Lower Manhattan Year in Review 2016 by Alliance for Downtown New York

ALLIANCE FOR DOWNTOWN NEW YORK

LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW 2016

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LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW

2016

LOWER MANHATTAN CATCHES ITS BREATH In 2016, Lower Manhattan continued its decade-long transformation into one of New York’s most vibrant, 24/7 neighborhoods. While commercial leasing mirrored the slowdown experienced throughout Manhattan, several existing Lower Manhattan tenants demonstrated their commitment to the district by renewing or expanding their Lower Manhattan footprints. Additionally, a pipeline of upcoming deals announced in 2016 will (if completed) take several large blocks of space off the market. As commercial leasing took a breather, Lower Manhattan’s dining and retail scenes took off. Internationally renowned chefs opened some of 2016’s most anticipated new restaurants in Lower Manhattan, while Westfield World Trade Center brought worldclass retail to the stunning World Trade Center Transportation Hub. The hotel market has remained robust with several major openings, and residential developers continue to invest in Lower Manhattan. Commercial leasing was relatively quiet in 2016, reflecting the economic and political uncertainty that dampened leasing activity throughout Manhattan. This year’s overall activity did confirm that existing Lower Manhattan tenants continue to see both value and quality in a Lower Manhattan address. Activity at the World Trade Center especially illustrated this trend; One and 4 World Trade Center inked a combined 320,000 square feet of leases, many of which came from

Lower Manhattan Real Estate Year in Review | 2016

existing Lower Manhattan tenants seizing opportunities to stay or expand in the neighborhood. In addition, current and new media, tech and advertising tenants grew their presence but at a slower rate than past years. Droga5, a Lower Manhattan TAMI tenant since 2014, expanded by more than 100,000 square feet in early 2016. Other smaller TAMI deals followed throughout the year, and late November brought exciting news reports about Spotify’s rumored move to a new headquarters in 4 World Trade Center. Lower Manhattan also began to reap the benefits of prior strong years as new tenants in growing industries completed their moves to the district. These changes continued to diversify the tenant mix and helped drive private sector employment to its highest level since the end of 2001. The World Trade Center also reached another milestone with the opening of Westfield World Trade Center in 2016 and its more than 100 new shops and eateries. Lower Manhattan also welcomed nearly 80 dining establishments this year, from fast casual concepts to full-service neighborhood spots to destination restaurants by renowned chefs across the district. The neighborhood now boasts 512 total restaurants and casual eateries with the majority open after dark. All of these changes led to Bloomberg News declaring, “Manhattan’s FiDi is this year’s surprise, hot restaurant scene”.

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LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW 2016’s culinary contributions extend also to new places to shop with the neighborhood’s expansion of food markets and grocery stores. In 2016, Eataly opened in 4 World Trade Center, joining Le District at Brookfield Place, and in 2017, City Acres Market, Dean & Deluca and a World Trade Center greenmarket will join this array. In mid-2016, Whole Foods also announced that it would open a 44,000-squarefoot store in 2018 at the base of One Wall Street, further expanding options for Lower Manhattan’s robust daytime population and residents.

2016

through the World Trade Center complex, and Liberty Park opened atop the Vehicle Security Center (creating an above ground connection via the Liberty Street pedestrian bridge across West Street to Brookfield Place). Public space reopened in and around the World Trade Center, reconnecting the now active area to the rest of the neighborhood. Most symbolic of this change was the deconstruction of the temporary PATH station, where The Ronald O. Perelman Center for Performing Arts is slated to be built.

Lower Manhattan’s hotel offerings also expanded and diversified in 2016 as the market welcomed the eagerly anticipated Four Seasons New York Downtown, featuring CUT by Wolfgang Puck, and The Beekman, featuring restaurants by Keith McNally and Tom Colicchio. More mid-priced options such as The Four Points by Sheraton New York Downtown and The Courtyard by Marriott World Trade Center, also opened. The range of flags and price points opening south of Chambers is broadening this area’s appeal to luxury, leisure and business travelers alike. In total, Lower Manhattan’s hotel market has now reached 6,560 rooms, a 35 percent expansion in hotel room inventory from just two years ago. With all of these developments, Lower Manhattan has more to offer its population of 61,000 residents than ever before. More than 1,200 residential units were completed in 2016, including premier luxury condominium projects like 30 Park Place, 100 Barclay and 5 Beekman. Lower Manhattan’s residential market goes beyond luxury buyers; more than 43 percent of the district’s population are millennials. More than 1,500 units, the majority of them rental, are expected to come online in 2017 and will provide more housing options for young New Yorkers looking to live in Lower Manhattan. Not only are there more choices of where to eat, visit, live or shop, but it is now much easier to get around Lower Manhattan—especially around the World Trade Center complex. Most noticeably, the World Trade Center Transportation Hub opened in early March 2016, providing access to the NJ PATH as well as a virtual river-to-river underground linkage from Brookfield Place to One and 4 World Trade Center and through to Fulton Center. In addition, Greenwich Street reopened to pedestrians passing

Pete Thompson for Utopia, The Agency

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COMMERCIAL OFFICE MARKET LOWER MANHATTAN MIRRORS CITYWIDE LEASING SLOWDOWN After several years of intense leasing activity reshaped the makeup of the district as new tenants took occupancy, Lower Manhattan’s commercial market took a breath in 2016. Major new leasing announcements waned, and several 100,000plus square foot deals are pending. Both Lower Manhattan and Manhattan as a whole experienced a slower commercial market in 2016 due in part to political and economic uncertainty. While leasing totals were weaker than usual overall, the market nonetheless posted some solid commitments from existing tenants and charted the largest deal of the year citywide, with McGraw Hill’s 900,000-square-foot renewal at 55 Water Street in March 2016. Lower Manhattan logged 3.36 million square feet of new leasing activity in 2016, according to CBRE, after capping the year with 483,000 square feet leased in the fourth quarter. This year-end total reflects a 27 percent drop from 2015 and is 33 percent below the five-year average. However, there were several

significant deals announced throughout 2016 that are expected to close in early 2017 and bolster upcoming leasing totals. In late January 2017, the New York State Attorney General’s closed a deal to relocate to 345,000 square feet in 28 Liberty, opening up a 428,000-square-foot block in 120 Broadway. In addition, there is a rumored pending deal with the New York City Department of Investigation at 180 Maiden Lane for about 300,000 square feet. 1 Liberty Plaza is also expected to finalize two deals for a combined 300,000 square feet; Aon, an insurance firm, has a pending lease to move to 200,000 square feet from 199 Water Street, and New Avon plans to relocate to 90,000 square feet from the company’s Midtown Headquarters. Finally, Spotify, currently located in the Flatiron district, is close to a 400,000-square-foot commitment at 4 World Trade Center, according to news reports. Spotify’s deal would make 4 World Trade Center fully leased.

LEASING ACTIVITY BY MANHATTAN SUBMARKET, 2012 - 2016 Source: CBRE

YTD Leasing, 2012

20 Million 18 Million 16 Million

15.1 MSF

Square Feet

14 Million 12 Million 10 Million

2 Rector Street

8 Million 6 Million 4 Million

4.4 MSF 3.36 MSF

2 Million 0

2012 2013 2014 2015 2016 Lower Manhattan

Lower Manhattan Real Estate Year in Review | 2016

2012 2013 2014 2015 2016 Midtown

2012 2013 2014 2015 2016 Midtown South

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LOWER MANHATTAN TOP LEASES, 2016

Source: Downtown Alliance, CBRE, JLL, CoStar, Colliers International

Tenant Name Location

SF Leased Transaction Type

Sector

McGraw Hill Financial 55 Water Street

900,027 Renewal

FIRE

New York State Department of Health 90 Church Street

256,616 Renewal

Government

182,750 Expansion & Relocation from Brooklyn offices to LM 131,856 Moving Within LM 118,377 Moving Within LM & Expansion

NYC Department of Finance 375 Pearl Street

Zurich American Insurance Company 4 World Trade Center

QBE North America 55 Water Street

Droga5 120 Wall Street

106,000 Expansion

TAMI, Advertising

American Express Company 200 Vesey Street

74,439 Renewal

FIRE

Hudson River Trading 4 World Trade Center

Port Authority of New York and New Jersey 80 Pine Street

69,000 Moving Within LM & Expansion 57,245 Moving Within LM

Paradigm Talent Agency 140 Broadway

50,604 Relocation

Other, Arts

True Entertainment 180 Maiden Lane

49,320 Relocation

TAMI, Media

Guggenheim Foundation 1 Liberty Plaza

45,558 Relocation

Nonprofit

Global Atlantic Financial Company 4 World Trade Center

44,711 Expansion

FIRE

ABM Industries 1 Liberty Plaza

44,025 Relocation

Other, Building Services

Hawkins Delafield & Wood 7 World Trade Center

41,986 Moving Within LM and Downsizing

Professional Services, Legal

Abrams Books 195 Broadway

41,982 Relocation

TAMI, Media

Rocket Fuel 195 Broadway

41,982 Relocation

TAMI, Marketing

41,516 Renewal

Government

40,274 Expansion

Healthcare

40,000 New LM Location

Professional Services, Other

18 19 20

The Port Authority of New York & New Jersey 115 Broadway Weill Cornell Medical College 156 William Street Select Office Suites 90 Broad Street

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Overall, Manhattan activity was dampened throughout 2016 as new leasing activity also decelerated in Midtown and Midtown South. Midtown South activity slowed by 22 percent yearover-year, with activity 14 percent below the five-year average. Midtown recorded a less dramatic decline with activity down 15 percent from last year and just 3 percent under the five-year historical average. Manhattan’s leasing activity totaled 20.9 million square feet at the end of 2016, making it the least active year since 2012.

Government

TOP DEALS SIGNED BY EXISTING FIRE AND GOVERNMENT TENANTS

FIRE

Despite below average leasing performance, Lower Manhattan’s office market still benefitted from a year of strong commitments from existing tenants renewing, expanding or moving within the district — especially to office space in the World Trade Center or other newly repositioned buildings on the market. This trend was especially evident among Lower Manhattan’s traditionally strong FIRE and Government industry sectors, demonstrating their continued confidence in the value of a Lower Manhattan address as the neighborhood evolves.

FIRE

FIRE Government

Lower Manhattan’s top 20 deals of 2016 were emblematic of these trends. The majority of Lower Manhattan’s largest deals (13 out of 20) reflected activity from existing tenants, with four of these being renewals: ●● McGraw Hill Financial, Inc.’s 900,027-square-foot

renewal at 55 Water Street was Manhattan’s largest deal overall in 2016. The financial information and analytics company vacated 413,000 square feet in its namesake Midtown building, 1221 Sixth Avenue, and moved into Wedding / event start up callout Standard & Poor’s space in 2015. McGraw Hill has also been consolidating from 2 Penn Plaza where it once had approximately 500,000 square feet but now holds about 85,000 square feet. It will occupy that property until 2020, when the company will fully relocate all operations to 55 Water Street. This deal brought Manhattan’s largest commercial building to about 97 percent leased. ●● The New York State Department of Health signed a

renewal for 256,000 square feet in 90 Church Street, a 1.15 million square-foot building owned by the United States Postal Service. ●● American Express, one of Lower Manhattan’s long-term and

largest tenants, signed a 74,439-square-foot renewal at 200 Vesey Street at Brookfield Place. They currently occupy 1.35 million square feet in Lower Manhattan. ●● The Port Authority renewed at 115 Broadway for 41,516

square feet.

Lower Manhattan Real Estate Year in Review | 2016

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Other top deals came from tenants in the FIRE and Government sectors moving within the district or expanding, accounting for 40 percent of all new activity (26 percent and 14 percent respectively). Of the top 20 deals, five existing tenants completed deals that expanded their combined footprint in the district by over 381,000 square feet, demonstrating a strong commitment to the market. The largest of these deals was completed by the New York City Department of Finance, which leased 182,750 square feet in 375 Pearl Street. The city agency will be moving some executive level offices and relocating Brooklyn operations to the 1.1 million-square-foot property. The Department of Finance currently has a 400,000-square-foot lease at 66 John Street, not set to expire until 2024. In addition, QBE North America, an insurance company, inked the 6th largest deal of the year in Lower Manhattan and will be moving and expanding within the district from a 99,379-square-foot space in 88 Pine Street to 118,377 square feet in 55 Water Street.

EXISTING LOWER MANHATTAN TENANTS EXPAND AND RELOCATE TO THE WORLD TRADE CENTER The World Trade Center benefitted from Lower Manhattan tenants looking for new or expansion space south of Chambers Street this year. 4 World Trade Center executed over 270,000 square feet of leases in 2016 with four tenants, which brought the building to 80 percent leased. These tenants include: ●● Zurich America Insurance Company, a Switzerland-

based insurance firm, signed the 4th largest deal of the year, committing to move its New York headquarters from

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170,000 square feet at 1 Liberty Plaza to 131,856 square feet on three floors in 4 World Trade Center. ●● Hudson River Trading, a financial technology firm,

committed to 69,000 square feet on the 57th and 58th floors and will be moving and expanding their operations from a 60,924-square-foot space in 32 Old Slip. ●● Validus Group, a Bermuda-based insurance firm, completed

a 24,489-square-foot lease to move operations from 48 Wall Street to the 47th floor, more than doubling its Lower Manhattan footprint. ●● Global Atlantic Financial Company executed a lease for

its second Lower Manhattan office in 44,711 square feet on the 15th floor (which is an expansion of its current 20,326-square-foot office in 7 World Trade Center). One World Trade Center also gained a tenant from 7 World Trade Center: Ameriprise Financial will be relocating its offices to 37,704 square feet on the 78th floor in the second quarter of 2017 following a lease completed in June 2016. (See Below)

“We’re thrilled to stay downtown in

one of the most exciting, vibrant and accessible neighborhoods in the world.” -Ed Lopes, EVP, Zurich America Insurance Company

WORLD TRADE CENTER LEASING STATUS Source: Silverstein Properties, Durst Organization and CoStar

% Leased

1 World Trade Center

70%

% Leased With 2016 Deals Pending Deals

N/A

4 World Trade Center

80%

100%

3 World Trade Center

37%

N/A

Lower Manhattan Real Estate Year in Review | 2016

Transaction Type

Ameriprise Financial Easy Soft Inc Global Risk Advisors Infosys Technologies ITT Data Kensho Technologies Mic Network Progenics Pharmaceuticals

37,704 5,262 6,955 13,715 4,574 4,020 36,099 26,558

Moving Within LM Relocation from New Jersey Relocation from Midtown Expansion from Midtown Expansion First NYC Location Relocation from Midtown South Relocation from Westchester Co.

Zurich American Insurance Company Hudson River Trading Company Global Atlantic Financial Company Validus Group Spotify

131,856 69,000 44,711 24,489 400,000

Moving Within LM Moving Within LM Expansion Within LM Moving & Expanding Within LM Pending According to News Reports

None; Group M signed an expansion for 170,000 SF in late 2015. Total footprint will be about 689,000 SF.

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NEW LEASING ACTIVITY BY INDUSTRY IN LOWER MANHATTAN, 2015 vs. 2016* Source: Jones Lang LaSalle

Apparel & Retail Trade 6%

Other Services 3%

Professional Services 18%

FIRE 19%

Education, Health Care & Nonprofit 9%

2015

New Leasing Activity by Industry Professional Services

Other Services Apparel & Retail Trade 2% 2%

Government 5%

TAMI 26%

32%

FIRE 26%

2016

New Leasing Activity by Industry

TAMI 19%

Education, Health Care & Nonprofit 19%

Government 14%

* By square footage

LOWER MANHATTAN LEASING ACTIVITY BY QUARTER Source: CBRE

8 Million 7 Million 6 Million

1.69 MSF 1.06 MSF

5 Million

Q4 1.71 MSF

Q4 1.23 MSF

4 Million

1.21 MSF Q4

Q4 483 K Q4

3 Million 2 Million 1 Million 0

2011

2012

2013

Lower Manhattan Real Estate Year in Review | 2016

2014

2015

2016

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TAMI & CREATIVE INDUSTRIES CONTINUE TO EXPAND PRESENCE Lower Manhattan’s office market continued to diversify in 2016 with some notable Technology, Advertising, Media and Information (TAMI) tenants and other like-minded creative industries committing to move south of Chambers Street. TAMI’s share of new leasing activity fell somewhat to 19 percent from previous highs (26 percent in 2015 and a 31 percent share in 2014, according to Jones Lang LaSalle), mirroring the slowdown in relocation activity overall. But tenants in these sectors continue to view Lower Manhattan as a strong location to build their creative businesses and access their clients and partners. One of Lower Manhattan’s largest TAMI tenants, Droga5, an advertising firm, signed a significant expansion for another 106,000 square feet in 120 Wall Street this year, bringing its Lower Manhattan footprint up to 203,335 square feet. Named “Agency of the Year” by Advertising Age in 2016, Droga5 has now doubled its original 2014 footprint. Paradigm Talent Agency, a talent agency for film, music, and book publishing clients, signed the largest relocation deal of the year and has moved to a 50,600-square-foot office in 140 Broadway from a previous Flatiron district location. The Solomon R. Guggenheim Foundation, a nonprofit focused on the collection and preservation of art for public benefit, will be expanding and moving from Hudson Square in Midtown South into 45,558 square feet at Brookfield’s 1 Liberty Plaza. Another three of the top 20 deals were completed by TAMI tenants relocating from other markets. Among these future new TAMI tenants: ●● True Entertainment and its sister firm, Original Media, TV

production companies, will relocate to 40,000 square feet in 180 Maiden Lane. They are currently located in three offices in Midtown South. ●● Abrams Books, a children’s book publisher, signed a lease

for the full 42,000-square-foot, ninth floor at 195 Broadway, joining another publisher, HarperCollins, in the building. ●● RocketFuel, an advertising technology company, will also

relocate to a 43,000-square-foot floor at 195 Broadway, leaving a 90,000-square-foot office in the Penn Station submarket. With these deals, 195 Broadway is about 69 percent leased to TAMI tenants, reflecting its appeal with that industry. While 2016 lacked some of the blockbuster relocation announcements of years past, the TAMI industry accounted for eight of the top 20 relocations overall. These ranged in size from 13,600 square feet to 42,000 square feet.

Lower Manhattan Real Estate Year in Review | 2016

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

Tenant Name Location

SF Leased Previous Submarket

Sector

Paradigm, Talent Agency 140 Broadway

50,604 Midtown South

Other, Arts

Guggenheim Foundation 1 Liberty Plaza

45,558 Midtown South

Nonprofit

ABM Industries 1 Liberty Plaza

44,025 Midtown

Other, Building Services

Rocket Fuel 195 Broadway

41,982 Midtown

TAMI, Marketing

Abrams Publishing 195 Broadway

41,982 Midtown South

TAMI, Media

True Entertainment 180 Maiden Lane

40,000 Midtown South

TAMI, Media

The Quad Preparatory School 40 Wall St

36,756 Midtown South

Nonprofit

Mic 1 World Trade Center

36,099 Midtown South

TAMI, Media

Fitapelli and Schaffer LLP 28 Liberty Street

28,329 Midtown South

Professional Services, Law

Allied Advertising Public Relations 233 Broadway

28,098 Midtown

TAMI, Public Relations

Radio One 4 New York Plaza

26,810 Midtown

TAMI, Media

Progenics Pharmaceuticals 1 World Trade Center

26,558 Outside NYC

TAMI, Technology

Brennan Center for Justice at NYU School of Law 120 Broadway

25,476 Midtown South

Nonprofit

Public Health Solutions 22 Cortlandt Street

18,550 Midtown South

Nonprofit

Tommy John 100 Broadway

17,460 Midtown South

Other, Fashion

Bottega Veneta 33 Whitehall Street

16,889 Midtown

Other, Fashion

16,500 Midtown South

Nonprofit

14,830 Midtown South

Healthcare

17 18

Demos: A Network For Ideas And Action 80 Broad Street National Institute for Reproductive Health 14 Wall Street

ABT SRBI 180 Maiden Lane

13,607 Midtown South

TAMI, Marketing

Argyle Executive Forum 50 Broad Street

13,130 Midtown South

Professional Services, Other

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COWORKING– INCREASING FOOTPRINT AND DIVERSITY IN LOWER MANHATTAN The Coworking industry now occupies more than 1 million square feet in Lower Manhattan, across 11 different locations and six different providers. The footprint of this industry has tripled since the first WeWork opened in 2013 in two locations. WeWork has been one of Lower Manhattan’s top 20 largest tenants for the second year in a row; it occupies over 854,307 square feet across five separate locations. WeWork is the 11th largest tenant Manhattan-wide with a total footprint of 2.12 million square feet. The scale and diversity of the coworking market in Lower Manhattan leaped ahead in 2016. Three new providers entered the market. Among them: ●● The Yard, which focuses on private offices supplemented by

communal space, opened its 34,000-square-foot, seventh NYC location across three floors in 116 Nassau Street in October 2016. ●● Grind, a coworking space with three other NYC locations,

COWORKING FOOTPRINT IN LOWER MANHATTAN Source: Downtown Alliance, CBRE, CoStar

1.2 Million 1 Million SF

1 Million 866K SF 800,000 600,000 400,000 200,000 -

249K SF

2013

263K SF

2014

2015

2016

opened its 10,000-square-foot hub in partnership with Verizon in 140 West Street. ●● Primary, a coworking space focused on fitness and

wellness, opened in May 2016 at 26 Broadway.

Wedding and Event Startups in Lower Manhattan

ther existing Lower Manhattan coworking companies focused O on specializing and rebranding in a competitive marketplace. ●● Coworkrs, with two Lower Manhattan locations at 55

Broadway and 60 Broad Street, rebranded to The Bond Collective and will be concentrating on offering a premium, hospitality-driven workspace to its members. ●● WeWork signed a deal with Microsoft for 300

memberships for Microsoft’s sales teams, spread across WeWork Charging Bull at 25 Broadway and WeWork’s Chelsea coworking space on 18th Street. In addition, WeWork expanded its commitment to Lower Manhattan in 2016. ●● WeWork signed on for an additional 39,000-square-foot

floor at its 85 Broad Street location, WeWork FiDi, which is its largest Lower Manhattan coworking office space.

Lower Manhattan Real Estate Year in Review | 2016

Zola Inc., a wedding and gift registry startup, signed a 12,500-square-foot lease at 150 Broadway in December 2016 and will be moving in during March 2017. This wedding website joins two other Lower Manhattan TAMI companies within a similar niche: Paperless Post and XO Group, both also located on Broadway. Paperless Post, an online card and event invitation company, now occupies 36,000 square feet in 115 Broadway, after expanding in 2015. Paperless Post also offers physical cards and invitations through a partnership with Crane and Co., a premium, Boston-based cardmaker. XO Group, a website publisher for The Knot, The Bump and The Nest, occupies 63,822 square feet in 195 Broadway and has been a Lower Manhattan tenant since 2011.

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LOWER MANHATTAN’S LARGEST TENANTS IN 2017 Source: Downtown Alliance, CBRE, CoStar

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Tenant Name

SF Occupied

Sector

City of New York New York State Government Goldman Sachs United States Federal Government Deutsche Bank AG Metropolitan Transportation Authority American Express Company American International Group (AIG) Bank of New York Mellon Condé Nast Bank of America Corporation Morgan Stanley JPMorgan Chase & Co. McGraw-Hill Citigroup Inc. Moody’s Corporation Port Authority of New York & New Jersey WeWork Time Inc. Guardian Life Insurance Company of America Sullivan & Cromwell Royal Bank of Canada EmblemHealth Verizon Communications Cadwalader, Wickersham & Taft Cleary Gottlieb Hudson’s Bay Company Fried Frank, Harris, Shriver & Jacobson LLP United Federation of Teachers Aon Corporation

9,094,838 2,360,690 2,100,000 1,991,772 1,530,500 1,474,981 1,349,051 1,543,659 1,293,758 1,268,132 1,234,752 1,185,206 980,011 900,027 885,500 884,985 854,307 775,226 701,647 648,985 634,108 594,367 560,229 522,938 509,178 501,413 405,091 378,960 353,534 340,724

Government Government FIRE Government FIRE Government FIRE FIRE FIRE TAMI, Media FIRE FIRE FIRE FIRE FIRE FIRE Government Professional Services, Coworking TAMI, Media FIRE Professional Services, Law FIRE FIRE TAMI, Technology Professional Services, Law Professional Services, Law Retail Trade Professional Services, Law Nonprofit FIRE

Lower Manhattan Real Estate Year in Review | 2016

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NEW COMPANIES MOVING IN DIVERSIFY OCCUPANCY AND EMPLOYMENT IN LOWER MANHATTAN Impressive relocation activity and above average leasing in past years has reshaped office occupancy in Lower Manhattan. Many of the tenants that drove 2013 and 2014’s above average leasing activity have moved in, leading to a shift in the composition of industries south of Chambers Street. Most notably, FIRE’s share of occupancy has dropped by nearly 20 percentage points from 55 percent to 37 percent from 2008 to 2016; meanwhile, other industries have grown their impact on the market, including TAMI, Professional & Business Services and Apparel & Retail Trade. These trends are also evident in the increasing diversification of Lower Manhattan’s employment market. In 2008, FIRE sector employment accounted for 43 percent of all private sector jobs in Lower Manhattan; today, this share is down to 36 percent. But private sector employment is up nearly 8 percent since 2008 to more than 233,000 as other employment sectors — like Professional Services, TAMI as well as Hotel, Restaurants, Retailing, and Health care — have grown. TAMI’s share of the market has more than doubled in eight years from 5 percent to 13 percent. Some of the tenants moving in during 2016 helping to drive this shift include: ●● Vox Media, a digital media company (with eight brands,

including Curbed and Eater), which moved into its 85,000-square-foot headquarters in 85 Broad Street; ●● Mic, a millennial-focused news and media company, which

moved into its 36,099-square foot office on the 82nd floor of One World Trade Center. Professional Services’ share of the market rose to 18 percent from 14 percent, driven in part by the boom in coworking space. Five separate coworking locations opened in 2016 totaling over 143,000 square feet. Among the largest: ●● The BOND Collective, formerly Coworkrs, opened its second

Lower Manhattan location in 40,000 square feet in 60 Broad Street. ●● WeWork Fulton Center opened its doors in a

32,000-square-foot space that spans the landmarked Corbin Building and the Fulton Center hub.

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OFFICE OCCUPANCY BY INDUSTRY, 2008 vs. 2016 Source: Jones Lang LaSalle

Other Services 7%

Apparel & Retail Trade 1%

TAMI 5%

Professional Services

13%

Education, Health Care & Nonprofit 5%

, ,

FIRE 55%

2008

Occupancy by Industry

Government 14% Other Services 3%

Apparel & Retail Trade 2%

37%

TAMI 13% Professional Services

18%

Education, Health Care & Nonprofit 7%

FIRE

2016

Occupancy by Industry

Government 513K 20% SF

●● Hudson’s Bay Company began relocating to its new North

American headquarters in Brookfield Place, moving into a 233,000-square-foot office in 225 Liberty Street. It will eventually occupy more than 398,000 square feet in Brookfield Place. ●● Gucci America moved into its 83,964-square-foot space in

195 Broadway from its former office at 54th Street and 5th Avenue.

Fashion and Retail Trade occupy a small, 2 percent share of office space overall, but their presence in this market continues to grow.

Lower Manhattan Real Estate Year in Review | 2016

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VACANCY RATE STABLE AT 10.2 PERCENT

85 Broad Street

While new leasing activity has slowed, Lower Manhattanâ&#x20AC;&#x2122;s overall vacancy rate has risen just marginally year-over-year. This minimal shift is thanks to continued leasing from existing tenants moving within the district or renewing, leading to few large blocks being added to market availability. The overall vacancy rate crept up slightly over last quarter to 10.2 percent, according to Cushman & Wakefield, but is up less than one percentage point year-over-year. It has hovered around 10 percent since the fourth quarter of 2015.

Today, 85 Broad Street, a 1.1 million-squarefoot property, is about 88% leased, following a successful repositioning and lease-up. In 2012, the property was more than 75% vacant. Over the past several years, the property has attracted major tenants, including Nielsen Media Research, WeWork and Vox Media. In addition, building owners added Le Pain Quotidien to the base of the building in summer 2015. MetLife and Beacon Capital Partners have put the building on the market, and reports say it could be valued for around $700 million. MetLife has owned the building since 1983 and Beacon Capital purchased a 50% stake in 2014, valuing the property at $350 Million.

Over the last quarter, about 187,000 square feet of Class A availabilities have been added to the market, inching the Class A vacancy rate to 12.6 percent, up just under one percentage point from last quarter. The Class A vacancy rate has hovered around 12 percent over the course of 2016. These new Class A availabilities include 143,000 square feet at 55 Water Street and 90,000 square feet that was put on the market at One Broadway.

OVERALL VACANCY RATES BY SUBMARKET, Q4 2012 - Q4 2016 Source: Cushman & Wakefield

13% 12% 11% 10.2% 10%

9.3%

9% 8% 7%

6.3%

6% 5%

2012

2013 Lower Manhattan

Lower Manhattan Real Estate Year in Review | 2016

2014 Midtown

2015

2016

Midtown South

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Lower Manhattan’s market was bolstered by a solid year of renewal activity as new activity waned. Even without McGraw Hill’s blockbuster renewal for about 900,000 square feet (Manhattan’s top deal of 2016), the market posted nearly double the renewal activity of 2015, according to CBRE. Vacancy rates in the rest of Manhattan trended in a similar direction; Midtown South’s vacancy rate rose slightly to 6.3 percent, and Midtown’s vacancy rate also rose less than one percentage point to 9.3 percent.

10.2%

Lower Manhattan’s overall vacancy rate

55 Water Street 55 Water Street logged the top 2016 deal Manhattan-wide with McGraw Hill’s renewal for more than 900,000 square feet. The city’s largest office building by square footage (3.6 million square feet) is also home to the Elevated Acre, one of Lower Manhattan’s three above ground parks.

LOWER MANHATTAN VACANCY RATES BY OFFICE CLASS, Q4 2012 - Q4 2016 Source: Cushman & Wakefield

16%

14% 12.6% 12%

10%

7.3% 6.4%

Q2 Q3 2013

Lower Manhattan Real Estate Year in Review | 2016

Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 Class A Class B Class C

Q2 Q3 2016

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2016 ACTIVITY AND PENDING DEALS SHIFT LARGEST BLOCKS IN THE MARKET Lower Manhattan’s largest blocks of available space shifted over the past year as tenants relocated within the district and several pending deals were announced. There are six buildings with blocks over 500,000 square feet including. Among them: ●● 3 World Trade Center has the largest block of space on the

market in Lower Manhattan, totaling 1.8 million square feet.

after AIG put more than 216,000 square feet on the market in the fourth quarter. ●● 120 Broadway has 500,000 square feet available as the

New York State Attorney General will be vacating about 428,000 square feet with its planned 2018 move to 28 Liberty. This new availability drops the property to 72 percent leased from 96 percent leased.

●● 28 Liberty has the second largest block of space, totaling

about 1.14 million square feet. In early 2017, the New York State Attorney General announced that it had closed on this lease, dropping this building’s availability by about 345,000 square feet.

Some of the biggest changes in large blocks of availability, if pending deals are completed, include the following properties. ●● 4 World Trade Center, will be fully leased, if Spotify’s

●● One World Trade Center is 70 percent leased, up from 64

reported deal for about 400,000 square feet is completed. Currently, the building is over 80 percent leased, up from 70 percent at the end of 2015.

percent one year ago, and has about 911,000 square feet left on the market. ●● 375 Pearl Street is 50 percent leased, up from 33 percent

one year ago, with 580,000 square feet left to lease in the building.

● 180 Maiden Lane, will be about 69% leased, if the

reported 300,000-square-foot lease with the New York City Department of Investigation is completed. Currently, the building is 45 percent leased, up from 37 percent last year.

●● 3 2 Old Slip now has some of the largest space availabilities

in Lower Manhattan with 576,000 square feet available,

LOWER MANHATTAN’S LARGEST BLOCKS OF SPACE & AVAILABILITY, Q4 2016 Source: Downtown Alliance, CoStar, JLL, Cushman & Wakefield, Silverstein Properties & Brookfield Properties

70% Leased

3 Million 2.5 Million

28% Leased

50% Leased 72% Leased

2 Million 1.5 Million

49% Leased

50% Leased

580K SF

576K SF

1 Million 500,000 0

1.80 MSF 3 World Trade Center

1.14 MSF 28 Liberty St

911K SF One World Trade Center SF Available

Lower Manhattan Real Estate Year in Review | 2016

375 Pearl Street

32 Old Slip

513K SF 120 Broadway

SF Leased

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AVERAGE ASKING RENTS FLAT, BUT REMAIN AT HISTORIC HIGHS

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Lower Manhattan Average Class A Rent

$62.40 Midtown South Average Class A Rent $83.60

Lower Manhattan’s average asking rents are largely flat yearover-year since reaching the highest level in the market’s history in the fourth quarter of 2015. Meanwhile, other Manhattan submarkets have seen slight increases in asking rents yearover-year, leading to a stronger pricing advantage for Lower Manhattan office space entering 2017. Overall average asking rents in Lower Manhattan held steady at about $59 per square foot for the fifth consecutive quarter and are stable year-over-year. The rest of Manhattan has trended oppositely: Midtown South and Midtown’s overall average asking rents have increased 4.8 percent and 2.3 percent, respectively, from the end of 2015.

Midtown South Average Class A Rent

$88.60

CLASS A ASKING RENTS BY SUBMARKET, Q4 2012 - Q4 2016 Source: Cushman & Wakefield

$95 $88.60 $85 $83.60 $75

$65

$62.40

$55

$45

$35

Q2 Q3 2013

Q2 Q3 2014 Lower Manhattan

Midtown

Q2 Q3 Q4 2015 Midtown South

Lower Manhattan Overall Average Asking Rent

Lower Manhattan Real Estate Year in Review | 2016

Q2 Q3 2016

$59.30 14

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However, as average Lower Manhattan asking rents remain steady, brokers in the Lower Manhattan market have reported an increase in concessions to drive deals. As a result of all these changes, the district’s pricing advantage has increased from this time last year. The value is most compelling for Class A availabilities where the average Class A rent in Lower Manhattan is now $26 below Midtown South, up from a $14 pricing difference one year ago. Lower Manhattan’s Class A average is $21 less than the Midtown average, up from a $19 difference at the end of 2015.

Lower Manhattan’s Class A space (the bulk of available space on the market) has also experienced a flat asking rent, holding firm at $62 for the fourth quarter in a row. While there has been some repricing in the market, the majority of Class A space on the market is held in a collection of new and repositioned buildings, including 28 Liberty, One World Trade Center and 180 Maiden Lane, which have held their asking rents largely steady. Meanwhile, Midtown South’s Class A rents remain at about $88 for the second quarter in a row, up 15.3% year-over-year due to the scarcity of available Class A space in this market. Midtown’s Class A rent is also up, rising 2.4% year-over-year to $83.60.

Lower Manhattan Overall and Class A Asking Rents reached highest level in market’s history: Q4 2015 LOWER MANHATTAN ASKING RENTS BY CLASS TYPE Q4 2012 - Q4 2016 Source: Cushman & Wakefield

$70 $65

$62.40

$60 $53.20

$55 $50

$50.40

$45 $40 $35 $30 $25

Q2 Q3 2013

Lower Manhattan Real Estate Year in Review | 2016

Q2 Q3 2014 Class A

Q4 Class B

Q2 Q3 2015 Class C

Q2 Q3 2016

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PROPERTY SALES1 The investment sales market was active in 2016, with sales volume reaching $3.6 billion across 27 closed transactions. This tops last year’s activity of $3 billion. Investment interest was particularly active in the hotel and office sectors south of Chambers Street. Highlights of 2016’s property sales across key sectors are described below.

PROPERTY SALES VOLUME ($) BY PROPERTY TYPE, 2016 Source: Newmark Grubb Knight Frank

Office 43%

Office More than $1.5 billion of office building transactions took place in 2016 across five buildings including 2 Rector Street, 1 New York Plaza, 44 Wall Street, 24 State Street and 30 Broad Street. Among the largest transactions: ●● Brookfield Properties sold a 49 percent stake in 1 New York

Plaza in the first quarter to China Investment Corp. for $700 million, valuing the Class A, 2.6 million square foot property at $561 per square foot. In the fourth quarter, Brookfield sold another 15 percent stake for $223 million to AEW Capital Management, a privately owned real estate manager, which valued the property at $1.4 billion. Brookfield recently completed a repositioning of the building’s retail concourse in 2015 and recent tenant move-ins include Revlon and FULLBEAUTY Brands. Brookfield now retains a 35 percent ownership stake in the tower.

Land- Fee Interest 3%

Office Condo 8%

Mixed Use/ Residential 21%

Hotel 8% Retail Condo 1%

Student Housing 5%

Development Sites 11%

●● In the first quarter, The Kushner Companies and CIM Group

sold 2 Rector Street, a 440,000-square-foot office building, to a partnership between Bentall Kennedy, a pension fund, and Cove Property Group for $221 million or $502 per square foot. The previous owners purchased the property in 2013 for $140 million and had debated plans to convert the building into rental apartments. ●● In the second quarter, Allianz Real Estate of America, the

equity investor arm of the Allianz Insurance companies, purchased a 49% stake in One Battery Park Plaza, a 885,645-square-foot tower, from the Rudin Organization, for $178.9 million. The deal valued the property at $412 per square foot, up from its $177 per square foot valuation in 2012 when the Rose family sold its 50 percent stake to Rudin.

One New York Plaza Brookfield Properties sold ownership stakes to two separate entities in 2016. The property is valued at $1.4 billion.

Source of Closed Transactions: Newmark Grubb Knight Frank

Lower Manhattan Real Estate Year in Review | 2016

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Office Condominiums Tenants across industry sectors purchased office condominiums, making significant investments. ●● In the second quarter, Sullivan & Cromwell, a longtime Lower

Manhattan law firm tenant, purchased a 525,000-squarefoot office condominium on floors 2 - 16 in 125 Broad Street from Mack-Cali for $202 million, or $385 per square foot. Sullivan & Cromwell has been a tenant since 1970 and now has full ownership of the 1.46 million-square-foot building. Other tenants in 125 Broad Street include AECOM Technology Corp., AXA Insurance Co. and Continental Casualty Co. This was Mack-Cali’s only Manhattan holding. ●● Nyack College, a private liberal arts college, purchased its

166,285-square-foot office space in 17 Battery Place from the Moinian Group for $49.2 million in the first quarter. Nyack College, headquartered in Nyack, NY, increased its Manhattan presence when it opened the school in this building in 2013. ●● Doctors without Borders, a nonprofit, purchased two office

condominiums totaling 44,178 square feet in 40 Rector Street from Phillips International for a combined purchase price of $41.4 million, or about $931 per square foot. The nonprofit will relocate from a leased space in Midtown South in late 2017. It will join the Metropolitan College of New York, a private nonprofit college, which moved into its 100,000-square-foot space in mid-2016.

Hotel Four Lower Manhattan hotels had ownership changes in 2016 with more than $300 million in investment activity. Among these trades: ●● Union Investment Real Estate GmbH purchased The

Courtyard New York Marriott Downtown at 133 Greenwich Street from Hidrock Realty in the fourth quarter for $205 million or about $646,000 per hotel key. The 317-room hotel opened in November 2016. Hidrock will retain ownership of the 2,600-square-foot retail space at the base of the hotel. ●● The Howard Hughes Corporation purchased the 72-key Best

Western Plus Seaport Inn Downtown at 33 Peck Slip for $38.3 million in the first quarter from Gemini Real Estate

Lower Manhattan Real Estate Year in Review | 2016

Doctors Without Borders Relocates to 40 Rector Street Doctors without Borders, a nonprofit, purchased two office condominiums, totaling 44,178 square feet in 40 Rector Street, from Phillips International for a combined purchase price of $41.4 million. Doctors without Borders’ staff travels frequently and selected Lower Manhattan for its accessibility to transportation and area airports.

Advisors and Werber Management. The hotel is now closed, and Howard Hughes’s future plans have not been confirmed. ●● Hersha Hospitality Trust sold its majority interest in two

Lower Manhattan hotels in the first quarter to Cindat Capital Management. Cindat Capital Management, a China-based investment firm, purchased the majority interest in the 113-room Holiday Inn Wall Street, located at 51 Nassau Street, for $38.3 million or $484,000 per key (Hersha last purchased it in 2011 for $358,000 per key). Cindat also purchased the majority interest in the Holiday Inn Express Wall Street, located at 126 Water Street, for $35.8 million or $457,000 per key (Hersha last purchased it in 2011 for $327,885 per key). Hersha will remain as the minority partner in both of these hotels.

Retail Condominiums Four retail condominiums traded in 2016 reflecting about $46 million in investment activity. Among these sales: ●● The Gindi Family executed the largest retail condominium

purchase of the year south of Chambers Street. The Gindi Family, owner of the Lower Manhattan-based Century 21 retail chain, purchased a 12,190-square foot retail condominium at 1 Coenties Slip from Northwind Group. The purchase price, $19 million, values the retail property at $1,559 per square foot. Northwind Group remains the owner of 42 rental apartments on higher floors and last purchased the entire building for $30.1 million in 2014.

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●● HUBB NYC purchased a 4,211-square-foot retail

condominium in 37 Warren Street, an 18-unit luxury condominium building, for $11.2 million or $2,660 per square foot from Fisher Brothers. The retail condominium is currently vacant and holds 2,847 square feet on the ground level and 1,364 square feet on the lower level. ●● Florida Developers Group purchased a 2,016-square-foot

retail condominium, where the current tenant is Starbucks, from The Claremont Group at 99 Wall Street for $9.6 million or $4,774 per square foot. The Claremont Group currently owns the rest of the building, which is converting into 52 residential condominium units.

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●● I n the fourth quarter, DSA Property Group purchased 106

Fulton Street, a former 75,000-square-foot Pace University residence hall, for $51 million. The purchase price is $680 per square foot, and rumored plans include a rental conversion. Pace University now has four active residence halls remaining with a population of about 2,400 in Lower Manhattan.

Development Sites One development site closed in 2016, representing a drop in activity from 2015 when eight sites were sold south of Chambers Street. ●● In the first quarter, China Oceanwide Holdings closed on

●● An undisclosed buyer purchased a 9,538-square-foot retail

condominium with ground and lower level space at the base of The Downtown Athletic Club (a 283-unit residential condominium building), located at 20 West Street, for $6 million, or $629 per square foot, from The Moinian Group. The current tenant is The Learning Experience, a day care center, and the entrance is located on the Washington Street side of the residential tower.

its purchase of a development assemblage at 80 South Street from The Howard Hughes Corporation (HHC) for $390 million (or $476 per buildable square foot). The lot is capable of supporting 820,000 square feet of fully entitled development rights. The full site includes 80 South Street, 163 Front Street and air rights from 163 Front Street and 175 Front Street.

Pending Deals Mixed-Use/Residential Six mixed use properties, including residential rental units and retail space, traded in 2016 for a total sales volume of more than $765 million. Among the largest transactions: ●● In the third quarter, the Boston-based private equity firm,

Rockpoint Group, purchased 63/67 Wall Street from a joint venture between MetroLoft and DTH Capital. The residential property is comprised of two adjacent buildings and 810 units combined. The purchase closed for $429 million, or about $545,000 per unit, in September. Originally the headquarters for Brown, Brothers, Harriman & Co. and the Munshon Shipping Company, the properties were converted to residential use between 2003 and 2007 and also include 20,000 square feet of retail at the base of the building (now home to Sweetgreen, La Colombe, Tumi and La Maison du Chocolat).

● In the third quarter, JTRE Holdings announced it was in

contract to purchase 23 Wall Street, the 145,000-squarefoot former JP Morgan headquarters at the corner of Broad and Wall Streets, for an unconfirmed purchase price from China Sonangol, a Chinese Oil Company. China Sonangol purchased the property in 2008 for $150 million from Africa Israel, an international real estate investor. In the fourth quarter, Uniqlo emerged as the rumored retail tenant for the property.

$3.6 Billion in Investment Market Sales in 2016 in Lower Manhattan

Lower Manhattan Real Estate Year in Review | 2016

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RETAIL MARKET As Lower Manhattan continues to undergo dramatic changes — a growing and affluent residential base, a rapidly diversifying office tenancy, surging tourism and ongoing investments in capital improvements — the area has emerged as a major shopping and dining destination. The significant retail activity at Westfield World Trade Center, Brookfield Place and the Seaport District are creating a positive spillover effect throughout the rest of the neighborhood, as more retailers recognize the benefits of locating in the district. Renowned restaurateurs and chefs are opening new locations in the neighborhood, while major fashion brands and lifestyle amenities are catering to the growing residential population. Courtesy of L’Appart

“Manhattan’s FiDi Is This Year’s Surprise, Hot Restaurant Scene” – Bloomberg At the end of 2016, the district had 1,170 stores and restaurants – a six percent increase over 2015. A total of 202 new stores and restaurants opened in Lower Manhattan in 2016. The neighborhood now boasts 512 total full-service restaurants, bars and casual eateries with more than 82 percent open after 7 P.M. Once considered a culinary backwater, Lower Manhattan is now well on its way to becoming a genuine dining destination home to restaurants associated with many of New York City’s most prominent chefs and restaurateurs. Nearly 80 full-service and casual-eating dining establishments across a variety of cuisines and price points opened this year, including Blacktail, Sauce & Barrel, 11 Hanover Greek, Ketch Brewhouse, Broadstone Bar & Kitchen, Schnippers, Shake Shack, Le Pain Quotidien, Sweetgreen, Bocadillo and Fioro. Joining the surging number of new eateries in 2016, celebrity chefs and restaurateurs brought a flood of culinary talent to the district, including: • Nicolas Abello’s L’Appart at Brookfield Place – the first Michelinstarred restaurant in Lower Manhattan;

L’Appart opened in Le District at Brookfield Place and earned Lower Manhattan’s first Michelin star.

Photo by Nick Solares for New York Eater

Keith McNally’s Augustine and Tom Colicchio’s Fowler & Wells were unveiled at The Beekman Hotel.

• Jose Garces’ Amada at Brookfield Place; • Mario Batali’s Eataly at Westfield World Trade Center; • Daniel Boulud’s Epicerie Boulud at Westfield World Trade Center; • Wolfgang Puck’s CUT at the Four Seasons Downtown; • Tom Colicchio’s Fowler & Wells at The Beekman Hotel; • Keith McNally’s Augustine at The Beekman Hotel; • Sherry Yard’s The Tuck Room in The Seaport District; • Edi Frauneder’s Schilling at 109 Washington Street.

Courtesy of Schilling

Schilling debuted at 109 Washington Street.

Lower Manhattan Real Estate Year in Review | 2016

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Over the course of the next year, many more restaurants will open in Lower Manhattan: Blue Ribbon Federal Grill at the AKA Wall Street; Nobu at 195 Broadway; Westville and Fuku at 100 Wall Street; concepts by celebrated chefs Jean-Georges Vongerichten and David Chang in the Seaport District; and Daniel Humm at 3 World Trade Center.

Grocery Stores and National Chains Commit to Lower Manhattan

Photo by Mark Weinberg for Utopia, The Agency

Eataly & other eateries

3 WORLD TRADE CENTER

The growing residential population and increasingly diverse office mix in the district are leading to a rise in food markets. In addition to the recent arrivals of Eataly and Le District, City Acres Market plans to open a 13,000-square-foot grocery store at 70 Pine Street, and Dean & Deluca will unveil an 18,500-square-foot gourmet food market and eatery at 40 Wall Street, both in mid-2017. Lastly, Whole Foods announced in July it would open a 44,000-square-foot grocery store at the base of One Wall Street, which is being converted to a residential tower. The grocer expects to open in late 2018. Large brand-name stores continue to open throughout the district, providing shopping at all price points. Target opened a 45,000-square-foot location at 255 Greenwich Street in October 2016, making it the second Manhattan location for the big box retailer. Anthropologie plans a 20,000-square-foot store at 195 Broadway, while Saks Off 5TH will open a 55,000-square-foot location in One Liberty Plaza (both are scheduled for 2017). Marshalls announced it would open a 68,400-square-foot location at 140 West Street – the second largest retail deal in New York City in 2016. Additionally, in a testament to the market’s strength, Zara took an additional 10,000 square feet at 222 Broadway, growing the retailer’s footprint to 40,000 square feet.

New Retail Developments

Photo by Mark Weinberg for Utopia, The Agency

Santiago Calatrava’s Oculus

Over 100 retail shops Lower Manhattan Real Estate Year in Review | 2016

In August 2016, Westfield World Trade Center became an instantly identifiable landmark when its 100 stores and restaurants, located in Santiago Calatrava’s Oculus and at the base of the 3 and 4 World Trade Center buildings, debuted. • The list of brands at Westfield World Trade Center includes Apple and Bose in technology; Boss Hugo Boss, H&M, Kate Spade, John Varvatos, LK Bennett, Lacoste and Banana Republic in apparel; Under Armour in the athletic category; Sephora, Caudalie, Kiehl’s, MAC and Dior Cosmetics in beauty; Cole Haan, Stuart Weitzman, Aldo and Vince Camuto in footwear; as well as Breitling, London Jewelers, Links of London and Swatch in jewelry. • Alongside Eataly’s 40,000-square-foot Italian marketplace on the third floor of 4 World Trade Center, the property includes Shack Shack (at Fulton Center), Lady M. and Epicerie Boulud plus several cafes and eateries. Slated to open in 2017 are fresh food/gourmet grocer Market Lane and the London steakhouse Hawksmoor in 3 World Trade Center. 20

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• Connected via an underground pedestrian passage to Fulton Center, the World Trade Center Transportation Hub (which opened in March 2016) provides seamless access to 12 subway lines, the PATH train to New Jersey, Battery Park City Ferry Terminal, Brookfield Place and the World Trade Center complex. Coming off the heels of a major renovation in early 2015, several notable retailers joined the shopping and dining offerings at Brookfield Place, including Warby Parker, Jo Malone, Davidoff of Geneva Cigars, Kamakura Shirts, Hickey Freeman, Joie and an 85,000-square-foot Saks Fifth Avenue women’s department store. Opening in late February 2017 will be a dedicated Saks Fifth Avenue men’s department store, Allen Edmonds and Suit Supply. Adding to the complex’s rich dining mix, L’Appart opened within Le District and earned a Michelin star – the first for a Lower Manhattan establishment. Looking ahead, Del Frisco’s Grille will also open next summer along Vesey Street.

Photo by Romer Pedron for Saks Fifth Avenue

Saks Fifth Avenue debuted its women’s department store in Brookfield Place. A men’s store will open in February 2017.

The Seaport District had an active 2016, with a number of openings, public programs and announcements, setting the stage for what the future of the District will look like later in the year when the retail district debuts. The Howard Hughes Corporation continued construction on Pier 17, which, when completed in 2018, will feature a one-and-a-half-acre rooftop entertainment space. The new pier and revitalized historic area will provide roughly 400,000 square feet of retail, dining and entertainment. • iPic Theaters debuted its first New York City location in the Fulton Market Building. The 500-seat, eight-screen luxury movie theater serves as a cornerstone tenant in the Seaport’s transformation. In addition, The Tuck Room opened on the third floor of the building. • Following an earlier announcement, Jean-Georges Vongerichten will be the culinary anchor within the Seaport District. The celebrated chef will launch two major projects: a 40,000-square-foot, fresh food marketplace inside the Tin Building and a 10,000-square-foot restaurant in the newly opened Pier 17. Joining Jean-Georges on the pier is the Momofuku Group led by David Chang. Both are scheduled to open in 2017. • Milan-based 10 Corso Como announced it will unveil a 13,000-square-foot experiential store in the Fulton Market Building, its first U.S. location. McNally Jackson Books and Scotch & Soda plan to open locations along Schermerhorn Row, while by CHLOE., a fast-casual restaurant, will open along Front Street. The retailers anticipate opening later in 2017. • Throughout 2016, The Howard Hughes Corporation continued to activate the historic Seaport with innovative programming and events, including the return of the popular Seaport Smorgasburg, Seaport Design Market and the Seaport Cultural District.

Lower Manhattan Real Estate Year in Review | 2016

Courtesy of Macklowe Properties

Whole Foods announced it will open a 44,000-SF market at One Wall Street in 2018.

Courtesy of iPic Theaters

iPic Theaters opened an eightscreen, luxury movie theater in the Seaport District at the Fulton Market Building.

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Macklowe Properties received landmarks approval in early 2016, paving the way for the conversion of One Wall Street into 524 apartments. The property will feature over 100,000 square feet of retail, including a newly created glass storefront on the adjacent, non-landmarked Annex building and the repositioning of the mosaic Red Room in the landmarked, Art-deco tower. Whole Foods announced in July it would open a 44,000-square-foot grocery store, expected to debuted in late 2018.

Courtesy of BlackTail

BlackTail, from the team behind The Dead Rabbit, opened a Cuban-themed speakeasy at Pier A.

At 28 Liberty Street, Fosun Property Holdings is in the process of creating hundreds of feet of new storefront, restoring the historic parapet to its original condition and creating a larger plaza by removing mechanical components. The site will offer more than 200,000 square feet of retail below the plaza. Fosun is also in active negotiations with a hospitality partner to run the catering and events space on the 60th floor of the tower.

Retail Rents

Courtesy of Target

Target unveiled its first flexibleformat store at 255 Greenwich Street in Tribeca.

While Manhattan’s overall retail leasing market saw softening in ground floor asking rents, Lower Manhattan’s ground floor retail asking rents along lower Broadway (Battery Park to Chambers Street) have increased by 20 percent over the past year to an average of $369 per square foot, according to the Real Estate Board of New York (REBNY). Key areas along Broadway and Wall Streets are experiencing asking retail rents as high as $600-per-squarefoot. The continued strength is being attributed to “increased foot traffic from the World Trade Center complex and the openings of the Oculus and Fulton Center transit hub,” according to REBNY.

LOWER MANHATTAN AVERAGE ASKING RETAIL RENT Source: Real Estate Board of New York $400

$369

$350 $308 $300

$265

$257 $250 $200 $150

$232 $184

$326

$226

$234

$180 $144

$152

$100 $50 Courtesy of Broadstone Bar & Kitchen

Broadstone Bar & Kitchen opened a threelevel pub at 88 Broad Street.

Lower Manhattan Real Estate Year in Review | 2016

Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall 2011

2012

2013

2014

2015

2016

Note: Rents reflect available ground floor space only on Broadway, between Battery Park and Chambers Street.

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TOURISM & HOSPITALITY 2016 was a record-breaking year for hospitality, as 60.7 million people visited New York City, according to NYC & Company. As the city experiences a rise in tourism, Lower Manhattan is leading the way with 14.8 million unique visitors in 2016, representing a five percent increase from 2015 and a 19 percent increase from 2014. Last year saw record-breaking crowds at the National September 11 Memorial Museum and the Statue of Liberty/Ellis Island. All this leisure and business travel has attracted the attention of the hotel industry, sparking a hotel building surge in the last several years and adding new brands, ranging from luxury to boutique to budget. The number of hotel rooms is expected to grow by 33 percent by the end of 2018.

Record Year for Tourism Lower Manhattan welcomed 14.8 million unique visitors in 2016, up five percent from 2015. The National September 11 Memorial Museum (which opened in May 2014) had 6.6 million visitors in 2016, an incredible 120 percent increase over the past year. According to TripAdvisor, the Memorial was named the “most trending” attraction in the United States, spurring a 425 percent spike in traveler interest in visiting the site. The Statue of Liberty and Ellis Island attracted 4.5 million visitors last year, the highest number of visitors the landmarks have ever seen. Not since 2000, the year before the September 11th attacks, has the visitorship been this high.

LOWER MANHATTAN HOTEL DEVELOPMENT Source: Downtown Alliance 10,000 8,701

9,000

By the end of 2016, hotel inventory reached nearly 6,560 hotel rooms throughout Lower Manhattan — a 35 percent increase in just two years. While Lower Manhattan makes up a smaller piece (six percent) of New York City’s total hotel inventory of 109,000 hotel rooms, ten percent of hotel rooms under construction in all of New York City are in Lower Manhattan. Seven hotels opened in 2016, adding 1,264 rooms: • The Four Points by Sheraton at 6 Platt Street with 262 rooms. The hotel also features Ketch Brewhouse. • The Riff Downtown 36 rooms.

Hotel at 102 Greenwich Street with

• The Down Town Association at 60 Pine Street added 33 rooms. The membership-based social club has been in operation since 1860. • AKA Wall Street at 84 William Street with 140 rooms. The conversion of the former office building into an extended-stay hotel also features Blue Ribbon Federal Grill, opening in early 2017. • The Beekman Hotel opened in the historic Temple Court building at 123 Nassau Street with 287 hotel rooms. The hotel features two restaurants: Fowler & Wells by Tom Colicchio and Augustine by Keith McNally. • The Four Seasons Hotel New York Downtown opened at 27 Barclay Street with 189 hotel rooms. The hotel features a full-service spa and CUT by Wolfgang Puck, the celebrity chef’s first restaurant in New York City. • The Courtyard by Marriott Street with 317 rooms.

WTC at 133 Greenwich

7,684

8,000 6,562

7,000 6,000 4,934

5,000 4,000

Hotel Development Takes Off

Over 2,100 hotel rooms in 13 hotels are currently in the development pipeline. In 2017, inventory is expected to grow by up to 17 percent, as over 1,100 rooms in six properties will come online throughout the year. If all these projects meet current deadlines, the hotel inventory in Lower Manhattan will reach 7,680 rooms by year-end 2017.

5,370

4,118

3,000 2,000 1,000 0

2010

2011

2012

Existing Hotel Rooms

2013

2014

2015

New Hotel Rooms

2016

2017

Projected Hotel Rooms

Source of visitor estimates: Audience Research & Analysis

Lower Manhattan Real Estate Year in Review | 2016

2018+

The hotel development boom is bringing a diversity of hotel brands, targeting both business and leisure travelers, across multiple-price points. While 2016 saw the arrival of higher-priced hotels (AKA, Four Seasons and the Beekman), the market share of mid-priced hotel rooms (such as Aloft, Courtyard, Moxy and Hotel Indigo) in Lower Manhattan will grow from 19 percent in 2013 to 52 percent in 2019.

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Those hotels scheduled for completion in 2017 include: •

The Artezen Hotel at 24-26 John Street, 89 rooms;

• Fairfield rooms; • Hilton

Inn & Suites at 100 Greenwich Street, 192

Garden Inn at 6 Water Street, 250 rooms;

• Marriott Residence 120 rooms; • Courtyard 200 rooms, • AC

Inn at 215 Pearl Street; (upper floors)

by Marriott at 215 Pearl Street; (lower floors)

Hotel by Marriott at 151 Maiden Lane, 271 rooms.

LOWER MANHATTAN HOTEL DEVELOPMENT PIPELINE Source: Downtown Alliance

Hotel & Address

Owner/ Developer

Rooms/ Floors

Open Date

The Artezen Hotel 24 John Street

Westbury Realty Associates

89/21

2017

Fairfield Inn & Suites 100 Greenwich Street

Jiten Hotel Management

192/25

2017

Hilton Garden Inn 6 Water Street

Magna Hospitality Group

250/29

2017

Marriott Residence Inn 215 Pearl Street

Lam Group

120/40 (upper floors)

2017

Courtyard by Marriott 215 Pearl Street

Lam Group

200/40 (lower floors)

2017

AC Hotel | Marriott 151 Maiden Lane

Fortis Property Group

271/33

2017

Moxy Hotel 143 Fulton Street

Tribeca Associates

228/26

2018

TBD Hotel 11-13 Stone Street

Premier Emerald LLC

143/27

2018

Extended Stay Hotel 17 John Street

Prodigy Networks

81/23

20188

Hotel Indigo 8-12 Maiden Lane

10-12 MLane Inc.

190/25

2018

Hotel Indigo 120-122 Water Street

Atlas Hospitality

122/31

2018

Aloft Hotel 50 Trinity Place

Fit Investment Group

173/29

2018

TBD Hotel 265 Broadway

Roe Corporation

150/ 12 (of 42)

TBD

Photo by Mark Weinberg for Utopia, The Agency

Total Hotels in the Pipeline

Total Hotel Rooms in the Pipeline

35%

The Four Seasons Hotel New York Courtesy of One World Obsevatory Downtown opened at 27 Barclay Street with 189 rooms and featuring Wolfgang Puck’s first NYC restaurant, CUT.

2,139

growth in hotel rooms between 2014 & 2016

Lower Manhattan Real Estate Year in Review | 2016

Photo by Mark Weinberg for Utopia, The Agency

The Beekman Hotel opened at 123 Nassau Street with 287 rooms and signature restaurants by Tom Colicchio & Keith McNally.

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RESIDENTIAL

MAJOR PROJECTS UPDATE

RESIDENTIAL MARKET 2016 was another strong year for the Lower Manhattan residential market. Many high-profile projects were completed, leasings and closings occured throughout the year, and more than 1,200 units came to market. 2017 will add even more residential product to the market with another 1,500 units coming online by year’s end.

70 Pine Street Leasing is underway at AIG’s former headquarters by Rose Associates. The tower includes 644 luxury rental units and a 132-room Q&A Hotel.

Inventory and Development Lower Manhattan has close to 31,000 units in 324 mixed-use and residential buildings and an estimated population of approximately 61,000. There are more than 4,200 units in 28 buildings under construction or planned for development, with 56 percent planned as rental units and 44 percent as condos. According to the New York Building Congress, Lower Manhattan’s residential pipeline accounts for six percent of the 52,000 housing units anticipated to be completed citywide between 2017 and 2018.

Retail includes a City Acres Market, La Palestra fitness, Black Fox Coffee and a roof top bar (coming soon).

This year, 1,236 residential units in six buildings were added to the market (68 percent rental and 32 percent condo). Among them: • Rose Associates’ conversion of the historic AIG office building at 70 Pine Street continued with the roll out of its 644 luxury rental units throughout 2016. • Rudin Management’s 110 Wall Street completed the conversion of a former office building, with WeWork opening both an office and its first residential offering, WeLive. The micro-unit concept that focuses on establishing a community-driven living concept added 232 units throughout the year, housing 600 people.

Courtesy of CoStar

30 Park Place

• Magnum Real Estate began welcoming residents to the top 22 floors at the former Verizon Building at 100 Barclay Street. The tower features 166 condo units and approximately 100,000 square feet of retail at the base.

Silverstein Properties completed the Four Seasons Residences. The 82-story tower includes 157 condo units and the 189room Four Seasons New York Downtown Hotel at the base.

• The Beekman Residences at 5 Beekman Street, a 51-story tower with 68 condo units, opened this past fall. The new residential tower was joined by the opening of the 287-room Beekman Hotel; both were developed by GFI Development and GB Lodging.

In addition to hotel & spa amenities, CUT by Wolfgang Puck also debuted.

• Silverstein Properties’ Four Seasons Residences at 30 Park Place debuted in October. The 82-story tower has 157 condo units and also features the newly opened 189-room Four Seasons Hotel New York Downtown on the first 20 floors.

Courtesy of Silverstein Properties

Lower Manhattan Real Estate Year in Review | 2016

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HIGHLIGHTS OF LOWER MANHATTAN RESIDENTIAL DEVELOPMENT Total Units Under Construction & in Planning Stages: 4,200+ Source: Downtown Alliance Address & Building Name Rental Units Under Construction

Lease & Building Type

Units

TOTAL

2,025

Open Date

RESIDENTIAL

MAJOR PROJECTS UPDATE

The pipeline of residential development includes over 1,500 units in eight buildings under construction (79 percent rental and 21 percent condo) with plans to open in 2017. Among them: • At the tail end of 2016, 50 West Street, a 65-story, 191-condo unit tower developed by Time Equities, received its certificate of occupancy. Closings will continue through 2017. Construction of the West Thames Pedestrian Bridge will begin this year, connecting a new plaza adjacent to 50 West Street to Battery Park City.

60 Fulton Street Exhibit

Rental New Construction

120

2017

180 Water Street

Rental Conversion

565

2017

20 Broad Street

Rental Conversion

521

2017

112-118 Fulton Street

Rental New Construction

483

2018

• The Claremont Group plans to complete its conversion of 101 Wall Street to 52 condominiums by spring 2017. • The former parking garage at 60 Fulton Street has now been replaced by a 23-story, 120-unit rental building. The building is being developed by Socius Development Group and the Brauser Group and will include 24 affordable units.

Condo Units Under Construction

TOTAL

1,103

50 West Street

Condo New Construction

191

2017

12 Warren Street

Condo New Construction

2017

101 Wall Street

Condo Conversion

2017

19 Park Place

Condo New Construction

2017

2 Park Place Woolworth Residences

Condo Conversion

2017

161 Maiden Lane 1 Seaport

Condo New Construction

2018

49-51 Chambers Street

Condo New Construction

2018

111 Murray Street

Condo New Construction

157

2018

125 Greenwich Street

Condo New Construction

288

2018

1 Wall Street

Rental/Condo Conversion

336/188

2018

1 Beekman Street

Condo New Construction

2018

45 Park Place

Condo New Construction

2018

23-31 Park Row

Condo New Construction

108

2019

Condo & Rental Buildings Planned for Development

907 23

2018

130 William Street

Condo New Construction

244

2019

75-83 Nassau Street

Rental/Condo New Construction

197

2018

77 Greenwich Street Former Syms site

Condo New Construction

2019

45 Broad Street

Condo New Construction

150

2019

86 Warren Street

Rental New Construction

TBD

102 John Street

Rental New Construction

TBD

81 Warren Street

Condo New Construction

TBD

106 Fulton Street

Rental Conversion

TBD

265 Broadway

Condo/Hotel New Construction

TBD

TOTAL UNITS IN THE PIPELINE

• Alchemy Properties continues its historic conversion of the top 30 floors of 2 Park Place. The Woolworth Residences will have 34 condo units. • MetroLoft is undertaking the conversion of 20 Broad Street, a 27-story office building adjacent to the New York Stock Exchange, into 521 rental apartments. The building will also include the addition of 70,000 square feet of retail. Residential development activity is anticipated to increase throughout the next couple of years, as 21 projects comprising over 2,700 units (50 percent condo and 50 percent rental) are planned to come to market in 2018 and beyond. Among them:

30 Warren Street

Condo New Construction

• Emmes Realty is currently converting 180 Water Street into 565 rental units. The conversion will also include the addition of seven stories to the building.

4,226

For complete residential pipeline, please see “Lower Manhattan Residential Pipeline 4Q 2016”.

Lower Manhattan Real Estate Year in Review | 2016

• Fortis Property Group continued construction this year on a 60-story, 80-condo unit tower at 161 Maiden Lane, known as 1 Seaport. The property will also be adjacent to a new, 271-room AC Hotel by Marriott. The hotel and condo tower are expected to be complete in 2017 and 2018, respectively. • Macklowe Properties received landmarks approval in early 2016 for the conversion of One Wall Street. The tower, now under construction, is expected to include 336 rental apartments and 188 condominiums. The building will offer over 90,000 square feet of retail, including a recently announced 44,000-square-foot Whole Foods. The tower was purchased for $585 million in 2014, and its anticipated completion is in 2018. • Soho Properties broke ground this year on a 43-story, 50-unit luxury condo tower at 45 Park Place. The tower, planned for 2018, will also include a public plaza connected to a three-story Islamic museum and prayer space.

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• Michael Shvo, who bought 125 Greenwich Street for $180 million, will partner with Bizzi & Partners to build a 91-story, Rafael Vinoly-designed building with 288 condo units and retail at the base. The building broke ground this past year and is anticipated to be complete in 2018.

77 Greenwich Street

• Fisher Brothers and the Witkoff Group continues construction at 111 Murray Street for a 62-story, 157-unit condo tower. The building, the site of the former St. Johns University building, is expected to be completed in 2018.

Trinity Place Holdings announced the redevelopment of the former Syms Department Store into an 85-condo unit tower. A public primary school will also open at the building’s base.

• Urban Muse began foundation work for a 25-story, 31-unit condo tower at One Beekman Street. The building, adjacent to City Hall Park, is expected to be finished in spring 2018. • Construction continues at 112-118 Fulton Street for a 63-story, 483-rental unit building. Carmel Partners purchased the demolished site from Lightstone Group in 2014 for $171 million – a 170 percent increase in the original price Lightstone paid in 2013 in acquiring the parcels and air rights. The building is expected to be completed in late 2018. • 130 William Street is undergoing demolition to make room for the Lightstone Group’s planned 50-story tower. The new building will adjoin soon-to-be demolished buildings at 90-94 Fulton Street and will include 244 condo units. Plans for an on-site hotel were scrapped this past year. Completion is set for early 2019.

Completion is set for 2019. Courtesy of Trinity Place Holdings

One Wall Street

• Madison Equities filed plans for a 1,100-foot, 150-unit condo tower at 45 Broad Street. The tower will also have an office component at the base. Completion is anticipated for 2019.

The historic office building is being converted to 188 luxury condo and 336 rental units by Macklowe Properties.

• In early 2016, Trinity Place Holdings announced the redevelopment of the former SYMS clothing store at 77 Greenwich Street. The tower will comprise 85 condo units and a public primary school at the building’s base. The company anticipates a 2019 completion. • In the collection of buildings along Park Row once occupied by J&R Music and Computer World, L&M Development filed plans for a new, 54-story, 108-unit condo tower at 23-31 Park Row. The new residential tower will also include 52,000 square feet of retail. Demolition of the J&R buildings is finished, and completion is expected in 2019. • Pace University sold its dormitory building at 106 Fulton Street to DSA Property Group for $51 million in 2016. The developer plans to repurpose the 15-story building for rental use. Unit counts and completion date are TBD.

Lower Manhattan Real Estate Year in Review | 2016

MAJOR PROJECTS UPDATE

The building will include 90,000 SF of retail space, including a 44,000SF Whole Foods Market.

Courtesy of CoStar

Completion is set for 2018.

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Residential Rental Market According to residential statistics published by Miller Samuel/ Douglas Elliman, Lower Manhattan’s median rent, $3,660, decreased one percent over the last quarter and remained flat year-over-year. Median rents across comparable neighborhoods1 remained flat, as concerns of an oversaturated luxury apartment market have made headlines; listing discounts have hovered between two and three percent.

Residential Sales Market The median condo sales price of $1.25 million dipped about two percent over the past quarter and seven percent year-over-year. Median sales prices hit a high water mark in late 2015 at $1.35 million and have been showing buyer push back. Across comparable geographies, the median sales price for Manhattan’s east side (defined as east of 6th Avenue, between E. 96th and E. 42nd Street) saw the greatest increase over the past quarter and past year, at 19.2 and 4.5 percent, respectively. The increase on Manhattan’s east side can be attributed to the arrival of the first phase of the Second Avenue subway.

RESIDENTIAL

MAJOR PROJECTS UPDATE

MEDIAN RENTAL PRICE

Source: Miller Samuel/Douglas Elliman $3,800 $3,700 $3,600

$3,660

$3,645

$3,500 $3,400 $3,300 $3,200 $3,100 $3,000 Q1

2015

2016

Lower Manhattan

Downtown

East Side

West Side

MEDIAN SALES PRICE

Source: Miller Samuel/Douglas Elliman $1.5 M $1.4 M

Due to new residential product entering the market and an emerging shopping and dining scene, the number of condo sales in Lower Manhattan increased significantly with the total number of sales up by 50 percent year-over-year. A total of 625 condo sales transactions took place in 2016, a 24 percent increase over the previous year. The average price per square foot (PPSF) in Lower Manhattan has shown steady growth over the past year. The district’s average PPSF of $1,925 saw a dramatic increase of 38 percent year-over-year, marking the highest average PPSF across comparable geographies. The higher PPSF can be attributed to closings in premier new developments, like 30 Park Place and 100 Barclay Street, which are in the $3,000 per square foot range (similar to new luxury developments across Manhattan).

$1.35 M

$1.3 M

$1.25 M

$1.2 M $1.1 M $1.0 M $.9 M $.8 M Q1

2015

Lower Manhattan

Downtown

East Side

West Side

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

38%

increase in average priceper-square-foot for Lower Manhattan condos & co-ops, 2016

Source or residential sales and rental data: Miller Samuel/Douglas Elliman Lower Manhattan defined as south of Chambers Street to the Battery. Downtown defined as south of W. 34th and E. 42nd Street to the Battery. East Side defined as east of 6th Avenue, between E. 96th and E 42nd Street. West Side defined as west of 6th Avenue, between W. 116th and W. 34th Street. 1

$1,925

$1,900 $1,800 $1,700 $1,600 $1,500 $1,400

$1,394

$1,300 $1,200 $1,100 $1,000 Q1

2015 Lower Manhattan

Lower Manhattan Real Estate Year in Review | 2016

2016

2016 Downtown

East Side

West Side

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MAJOR PROJECTS UPDATE Worth St t eS

World Trade Center (WTC)

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The Ronald O. Perelman Performing Arts Center (The Perelman Center) In September, designs were revealed for The Ronald O. Perelman Center for Performing Arts at the World Trade Center, proposing a 90,000-square-foot, cube-shaped building. Wrapped in translucent marble will be three theaters of varying sizes, with the potential to combine them to form seven unique performance spaces. Brooklyn-based firm REX is the lead architect.

Photo by Mark Weinberg for Utopia, The Agency

World Trade Center Transportation Hub The 800,000-SF transit hub opened in March and includes underground pedestrian access to the PATH, Fulton Center, WTC office complex and Brookfield Place. Withing the transit hub, Westfield’s 350,000SF retail complex opened in August with over 100 shops and restaurants.

In summer 2016, philanthropist Ronald Perelman announced he was donating $75 million to the project. With Perelman’s donation, the project took a significant stride toward its estimated $240 million cost. The Lower Manhattan Development Corporation (LMDC) committed $100 million in federal funds awarded after September 11th for the project’s design, construction and administrative costs. The site for the Perelman Center is the former, now demolished PATH entrance at Greenwich Street and West Broadway, which closed this summer when the World Trade Center Transportation Hub opened with additional entry points. The project is slated for a 2018 groundbreaking and a 2020 completion.

3 World Trade Center The 2.5 million-square-foot office tower topped out at 80 floors in June 2016 and will be completed in Spring 2018. In late 2015, anchor tenant GroupM Worldwide finalized an expansion, adding 170,000 square feet to the existing 520,000 square feet signed in 2014. The tower is currently 28 percent leased.

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

4 World Trade Center

Rendering by Luxigon for The Perelman Center

The Ronald O. Perelman Performing Arts Center Significant strides were made toward funding, including a $75M donation from Ronald Perelman, for whom the performing arts center will be named. Designs were revealed this past summer with groundbreaking expected in 2018 and completion in 2020.

Lower Manhattan Real Estate Year in Review | 2016

The 72-story, 2.3 million-square-foot office tower was completed in November 2013. The building is over 80 percent leased to MediaMath, PadillaCRT, SNY (SportsNet New York), Silver Suites, IEX, Morningstar, the Port Authority and the City of New York. During 2016, over 270,000 square feet of offices leases were signed, including: Zurich American Financial Company (132,000 square feet), Global Atlantic Group and Validus (70,000 square feet combined) and Hudson River Trading (69,000 square feet). At the end of the year, news agencies reported Spotify, the world’s largest music streamer, was focusing on leasing the remaining space in the building, bringing it to 100% occupancy.

One World Trade Center The 104-story, 3.1 million-square-foot office tower opened on November 3rd 2014. One World Trade Center is 70 percent leased; tenants include Condé Nast, High 5 Games, Moody’s, xAd, China Center New York, Mic Network and the U.S. General Services Administration. Over the past year, Ameriprise Financial signed a 37,000-square-foot lease, and Infosys inked a 14,000-square-foot lease. The Durst Organization and Port Authority also announced plans for a tenant amenity floor scheduled to open in the first quarter of 2017 and the expansion of its pre-built and built-to-suit program to another three floors, growing to a total of nine floors.

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Vehicle Security Center (VSC) & Liberty Street Bridge

RESIDENTIAL

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The Vehicle Security Center (VSC) is the World Trade Center’s main entry point for automobiles, trucks and buses. Operated by the Port Authority, the VSC will provide deliveries, tenant and bus parking for those with affiliations with the World Trade Center. It became fully operational in 2016.

West Street. According to the New York City Economic Development Corporation (NYCEDC), completion is anticipated in early 2018 and will replace the Rector Street pedestrian bridge. The Battery Park City Authority and the Lower Manhattan Development Corporation have voted to rename the bridge after Robert Douglass, former chairman of the Downtown Alliance and longtime advocate of Lower Manhattan.

Water Street Rezoning

Return of W Local Train

In June, the City Council took a major step toward realizing the Downtown Alliance’s vision for a vibrant, pedestrian friendly Water Street when they approved the Water Street text amendment. This innovative zoning proposal was a collaborative effort between the Downtown Alliance, the New York City Department of City Planning and the New York City Economic Development Corporation. The new zoning incentivizes Water Street property owners to make significant upgrades to nearly a quarter million square feet of privately-owned public plazas along the street, while allowing for the conversion of underused pedestrian arcades into nearly 110,000 square feet of new retail space. FEMA and the NYC Department of Buildings are discussing flood proofing interventions for any horizontal enlargements made to buildings citywide, which includes future arcarde infill on Water Street.

The Metropolitan Transportation Authority brought back the W local train in late 2016. The train is running again after a six-year hiatus on the N/Q/R/W line in advance of the Second Avenue subway, which opened January 1, 2017. The line operates only on weekdays and terminates at Whitehall Street and includes Lower Manhattan stops at City Hall, Cortlandt Street, Rector Street and Whitehall Street-South Ferry.

Infrastructure & Resiliency

Citywide Ferry Service

Street Reconstruction The Department of Design and Construction’s (DDC) $42 million capital reconstruction project on Broadway, referred to as Broadway 1 and stretching from Ann Street to Rector Street, began in 2014 and is done. Reconstruction of Warren Street, stretching from Broadway to West Street begins in February 2017 and is scheduled to be finished in Summer 2019. Once the Warren Street reconstruction is complete, an identical project will begin on John Street, from Broadway to William Street. These projects will replace all underground infrastructure, including water mains, sewers, electric, gas and other utilities, as well as construct new streets and curbs.

West Thames Pedestrian Bridge The pedestrian bridge planned for West Thames Street is slated to begin construction early this year. The bridge will span West Street and will feed into a new privately-owned public plaza at 50

South Ferry Station The MTA announced the main entrance to the South Ferry station will reopen in June 2017 after being closed for the past few years to replace Sandy-damaged equipment and put flood mitigation measures into place. During restoration, the old South Ferry station remained operational and accessible from alternative entrances. The $340 million restoration allowed the station to receive permanent flood protection measures and become wheelchair-accessible. In summer 2017, Mayor de Blasio will debut the first phase of the new citywide ferry service. In addition to the existing East River Ferry, there will be five new routes, providing a total of 21 landings citywide. Phase I routes to Astoria, South Brooklyn and the Rockaways are anticipated for 2017, while in 2018, Phase II routes will be added to the Lower East Side and Soundview in the Bronx. All routes will have a stop at Pier 11-Wall Street. One-way tickets will cost $2.75, and 4.6 million trips are projected annually.

Federal, State & City Investments Earlier in 2016, the de Blasio administration announced that $100 million in City capital funds would be allocated to support coastal resiliency in Lower Manhattan as part of a larger resiliency project funded by the U.S. Department of Housing and Urban Development’s National Disaster Resilience Competition. The money has been allocated to build a network of flood walls, berms and deployable flood

Water Street Rezoning Map Arcade Plaza Building Ground Floor

Seaport

Water Street Subdistrict Pier 17 Pier 15

Whitehall BMB

Lower Manhattan Real Estate Year in Review | 2016

Pier 11

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barriers to protect the southern tip of Manhattan from flooding. The project will extend from the Lower East Side, around the tip of the island, all the way to Battery Park City. Separately, the City set aside nearly $15 million, including $6.75 million from the City and State, for preliminary design and environmental review and another $8 million for first-phase flood protection design and implementation in Battery Park. The City’s Economic Development Corporation kicked off design work for the Lower Manhattan coastal resiliency initiative in the summer of 2016 and plans to complete its design work later in 2017.

Open Space The Battery The Battery Conservancy unveiled the Battery Oval, a two-acre lawn, to the public in June 2016 by debuting 300 moveable chairs. Plans are now being finalized for an expanded 1.4-acre playground that will feature climbing nets, a slide mountain and kid-oriented performance spaces. Design and construction on the new playground is expected to be completed in late 2019/early 2020 and will be funded with $8 million through the Parks Department, $6 million through the Lower Manhattan Development Corporation and $2 million from donors of The Battery Conservancy.

Courtesy of The Battery Conservancy

Liberty Park In The Battery, the SeaGlass Carousel opened this summer, while the Battery Oval, a threeacre lawn, will reopen to the public in spring 2016.

Liberty Park The 1.5-acre elevated park, located on the roof of the World Trade Center Vehicle Security Center (VSC), opened in late June 2016. The Port Authority also announced the return of Fritz Koenig’s “Sphere for Plaza Fountain” to the World Trade Center site, set at Liberty Park. The Liberty Street Bridge, also opening at the same time on the west side of the park, can now connect pedestrians to Brookfield Place in Battery Park City. Sidewalk pedestrian access under the bridge opened this fall, allowing ground-level access from the 9/11 Memorial to the Greenwich South neighborhood. The eastern side of the new park will feature the new $35 million, Santiago Calatrava-designed St. Nicholas Greek Orthodox Church. The church broke ground in late 2014 and is expected to open in the first half of 2018.

Elizabeth H. Berger Plaza Located between Trinity Place and Greenwich Street at the eastern exit of the Brooklyn-Battery Tunnel, Elizabeth H. Berger Plaza will be created by joining two disconnected, underutilized plazas. The resulting new plaza will have a cohesive design with increased pedestrian safety, plush landscaping and space for public programming. The project is going through approval processes, and work is expected to begin by the end of 2017.

Courtesy of The Battery Conservancy

The Battery Oval

Governors Island The 172-acre, seasonal park debuted The Hills, a $71 million public-private project, in July 2016. The four man-made hills range in heights from 25 to 70 feet and include slides, art installations and never-before-seen views of New York Harbor. The island welcomed nearly 600,000 visitors over the course of the 2016 season and will now be open to the public on May 1, extending public access from 120 days to 146 days. Commercial tenancy will arrive with the opening of QC Terme, a day spa, in 2018. The next goal for Governors Island is to transform into a 365-day destination by activating historic buildings and another 33 acres of land for commercial purposes.

Lower Manhattan Real Estate Year in Review | 2016

Photo by Timothy Schenck, courtesy of the Trust for Governors Island

The Hills at Governors Island 32

Visit www.downtownny.com/research for additional publications on the Lower Manhattan real estate market and economy. Documents comprise a complete list of residential and hotel developments, available retail spaces, a summary of leasing incentives and other research reports, including:

An Untapped Market: Lower Manhattan’s Young Professionals, a residential survey highlighting Lower Manhattan as a neighborhood of choice for young professionals in New York City, as well as ways to capture residents’ robust appetite for dining out and entertainment. Surging Ahead: Lower Manhattan’s Economic Revival and What It Means For New York, a report on the major advances in Lower Manhattan’s economy expected over the next five years as a result of post-September 11th investments and the area’s status as a burgeoning center for some of New York City’s highest value, most dynamic industries; The Brain Gain, 2015 Report, updated report on how the region’s shifting demographics continue to favor the Lower Manhattan Business District. Previously released in 2012, updated data shows an even stronger trend; TAMI Takes Lower Manhattan, a report on the growth of technology, advertising, media and information companies moving south of Chambers Street; Everything Old is New Again: Conversions of Historic Properties in Lower Manhattan, a report on historic properties preserved through significant investment and changs in use; The Golden Age of Transit in Lower Manhattan, a report released on Fulton Center’s opening, describing how the more than $6.4 billion of transit investments made since 2005 benefit a large and growing labor force; Going to the Head of the Class: The Growth of Higher Education in Lower Manhattan, a report on the growth of higher education in Lower Manhattan; A Surge of Bits and Bytes: The State of Tech and Innovation in Lower Manhattan, a report on Lower Manhattan’s growing technology industry.

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