and east of the Hudson River.

Gramercy Park

South of 30th Street, west of the East River, north of 14th Street and east of Fifth Avenue.

Greenwich Village

North of Houston Street, south of 14th Street, west of the East River and east of Avenue of the Americas.


Midtown South boundaries

Hudson Square

South of 14th Street, west of Avenue of the Americas, north of Canal Street and east of the Hudson River.

SoHo

South of Houston Street, west of the East River, north of Canal Street and east of Avenue of the Americas.

Quarter in review

Tight labor market conditions have shifted occupancy strategies, encouraging employers to consolidate footprints geographically and optimize workplace dynamics. To that end, Google closed on its purchase of 75 Ninth Avenue (Chelsea Market) in the first quarter, which further entrenched the company’s expansive footprint in the Meatpacking District. However, it came at a lofty cost—the $2.4-billion purchase was the second-largest single-building office transaction in the history of New York City. The tech giant now owns and occupies 111 Eighth Avenue and 75 Ninth Avenue and leases 240,000 square feet at 85 Tenth Avenue and 320,000 square feet at 57 Eleventh Avenue (SuperPier), which is expected to deliver in 2019. Google was not the only tech occupier to grow its presence in Midtown South during the first quarter: Facebook expanded by 78,000 square feet at 770 Broadway, bringing its total footprint in the building to 434,992 square feet.

Midtown South also reported strong leasing at new developments in the first quarter—a healthy sign for a market expected to deliver 1.9 million square feet of new construction during 2018 and 2019. These boutique projects have recently attracted commitments from financial services tenants, as four asset managers signed leases totaling 30,375 square feet at Rockpoint Group’s 412 West 15th Street. Jay-Z’s Roc Nation also signed a sizable lease, committing to the 73,000 square feet of available office space at the recently delivered 540 West 26th Street in Chelsea.

Overall average asking rents grew by 6.3 percent quarter over quarter, finishing at $80.18 per square foot. Rent growth was mostly attributed to expensive space entering the market, such as the full-building sublease availability at 61 Ninth Avenue. The market also posted positive absorption for the fourth consecutive quarter, pushing vacancy down by 180 basis points year over year to 5.9 percent. However, vacancy may rise by year-end 2018, as new construction projects deliver and large-block availabilities in Hudson Square come online.



Midtown South


Stock 66,358,217 SF

Overall net absorption 966,790 SF


Average asking rent $80.18 SF


Market outlook

The market is entering unchartered territory, as more than 1.0 million square feet of available space with asking rents exceeding $100 per square foot is expected to deliver over the next three years. While new construction may provide Midtown South with some supply relief, the absorption of this high-end space will determine the market’s near-term direction. At the same time, the market is expected to continue to be constrained by a dearth of affordable 100,000-square-feet or greater suites, which should accentuate the supply-and-demand imbalance amongst anchor-sized tenants attempting to establish a presence in Midtown South.


Midtown South

Large availabilities

375 Hudson Street Class A

281,339 SF

315 Hudson Street Class B

225,000 SF

512 West 22nd Street Class A

174,121 SF

345 Hudson Street Class A

141,590 SF

161 Avenue of the Americas Class A

106,350 SF

0%

2%

4%

6%

8%

10%

12%

14%

-1.5

-1.0

-0.5

0.0

0.5

1.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

SF

in m

illio

ns



Facebook

770 Broadway

Class A

78,000 SF

Roc Nation

540 West 26th Street

Class A

73,000 SF

Google

57 Eleventh Avenue

Class A

70,000 SF

WeWork

125 West 25th Street

Class A

58,350 SF

IBM

19 Union Square West

Class A

27,699 SF

Recent sales transactions

75 Ninth Avenue

1,200,000 SF

Class A

$1,998 PSF

330 Hudson Street (Leasehold Interest)466,000 SF

Class A

$826 PSF

Average rental rates (Class A vs. Class B)


$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1

2018

PS

F



Downtown

TriBeCa/City Hall

South of Canal Street, west of the East River and Pearl Street, north of Ann Street and east of West Street.

World Trade Center

South of Vesey Street, but inclusive of 7 World Trade Center, west of Trinity Place, north of Albany Street and east of the Hudson River.


Downtown boundaries

Financial District

South of Ann Street, west of Pearl Street, east of the Hudson River, south of Albany Street and east of Trinity Street.

Water Street Corridor

South of the Brooklyn Bridge, west of the East River and east of Pearl Street.

DowntownQuarter in review

Following a strong 2017 performance, activity in the Downtown market reverted back to recent historical averages during the first three months of the year. Approximately 1.2 million square feet of leases were recorded on the quarter, which was more in line with 2015 and 2016 figures. Furthermore, the largest contributors to leasing activity did not represent new demand within the market. As a result, the market reported negative absorption of 163,594 square feet during the first quarter.

In the largest year-to-date transaction, Omnicom restacked 288,000 square feet at its longtime home at 195 Broadway in the Financial District, freeing up tower space in the building as the firm moves to lower floors.

At 225 Liberty Street in Brookfield Place, Bank of America signed a 189,127-square-foot renewal for a portion of the bank’s existing footprint. The renewal indicates that Bank of America will maintain a presence in Lower Manhattan after signing large commitments at 1100 and 1114 Avenue of the Americas adjacent to its New York City headquarters at One Bryant Park at year-end 2017.

The Lower Manhattan vacancy rate ticked up slightly quarter over quarter from 9.5 to 9.7 percent. This was primarily the result of large subleases getting added to the market along the Water Street Corridor, namely from Ambac Assurance Corp (106,320 square feet at One State Street Plaza) and Fitch Ratings (52,263 square feet at 33 Whitehall Street). Further large-block availabilities are looming, both in the cost-competitive Water Street Corridor submarket and in the comparatively pricy World Trade Center submarket.

Rental rates Downtown declined by 2.2 percent during the quarter, from $62.05 to $60.68 per square foot. This was largely attributable to the repricing of a large block of available space at the top of 1 World Trade Center. Excluding the World Trade Center submarket, average asking rents increased over the quarter by roughly 1.6 percent.



Market outlook

Looking forward, impending large-block supply at both ends of the pricing spectrum could shift leverage towards tenants in the coming months. While well-located, Class A product should continue to see strong lease-up, upcoming availabilities at commoditized properties will likely provide opportunities for value-seeking tenants. Conversely, the upcoming delivery of 3 World Trade Center will test the Downtown market’s appetite for new construction priced at the top of the market.


Stock 97,075,594 SF

Overall net absorption -163,594 SF


Average asking rent $60.68 PSF



Downtown

Large availabilities

1 World Trade Center Class A

435,000 SF

199 Water Street Class A

414,000 SF

225 Liberty Street Class A

358,000 SF

55 Water Street Class A

271,000 SF

4%

6%

8%

10%

12%

14%

16%

-4.5

-3.0

-1.5

0.0

1.5

3.0

4.5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18

SF

in m

illio

ns



Omnicom Group

195 Broadway

Class A

288,000 SF

Bank of America

225 Liberty Street

Class A

189,127 SF

Tradition Financial

32 Old Slip

Class A

69,995 SF

Industrial Color Brands


Class B

56,000 SF

Average rental rates (Class A vs. Class B)


$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

$70.00

$75.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

PS

F



Appendix

Contiguous space

Manhattan under construction

Manhattan select sales

Glossary

Contiguous blocks greater than 100,000 square feet

32 blocks: 5,495,797 SF

1271 Avenue of the Americas – 440,391 SF


500 Seventh Avenue – 300,000 SF

75 Rockefeller Plaza – 282,320 SF

9 West 57th Street – 278,200 SF

575 Fifth Avenue – 258,307 SF

4 Times Square – 225,677 SF

135 West 50th Street – 183,948 SF

1400 Broadway – 179,467 SF

65 East 55th Street – 170,954 SF

31 West 52nd Street – 169,916 SF

605 Third Avenue – 164,229 SF

110 East 60th Street – 156,917 SF

620 Eighth Avenue – 156,766 SF

787 Eleventh Avenue – 155,191 SF


Midtown buildings with large contiguous blocks of space

405 Lexington Avenue – 145,813 SF

520 Madison Avenue – 140,466 SF


340 Madison Avenue – 136,167 SF





299 Park Avenue – 119,073 SF

11 Times Square – 108,923 SF

1633 Broadway – 106,230 SF

132 West 31st Street – 103,996 SF

485 Lexington Avenue – 103,905 SF

424-438 West 33rd Street – 103,343 SF

1 Penn Plaza – 103,303 SF


1501 Broadway – 102,106 SF

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

B

B

B

B

B

B

B

B


Midtown South buildings with large contiguous blocks of space

5 blocks: 752,524 SF

375 Hudson Street – 277,339 SF

75 Varick Street – 161,045 SF



261-271 Eleventh Avenue – 100,000 SF


A

A

A

A

B


15 blocks: 2,831,687 SF

One World Trade Center – 435,631 SF

199 Water St – 413,937 SF

55 Water Street – 270,944 SF

195 Broadway – 209,271 SF

101 Greenwich Street – 158,372 SF

32 Old Slip – 153,500 SF

180 Maiden Lane – 153,465 SF

28 Liberty Street – 136,583 SF


32 Old Slip – 124,221 SF

17 Battery Place North – 121,189 SF


375 Pearl Street – 109,650 SF


One New York Plaza – 102,347 SF


Downtown buildings with large contiguous blocks of space

A

A

A

A

A

A

A

B

BB

A

AA

A A

Manhattan under construction

Market/building Class Developer/owner RBA Preleased Major tenants signed Delivery date

Midtown

30 Hudson Yards Trophy Related Companies 2,600,000 SF 100.0% Time Warner; KKR; Wells Fargo; Related; DNB 2019

One Manhattan West Trophy Brookfield Properties 2,216,609 SF 80.4% Skadden; NHL, EY 2019

One Vanderbilt Trophy SL Green Realty 1,732,955 SF 21.7% TD Bank; Greenberg Traurig 2021

55 Hudson Yards Trophy Related Companies/Mitsui Fudosan 1,556,136 SF 84.6% Boies, Schiller & Flexner ; MarketAxess; Milbank 2018

390 Madison Avenue Trophy Clarion Partners 862,154 SF 100% Hogan Lovells; Shiseido; JPMorgan Chase 2018

Moynihan Station A Vornado/Related Companies 730,000 SF 0% 2019/2020

425 Park Avenue Trophy L&L Holding Company/GreenOak Real Estate 670,000 SF 31.5% Citadel 2018

Midtown South

Pier 57

512 West 22nd Street

A

A

RXR Realty/Youngwoo

Vornado Realty Trust/Albanese Organization

413,835 SF

174,222 SF

77.3%

0.0%

Google 2019

2018

61 Ninth Avenue A Vornado Realty Trust/Aurora Capital Associates 167,170 SF 100.0% Aetna; Starbucks (retail) 2018

40-56 Tenth Avenue A William Gottlieb Real Estate/Aurora 165,000 SF 30.8% Genesis (retail) 2019

Downtown

3 World Trade Center Trophy Silverstein Properties 2,861,402 SF 26.8% GroupM; IEX 2018

CBD totals 14,149,483 SF 59.7%


Midtown South 330 Hudson Street (leasehold interest)

Class A

RBA 466,000 SF

Buyer AEW Capital

Seller Ivanhoe Cambridge/Callahan Capital Partners

Price PSF $826

Date sold February 2018

Midtown South 75 Ninth Avenue

Class A

RBA 1,200,000 SF

Buyer Alphabet

Seller Jamestown

Price PSF $1,998

Date sold March 2018

Midtown 1700 Broadway

Class A

RBA 626,000 SF

Buyer Rockpoint Group

Seller Ruben Companies

Price PSF $724

Date sold January 2018

Midtown 1180 Avenue of the Americas

Class B

RBA 386,921 SF

Buyer Northwood Investors

Seller HNA Group/Murray Hill Properties

Price PSF $788

Date sold February 2018


Manhattan select sales

Active requirementsTenants actively seeking space in the market.

Available spaceExisting space that is being actively marketed for immediate or future occupancy, including both direct and sublease space.

Average asking rentQuoted at a gross price exclusive of tenant electricity based on a weighted average of available space.

BuildoutThe cost of configuring and finishing new space in accordance with a tenant’s specifications.

Build to suitA method of leasing property whereby the landlord builds a new building in accordance with a tenant’s specifications.

Capital improvementAny major physical development or redevelopment to a property that extends the life of the property. Examples include upgrading the elevators, replacement of the roof and renovations of the lobby.

ClassBuilding classification system broken down by Trophy, Class A, B and C buildings. Location, building amenities, mechanical/HVAC systems, age of building and tenant roster are some of the components that determine an office building's class.

ConcessionsCash expended by the landlord in the form of rent abatement, build-out allowance or other payments to induce the tenant to sign a lease. The level of concessions fluctuates with supply and demand conditions in the market and is up for negotiation in a similar fashion to rental rates.

Contiguous spaceAdjoining office space.

Delivered buildingsBuildings that have completed construction and are ready for tenant buildout. May or may not yet have a Certificate of Occupancy.

Direct rentRents quoted directly from the landlord on vacant space.


Glossary | Common real estate terms

Effective rentThe rental rate actually achieved by the landlord or tenant after deducting the value of concessions from the base rental rate paid; usually expressed as an average rate over the term of the lease.

Face rental rateThe “asking” or nominal rental rate published by the landlord.

Gross leasesThe quoted rents include tax and operating costs (property taxes, insurance and maintenance expenses).

Hard costThe cost of actually constructing property improvements.

Indirect (soft) costsDevelopment costs other than material and labor costs, which are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering and financing costs.

LeaseA legally binding agreement whereby the owner of real property (i.e., landlord) gives the right of possession to another (i.e., tenant) for a specified period of time (i.e., term) and for a specified consideration (i.e., rent).

Leased spaceExisting space under contract, regardless of if it is occupied; also includes subleased space.

NNN leasesThe quoted rents do not include tax and operating costs (property taxes, insurance and maintenance expenses).

Net absorptionNet change in occupied space between two dates measured as square footage. (i.e., a measure of the total square feet leased over a period of time taking into consideration office space vacated in the same area during the same period).

Occupied spaceTotal supply minus available space.

Operating expenseThe actual costs associated with operating a property, including maintenance, repairs, management, utilities, taxes and insurance.

Preleased spaceSpace that has been leased prior to construction completion date or Certificate of Occupancy date.

Proposed constructionBuildings are proposed when permits are in place, site is being actively marketed, but significant base building has not yet commenced. Proposed asking rents are not included in market calculations.

Shell spaceThe interior condition of the tenant's usable square footage when it is without improvements or finishes. Shell construction typically denotes the floor, windows, walls and roof of an enclosed premises and may include some HVAC, electrical or plumbing improvements but not demising walls or interior space partitioning.

Sublease spaceLeased space that is being actively marketed by the tenant under contract to another party.

Tenant at willOne who holds possession of premises by permission of the owner or landlord, but without agreement for a fixed term.

Tenant improvement allowance (TI)Improvements to land or buildings to meet the needs of tenants. May be new improvements or remodeling, and may be paid for by the landlord, the tenant or shared.

Total supplyThe entire area of an office building comprised of both usable space and an allocated portion of the common area.

Turnkey projectA project in which the developer is responsible for the total completion of a building (including interior design and construction) or demised premises to the customized requirements of a future owner or tenant.

Under constructionBuildings are under construction when significant work is under way from ground-up development (i.e., steel is going up).

Under renovation/rehabBuildings are under renovation/rehab when significant base building renovation is under way.

Vacant spaceDirect existing space being actively marketed for immediate occupancy as of the survey date, not including sublease space.


Glossary | Common real estate terms (cont’d)

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