Accelerating success.New York Capital Markets
Market Overview
4Q 2016
New York Quarterly
SNAPSHOT
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
2
Market Snapshot
Market Snapshot
- Manhattan Capital Markets
- Manhattan Leasing Market
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
3
Overview
Near Record Activity Continues in 2016: › 2016 was an exceptionally strong sales year for Manhattan, 502 deals totaling $42.9 billion. Multifamily Dominates Activity: › Quickly has become the most active investment asset class, accounting for 217 transactions, or 43% of all activity.› Garnering attention from institutional investors across the globe due to the supply/demand imbalance and secure cash
flow. Capital Values Continue Steady Upward Trend: › Nearly every product type has witnessed an increase in year-over-year capital values. › Midtown Class A office values up nearly 3% to $1,124 per square foot with an average cap rate of 4%. › Midtown Class B office values up 14% to $882 per square foot this year with an average cap rate of 3.5%.› Land pricing under pressure due to condo supply side concerns and challenging construction financing.Condominium Pricing Sets New Records: › Manhattan condos at record $2,209 PSF after 13% year-over-year increase. Large Transactions Capture Significant Market Share: › 16 transactions greater than $500 million, eight of which exceeded $1 billion. › The 16 largest deals of the year accounted for $16.5 billion, or 38%, of all dollar volume. › Seven of those were partial interest deals, reflecting owner confidence in the long-term appreciation of New York City
real estate. Foreign Participation Continues: › 2015 saw foreign participation rise to 45% ($15 billion) — more than double the historic 10% to 20% range. › 2016 saw 40% ($17.28 billion) of investment attributed to foreign investors.
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
4
2016 Closed Manhattan Investment Sales Activity
Total Size
Product Type # of Deals
% of Deals
Square Feet
Units / Keys
TotalDollars
% of Dollars
Average Deal Size
Avg / SF or Unit or Key
Multifamily 217 43.2% 13,862,152 16,545 $8,011,800,075 18.7% $36,920,738 $643 / $571,073
Office 90 17.9% 37,815,240 $21,867,803,003 50.9% $242,975,589 $898
Land 90 17.9% 7,728,899 $4,684,796,511 10.9% $52,053,295 $665
Retail 51 10.2% 1,555,457 $2,474,926,758 5.8% $48,527,976 $2,317
Hotel 36 7.2% 8,167 $4,083,442,637 9.5% $113,428,962 $585,501
Other 18 3.6% $1,821,464,600 4.2% $101,192,478
TOTAL 502 100% 60,961,748 24,712 $42,944,233,585 100% $85,546,282
Under Contract 10 $2,085,750,235
Closed & Under Contract $45,029,983,820
Psf calculations exclude leasehold interest positions, bankruptcy auctions and multifamily rent controlled portfolios.
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
5
2016 Manhattan Multifamily Investment Sales ActivityBy Submarket
Uptown Midtown South Midtown Downtown Total
Total # of Deals 101 59 52 5 217
Total Units 6,775 3,367 4,792 1,611 16,545
Total Dollar Volume $2,007,352,232 $2,370,659,619 $2,725,282,009 $908,506,215 $8,011,800,075
Avg Price Per Unit $339,488 $704,086 $779,090 $563,939 $571,073
Total Square Feet Sold 5,406,136 2,927,298 4,166,043 1,362,675 13,862,152
Avg Deal Size $19,874,774 $40,180,672 $52,409,269 $181,701,243 $36,920,734
Avg Price PSF $373 $818 $863 $667 $643
Uptown properties are north of 125th Street
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
6
2016 Manhattan Office Investment Sales Activity
Midtown Class A Midtown Class B Midtown South Downtown Uptown Total
Total # of Deals 14 32 26 15 3 90
Total Sq Ft 17,241,928 4,023,191 3,426,114 11,505,409 195,567 37,815,240
Total Dollar Volume $12,622,664,000 $2,662,868,250 $2,867,518,970 $3,891,751,783 $96,000,000 $22,140,803,003
Avg Price PSF $1,124 $882 $837 $565 $491 $898
Avg Deal Size $901,618,857 $83,214,632 $110,289,191 $259,450,118 $32,000,000 $246,008,922
Midtown Midtown South Downtown Uptown Total
Total # of Deals 52 29 5 4 90
Total Sq Ft 4,857,233 1,286,749 358,582 1,226,335 7,728,899
Total Dollar Volume $3,007,832,876 $1,144,008,065 $225,000,000 $307,955,570 $4,684,796,511
Avg Price PSF $633 $889 $669 $402 $665
Avg Deal Size $57,842,940 $39,448,553 $45,000,000 $76,988,892 $52,053,295
2016 Manhattan Land/Redevelopment Investment Sales ActivityBy Submarket
Uptown properties are north of 125th Street
By Submarket
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
7
2016 Manhattan Retail Investment Sales Activity
Midtown South Midtown Downtown Uptown Total
Total # of Deals 29 13 5 4 51
Total Sq Ft 375,790 659,122 56,645 464,900 1,556,457
Total Dollar Volume $956,196,840 $1,277,649,891 $92,650,000 $148,430,027 $2,474,926,758
Avg Price PSF $2,632 $3,4941 $1,635 $503 $2,317
Avg Deal Size $32,972,304 $98,280,760 $18,530,000 $37,107,506 $48,527,795
Midtown Midtown South Downtown Total
Total # of Deals 19 12 5 36
Total Keys 4,289 2,895 983 8,167
Total Dollar Volume $2,453,129,134 $1,142,797,718 $487,515,785 $4,083,442,637
Avg Price Per Key $690,907 $450,189 $532,513 $585,501
Avg Deal Size $129,112,059 495,233,143 $97,503,157 $113,428,962
By Submarket
By Submarket2016 Manhattan Hotel Investment Sales
Uptown properties are north of 125th Street
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
8
Unemployment Rate – US/NYC MSA/Manhattan
US: 5.0%
NYC MSA: 5.4%
Manhattan: 4.8%
% U
nem
ploy
men
t
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
2000Q4
2001Q3
2002Q2
2003Q1
2003Q4
2004Q3
2005Q2
3Q2006
2Q2007
1Q2008
4Q2008
3Q2009
2Q2010
1Q2011
4Q2011
3Q2012
2Q2013
1Q2014
4Q2014
3Q2016
United States NYC Metropolitan Statistical Area Manhattan
Source: Moody’s.com
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
9
71 Million SF
62 Million SF58 Million SF
10 Millions SF
21 Million SF
11.56 Million SF
1960s 1970s 1980s 1990s 2000s 2010 - Present
Net addition to supply over past 3 decades (1990’s + 2000 + 2010-Present) = 3.9 MSF per decade. New office development is concentrated in Downtown and the Far West Side.
Squa
re F
eet (
milli
ons)
11 Times Square – 1,100,000200 West Street – 2,000,000450 W 14th Street – 135,00051 Astor Place – 430,00050 W 47th Street – 745,000540 Madison – 300,000 1 WTC – 3,500,0004 WTC – 2,300,000250 West 55th St – 1,050,0007 Bryant Park – 470,000
New York Market Perspective
Average = 63.6 MSF per decade
Average = 14.2 MSF per decade
Inventory reduced by 31 MSF due to World Trade Center (15 MSF) and residential
conversions (16 MSF)
270 Park Ave - 1,132,460
1285 Sixth Avenue - 1,473,950
643 West 43rd St - 1,128,000
1 Chase Manhattan Plaza- - 1,898,158
399 Park Ave - 1,250,000
60 Broad St - 1,014,041
200 Park Ave - 2,254,274
1290 Sixth Avenue - 1,987,328
277 Park Ave - 1,529,945
1301 Sixth Avenue - 1,764,411
59 Maiden Ln - 1,043,007
245 Park Ave - 1,611,046
26 Federal Plaza- 1,109,969
140 Broadway - 1,200,000
909 Third Ave - 1,125,000
767 Fifth Ave - 1,637,379
1345 Sixth Avenue - 1,640,000
2 Penn Plaza- - 1,500,000
1 NY Plaza- -2,103,750
345 Park Ave - 1,600,519
450 West 33rd St - 1,500,000
153 East 53rd St - 1,492,860
1166 Sixth Avenue- 1,430,000
1211 Sixth Avenue- - 1,734,105
1 Bankers Trust Plaza- - 1,363,334
1633 Broadway - 2,240,000
1 Penn Plaza- - 2,072,136
1 Liberty Plaza- - 2,121,437
55 Water St - 3,600,000
9 West 57th St - 1,500,000
1114 Sixth Avenue- - 1,310,000
1185 Sixth Avenue- - 1,000,000
1221 Sixth Avenue- - 2,200,000
1251 Sixth Avenue- - 1,893,652
1515 Broadway - 1,417,450
1 WTC - 3,958,091
2 WTC - 3,958,091
2 NY Plaza- - 1,345,919
237 Park Ave - 1,142,196
55 East 52nd St - 1,050,000
101 Park Ave - 1,137,000
590 Madison Ave - 1,016,413
335 Madison Ave - 1,046,984
85 Broad St - 1,040,000
101 Barclay St - 1,140,000
787 Seventh Ave - 1,429,610
1 WFC - 1,461,365
3 WFC - 2,300,000
4 WFC - 1,600,000
2 WFC - 2,200,000
7 WTC - 1,855,000
Financial Sq - 1,000,301
825 Eighth Ave - 1,550,212
388 Greenwich St - 1,600,000
60 Wall St - 1,587,849 1585 Broadway - 1,220,732
4 Times Square - 1,477,631
383 Madison Ave - 1,200,000745 Seventh Ave - 1,036,7415 Times Square - 1,062,203Columbus Center - 1,016,000 731 Lexington Ave – 1,300,000300 Madison Ave - 1,200,0007 Times Square - 1,000,000 7 WTC - 1,700,000 1101 Sixth Avenue- - 2,100,000 620 Eighth Ave - 1,500,000
Note: Total construction square footage includes all new office buildings above 100,000 SF. Source: Colliers International Research
New Office Building Construction by Decade
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
10
New York Market Perspective
Year Expected Delivery (SF)Additions to Supply (%)
Pre Leased SF
Net New Space Available
2017 2,551,000 0.5% 561,000 1,990,000
2018 5,800,000 1.1% 2,369,000 3,431,000
2019 5,081,000 1.0% 3,515,000 1,566,000
2020 640,000 0.1% 0 640,000
2021 1,623,000 0.3% 223,000 1,400,000
SUBTOTAL PRE 2021
15,700,000 3.0% 6,672,000 9,028,000
2022 & Beyond 18,100,000 3.5% 1,700,000 16,400,000
NYC is witnessing a much needed construction boom to modernize its office stock. Despite the new construction, the additions to supply equal less than 6% of the total market.
Pipeline of New Office Building Construction by Year
Source: Colliers International Research
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
11
Manhattan
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
2017 2018 2019 2020 2021 2022 TBD
Squa
re F
eet
Uncommitted New Construction/Renovation Planned Construction Future Known Availability
Numerous planned construction projects are awaiting anchor tenants
Availability Horizon (4Q2016)
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
12
Sales Activity Price PSF
US
$ bi
llion
s
Annual Investment Sales Activity
111 78 58 83 165 170 259 346 191 66 136 245 275 223 442 589 502
$10.3 $12 $8.5 $10 $15 $21 $35 $48.5 $19.6 $3.5 $12.4 $25 $25 $30.2 $39.8 $60.3 $42.9
# of Deals
Volume ($B)
# of Class A Transactions
Total
Midtown and Midtown South
Downtown
Weighted Average Midtown Class A Office Price PSF
Numbers in parentheses represent the number of Class A transactions each year. In 2015, 8 of the 21 Class A transactions were for a partial interest. In 2016 7 of the Class A sales were for a partial interest. Source: Colliers International Research
$340(12)
$421(9)
$443(15)
$475(17)
$434(14)
$549(15)
$749(28)
$875(41)
$941(15)
$335(2)
$590(10)
$836(7)
$743(7)
$1,083(15)
$1,344(6)
$1,096(21)
$1,124(14)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$0
$10
$20
$30
$40
$50
$60
$70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
13
REIT13%
Foreign16%
Private Capital61%
Pension Fund10%
REIT15%
Foreign19%
Private Capital63%
Pension Fund3%
REIT 11%
Foreign 45%
Private Capital 44%
Based on YTD 2016 Sales of$42.9 Billion
NYC remains the primary investment market.Foreign activity remains strong, after a record participation rate in 2015.
Based on 2015 Total Sales of$60.3 Billion
Based on 2013 Total Sales of $30.2 Billion
Based on 2014 Total Sales of$39.8 Billion
Annual Investment Sales by Investor Profile
REIT3%
User 5%
Foreign40%
Private Capital46%
Pension Fund6%
Source: Colliers New York Capital Markets
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
14
$7.7 B
$3,100 M
$1,730 M$1,400 M
$578 M $565 M $523 M $378 M $264 M $219 M $173 M $158 M $150 M $138 M $124 M $59 M $18 M$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
$9,000,000,000
Total Dollars Invested by Country
Foreign Capital Inflows – 2016
Source: Colliers New York Capital MarketsNote: The only countries to date with multiple Manhattan transactions are Canada (4), China (16) and Germany (3). Excludes Saudi Arabia which closed one deal for $1.4 Billion.
62 transactions = 12% of total transactions$17.28B = 40% of $ invested
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
15
Midtown Class A Cap Rates vs. Rent Growth & 10-Yr Treasuries
Cap Rate
Interest rates witnessed the first meaningful increase in five years during Q4’16 both organically and through a Fed rate hike All signs point to an additional rate hike by the Fed during the first quarter of 2017.
7.30%7.58% 7.34%
6.34%
4.93% 4.64%
4.04%3.55%
4.45%
5.85%5.24%
4.40% 4.60%4.30% 3.88% 3.79% 4.00%
6.20%
5.40%5.10%
3.40%
4.70%
3.90%
5.10% 4.90%
3.90% 3.70%3.30%
2.90%
1.50%
2.10%2.50%
2.19%2.45%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: 10-Yr Treasury as of June for each year (does not include the spread) except 2016 which is year-end.
10-Yr Treasury
Y-O-Y rent growth 24% (4%) 11% (7%) 7% 4% 18% 29% 1% (27%) 1% 8% 3% 4% 2% 3% 2%
Source: Colliers New York Capital Markets
Weighted Average Cap Rates, 2000 – 2016
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
16
Manhattan Class B Historical Office SalesMidtown Class B Historical Office Sales
$406
$591
$379
$481
$742$796
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$ Volume Average Price PSF
Midtown South Class B Historical Office Sales
$214
$446
$107
$274
$387
$514
$0
$100
$200
$300
$400
$500
$600
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$ Volume Average Price PSF
Downtown Class B Historical Office Sales
$314
$603
$480
$577 $581
$882
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$ Volume Average Price PSF
$6 B
$5 B
$4 B
$3 B
$2 B
$1 B
$0 B
$6 B
$5 B
$4 B
$3 B
$2 B
$1 B
$0 B
$7 B
$6 B
$5 B
$4 B
$3 B
$2 B
$1 B
$0 B
Class-B office values continue to witness appreciation as tenants in the fastest growing industries seek space in vintage, loft style buildings clustered amongst other tenants in their respective industries.
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
17
Average Land Sale Price PSF Average Condo Price PSF
$431 $428
$466
$410$357
$314
$375
$559
$596
$636$665
$1,142$1,225
$1,374
$1,210$1,167
$1,229$1,275
$1,369
$1,529
$1,959
$2,209
$0
$500
$1,000
$1,500
$2,000
$2,500
$0
$100
$200
$300
$400
$500
$600
$700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Average land sales PSF Average condo PSF
Historical Land Sale Pricing vs. Residential Condominium Pricing
56 71 43 5 22 57 70 39 102 130 90
4,186 6,969 5,713 4,029 5,240 5,05 4,330 5,021 5,050 5,147 5,433
# of Land Sales
# of Condo Sales
Residential condominium pricing represents the average for both new and resale condominium units. Source: Elliman Decade Report and Colliers New York Capital Markets
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
18
$421$467 $462 $437
$398$332
$382$440
$735$795
$889
14
2
32
59
29
0
10
20
30
40
50
60
70
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Price Per SF Number of deals
Midtown South
Historical Land Sale Pricing by Submarket
$450 $445$472
$402$354
$385$355
$662
$600
$601$633
33
3
23
51
45
0
10
20
30
40
50
60
$0
$100
$200
$300
$400
$500
$600
$700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Price PSF Number of deals
$371
$293
$451
$0
$308
$214
$415$448
$501$517
$669
9
0
15
20
5
0
5
10
15
20
25
$0
$100
$200
$300
$400
$500
$600
$700
$800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Price PSF Number of deals
$431 $428$466
$410
$357$314
$375
$559$596
$636 $665
56
5
70
130
90
0
20
40
60
80
100
120
140
$0
$100
$200
$300
$400
$500
$600
$700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Price PSF Number of deals
Midtown
Downtown Overall Market
Source: Colliers New York Capital Markets
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
19
Notable Manhattan Transactions
1250 BroadwayOffice721,000 SFSeller: Jamestown Buyer: Global Holdings $565,000,000$784 PSFBlockfront between West 31st
and 32nd Streets 84% occupied Anchor tenant is Visiting Nurse
Service, who occupy 320,000 square feet through 12/18.
VNS will be leaving the property upon their expiration.
Acquisition was financed with a $330 MM loan from HSBC.
133 Greenwich Street (Courtyard by Marriott)Hotel317 UnitsSeller: Hidrock RealtyBuyer: Union Investment $206,000,000$649,842 per UnitLocated at Thames and
GreenwichThe brand new hotel was
designed by Peter Poon and is situated at the foot of the World Trade Center.
Hidrock will retain the retail component of the property totaling 2,600 square feet.
63 Wall StreetMultifamily476 Units Seller: MetroLoft JV DTH
CapitalBuyer: Rockpoint Group$239,114,603$502,342 Per UnitCorner of Wall and Hanover4.8% going-in cap rate.Average in-place rent is $60.11
per square foot. Benefits from a 421-g through
June 2020.Unit mix includes 170 studios,
143 studios with office, 124 one bedrooms, 22 one bedrooms with office and 17 two bedrooms.
441 Ninth Avenue Land/Development 515,000 BSFSeller: Emblem HealthBuyer: Cove Property Group JV
Baupost$330,000,000$641 PBSF Occupies a full City block
fronting Ninth Avenue between 34th and 35th Streets.
Building is currently home to Emblem Health, who occupies the 423,000 SF building and will move out in one year.
Site can be redeveloped to 515,000 SF.
Plans call for a full redevelopment with portion of the ground floor to be converted to retail.
371 Seventh Avenue (Stewart Hotel)Hotel618 KeysSeller: Pebblebrook Hotel TrustBuyer: A&B Sons JV Sioni
Group JV Highgate$217,500,000$351,942 per key4.1% going-in cap rate.The hotel totals 470,000
square feet ($460 per square foot).
The hotel ownership was consolidated by Pebblebrookand then sold.
September 2016 September 2016 September 2016 December 2016 December 2016
4Q 2016
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
20
Notable Manhattan Transactions
67 Wall Street (The Crest)Multifamily317 UnitsSeller: Metroloft JV DTH
Capital Buyer: Rockpoint Group$182,391,612$575,638 Per UnitLocated on the corner of
Pearl and Wall. 4.8% going-in cap rateProperty benefits from a
421-g through June 2020.
Unit mix includes 131 studios, 91 one bedrooms, 79 one bedrooms with office, 25 two bedrooms and 5 two bedrooms with office.
53 West 36th StreetOffice82,196 SFSeller: Hidrock Realty JV
AssurantBuyer: Effy Jewelery$54,000,000$657 PSFBetween Fifth and Sixth
Avenues4.3% going-in cap rate. In-place rents are $44.00
per square foot. Property recently
underwent a $3.2 million capital improvement program.
75% of the square footage rolls in the next five years.
240 West 35th Street Office 165,720 SFSeller: RPW GroupBuyer: ATCO Properties$108,000,000$652 PSFBetween 7th and 8th Avenues. 96% occupied4.35% going-in cap rate. 65% of the square footage
rolls within the first five years.
Recently renovated corridors, elevators and restrooms.
292 MadisonOffice 203,000 SFSeller: Marciano BrothersBuyer: Vanbarton Group$180,000,000$887 PSF Located at 41st Street and
Madison Avenue. 2.1% going-in cap rate.Major tenants at the
property include Buford Capital and Hogg Robinson.
The acquisition was financed with a $75 million loan from DB.
145 East 57th Street Office and Retail64,190 SFSeller: MIPBuyer: ABS Partners JV
Benenson$62,750,000$978 PSFBetween Lexington and
Third Avenues. Office space is 63%
occupied 2.5% going-in cap rate.The retail space is leased to
Hammacher Schlemmerat $200 psf.
The property is undergoing a $10 million renovation.
September 2016 October 2016 December 2016 October 2016 October 2016
4Q 2016
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
21
Market Snapshot
Market Snapshot
- Manhattan Capital Markets
- Manhattan Leasing Market
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
22
Overview
Leasing Activity Up 5.5% Y-O-Y:› At 33.10 MSF, Manhattan full-year leasing activity was 5.5% higher year-over-year. › 2016 also surpassed full year leasing from eight of the last ten years. › Only 2014’s 37.38 MSF and 2013’s 33.92 MSF topped leasing volume in 2016. FIRE (financial services, insurance and real estate) sector leads the way: › Accounting for 31% of all activity › Major FIRE activity in 2016 included UBS’ renewal at 1285 Avenue of the Americas, Two Sigma Investments’ 217,000
SF renewal/expansion at 100 Avenue of the Americas and a total of 808,000 SF of new leases and expansions from WeWork throughout Manhattan.
Asking Rents Continue Upward Climb: › At an average of $73.24/ SF, asking rents were 2.4% higher since year-end, 2015.› Manhattan’s Availability Rate Ticked Up 0.7pp (percentage points) to 10.3%: › Large blocks of available space were added during the year, mostly as a result of new construction/major renovations. › Sublet availability was higher for the year by 0.4pp to 1.8% but has remained at or below 2% for the last six years.First Year of Negative Net absorption Since 2009: › The market witnessed (3.79 MSF) of absorption, relatively small in comparison to 2009 when it was (10.07 MSF). › The four largest deals in 2016 were renewals or sale-leasebacks resulting in little impact to the absorption numbers. Demand in 2016 was Helped by Job Creation and Low Unemployment: › Between November 2015 and November 2016, more than 61,000 new private sector jobs (a 1.6% increase) were added
in New York City, higher than the 1.3% employment growth for New York State and on par with the 1.7% gain nationally during the same period.
› At 5.2%, New York City’s unemployment rate through November 2016 was stable over the last 12 months.
Sources: NYS Dept. of Labor, Colliers International Research
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
23
Current Office Market Statistics
Market Inventory Availability Rate Average Asking Rent
Midtown 236,122,551 10.7% $82.39
Midtown Class A 203,429,082 11.0% $85.09
Midtown Class B 28,101,556 9.5% $60.09
Midtown South 165,618,649 8.4% $67.81
Midtown South Class A 40,343,741 7.8% $81.72
Midtown South Class B 84,916,879 8.9% $66.04
Downtown 104,384,942 12.3% $59.01
Downtown Class A 79,469,698 13.6% $60.25
Downtown Class B 21,217,844 8.9% $52.30
Manhattan 506,126,142 10.3% $73.24
4Q 2016
*Trophy designation is a subset of Class A
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
24
Yearly Comparison by Major Market
11.2%
9.7%
15.6%
11.7%
10.7% 7.9%
11.7%
10.0%
10.0% 7.0%
12.6% 9.6%
10.7% 8.4%
12.3% 10.3%
0%2%4%6%8%
10%12%14%16%18%
Midtown Midtown South Downtown Manhattan
2013 2014 2015 2016
Overall Availability Rates
$69.73 $55.32
$48.60
$60.46
$74.78 $61.50
$52.23
$66.52
$80.61 $66.07
$57.63
$71.50
$82.39 $67.81
$59.01
$73.24
$0$10$20$30$40$50$60$70$80$90
Midtown Midtown South Downtown Manhattan
2013 2014 2015 2016
Overall Asking Rents
Class A Availability Rates
11.8%
12.5%
17.7%
13.4%11.3%
6.4%
13.3% 11.3%
10.3% 6.3%
14.4% 10.9%
11.0% 7.8%
13.6% 11.2%
0%2%4%6%8%
10%12%14%16%18%20%
Midtown Midtown South Downtown Manhattan
2013 2014 2015 2016
Class A Asking Rents
$71.25
$69.73 $51.80
$64.14
$76.65
$74.78 $54.10
$70.48
$83.37
$80.61
$58.70
$75.49
$85.09
$82.39
$60.25
$78.19
$0$10$20$30$40$50$60$70$80$90
Midtown Midtown South Downtown Manhattan
2013 2014 2015 2016
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
25
Landlord Concessions by Year
$50.84
$37.68
$48.82
$58.72
$63.10
$65.92
$51.15
$29.49
$54.79
$56.33
$61.86
$63.19
$0
$10
$20
$30
$40
$50
$60
$70
2011 2012 2013 2014 2015 2016
Midtown Downtown
$33.87
$29.46
$37.81
$49.61
$53.77
$48.98
$36.45
$30.74
$32.37 $25.27
$45.10
$32.16$22.51
$26.80
$35.21
$47.93
$46.50
$47.49
$0
$10
$20
$30
$40
$50
$60
2011 2012 2013 2014 2015 2016
Midtown Downtown Midtown South
7.8
5.5
7.3
7.8
9.4
9.6
7.9
5.8
9.7
14.2
9.7 9.1
0
2
4
6
8
10
12
14
16
2011 2012 2013 2014 2015 2016
Midtown Downtown
Tenant Improvements Free Rent
CLASS
A
5.6
4.5
6.3
6.4
6.5 5.8
6.8
6.0
3.6
4.4
5.1
5.5
4.6
5.5
5.9
8.0
6.9 6.3
0
1
2
3
4
5
6
7
8
9
2011 2012 2013 2014 2015 2016
Midtown Downtown Midtown South
PSF
PSF Months
Months
CLASS
B
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
26
Asking Rent vs. Starting Rent
14.4%
3.3%
9.5%
10.5%
7.4% 7.3%7.2%7.6%
4.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Midtown Midtown South Downtown
Star
ting
Ren
t vs.
Ask
ing
Ren
t Gap
4Q16 3Q16 4Q15
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
27
Historical Absorption and Leasing Activity
Absorption Leasing Activity
1.92M .45M
8.44M
4.25M
-3.85M
-4.M
-2.M
.M
2.M
4.M
6.M
8.M
10.M
Squa
re F
eet
M
5M
10M
15M
20M
25M
30M
35M
40M
Squa
re F
eet
Midtown Midtown SouthDowntown 10 Year Rolling Average: 29.0 MSF
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
28
Midtown Class A Asking Rent
$48.19
$95.00
$85.09
$66.39
$93.05
$40
$50
$60
$70
$80
$90
$100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Recorded Asking Rent CPI Adjusted 2000 Rent
Adjusted for Inflation (CPI)
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
29
Midtown and Downtown – Class A Asking Rents
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Aski
ng R
ent (
$/SF
)
Midtown Downtown2003–2007: rent increase
Midtown: +86% Downtown: +65% 2007–2009: rent decrease
Midtown: -33% Downtown: -21% 2009–2016: rent increase
Midtown: +41% Downtown: +52%
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
30
Leases greater than 100,000 SF
1,403,640 SF
7RENEWALS
0 SF
0EXPANSIONS
2,150,941 SF
7RENEWAL & EXPANSIONS
4,540,954 SF
16RENEWALS
487,434 SF
3EXPANSIONS
741,894 SF
4RENEWAL & EXPANSIONS
2016 2015
7,986,934 SF40
10,689,463 SF45
4,432,353 SF26
4,919,181 SF22
3,554,581 SF14
TRANSACTIONS
NEW/RELOCATIONS
RENEWALS & EXPANSIONS5,770,282 SF
23
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
31
MANHATTAN CAPITAL MARKETS
Leasing Activity
By Number of Deals
By Share of Activity
*Excludes deals under 5,000 SF.
62%16%
15%
3%4%
5,000 - 14,999 SF 15,000 - 24,999 SF 25,000 - 49,999 SF 50,000 - 99,999 SF 100,000 SF+
32%
25%
17%
13%
13%
67%
15%
11%
4%3%
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
32
Taking Rents
88 91 100126
155131
42 3039
33
58
417
2
816
7
13
0
50
100
150
200
250
2011 2012 2013 2014 2015 2016
Num
ber o
f Dea
ls
$75.00 - $99.99 $100.00 - $149.99 $150.00 +
New York Quarterly
SNAPSHOT4Q 2016
MANHATTAN CAPITAL MARKETS
33
Stephen ShapiroSenior Managing Director+1 212 716 [email protected]
Yoron CohenVice Chairman+1 212 716 [email protected]
Scott LathamVice Chairman+1 212 716 [email protected]
Colliers New York Capital Markets
Richard BaxterVice Chairman+1 212 716 [email protected]
Jason GoldSenior Managing Director+1 212 716 [email protected]
Contact Information