Lower Manhattan Real Estate Year In Review 2017

ALLIANCE FOR DOWNTOWN NEW YORK

LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW 2017 Photo by @Misshattan

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LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW

2017

EXECUTIVE SUMMARY Lower Manhattan Reaches 16-Year Private Sector Employment Peak as Commercial Market Rebounds 2017 marked a new stage of Lower Manhattan’s renaissance as commercial leasing activity soared, exciting new restaurants opened and private sector employment reached its highest level since September 11, 2001. Lower Manhattan now has nearly 242,000 private sector employees with growth occurring across industries. More than 44,000 jobs across a range of industries have been added since the recession--demonstrating once again that Lower Manhattan is one of the region’s most important economic engines. Areas of strongest growth include Professional Services, as well as Healthcare and Hotel and Food Services. Still home to one out of every five Financial Services, Insurance and Real Estate (FIRE) jobs in the city, the expansion in other sectors has helped diversify and bolster Lower Manhattan’s economy.

Investors showed continued confidence in Lower Manhattan’s office market as sales volume topped $2.1 billion. Investors have been particularly active over the last several years in repositioning and renovating older Class B properties helping to drive the average Class B asking rent to its highest level in the market’s history. Lower Manhattan still owns a pricing advantage over other parts of Manhattan -- offering a 22 percent and 13 percent discount to overall average asking rents in Midtown and Midtown South, respectively.

Lower Manhattan’s impressive job creation has been fueled by continued strength in the commercial market with leasing reaching the highest level of new activity since 2014. Relocations to Lower Manhattan accounted for some of the largest deals of the year and will make technology and media firms among the largest office occupiers in the neighborhood. Lower Manhattan is fast becoming the undisputed media capital of New York with ESPN Studios, Macmillan Publishers and Business Insider all announcing relocations to the district in 2017, joining Condé Nast, Meredith Corporation (now owner of Time Inc.), HarperCollins, Vox Media and many other major media businesses that have relocated over the last several years.

Spotify’s decision to move and expand their NYC headquarters to 4 World Trade Center will also strengthen this area’s growing technology and creative community when they move in this year. Late 2017 yielded additional impressive news when the influential consulting firm McKinsey & Co. announced a relocation to 3 World Trade Center joining advertising titan, GroupM, who will move in this summer. Existing Lower Manhattan tenants also drove leasing activity with four major State and City government agencies committing to new space in the district. With these major deals, Lower Manhattan was the only Manhattan submarket to post a year-over-year decline in its vacancy rate in 2017.

Lower Manhattan’s days as a culinary and retail backwater are in the rear-view mirror. In 2017, Westfield World Trade Center enjoyed its first full year of operations and Brookfield Place continued to draw shoppers from around the city, the region and the world. Lower Manhattan’s food and dining scene expanded and diversified with over 60 restaurants across price points opening in 2017. They joined celebrated unveilings from culinary heavyweights like Nobu, which opened in April 2017 after moving from TriBeCa, while Brookfield Place’s L’Appart became the neighborhood’s first Michelin starred eatery. In the coming year, Lower Manhattan will welcome restaurants by noted chefs David Chang and Jean-Georges Vongerichten and legendary restaurateur Danny Meyer. Retail and dining continue to diversify with rising demand from a growing residential population and increasing visitors and workers.

Lower Manhattan Real Estate Year in Review | 2017

New Restaurants and Hotels Across Multiple Price Points Make Lower Manhattan a Destination

Lower Manhattan’s hotel market, now increasingly diversified across price points, continued to attract strong business from tourists and business travelers. Occupancy rates were up yearover-year and from the end of 2015 even as the market absorbed over 1,700 new rooms since the beginning of 2016. With strong occupancy rates, the outlook for Lower Manhattan’s hotel market remains positive. By the end of 2018, Lower Manhattan’s hotel market is expected to grow to over 8,200 rooms -- an increase of 100 percent from just five years ago.

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Strong Residential Growth Continues Lower Manhattan’s Transition into a 24/7 Neighborhood

NYC Ferry Service Launces With Lower Manhattan as a Key Hub

Residential growth continued in 2017 with over 1,100 units added to the market and another 1,000 units expected to open by the end of this year. Lower Manhattan today is home to a thriving residential community with about 61,000 residents and about 31,800 residential units. Several high profile openings are expected in 2018, including the Woolworth Residences with 30 luxury condominium units atop the Woolworth Building, and One Seaport, a 60-story tower including another 80 condominium units. In addition, SL Green announced plans late in 2017 to build a mixed-income residential project at 183-187 Broadway, the first under the new Affordable New York program. Thirty percent of the project’s units are expected to be below market rate.

More than 90 percent of Lower Manhattan jobs are within a five minute walk or less of up to nine different subway lines, making the district one of the most accessible places to work and do business in the city. That extraordinary connectivity has only improved over the past year with investments in new transportation infrastructure and service. The NYC Ferry service launched with ridership exceeding expectation in 2017, connecting Pier 11 with booming waterfront communities across the city. The full network is expected to be operational by this summer. Lower Manhattan is the central hub of this popular new system with all six planned routes serving Pier 11. In 2017, three additional subway entrances opened in the World Trade Center Transportation Hub, another key anchor in Lower Manhattan.

Commuters can now access the E as well as the R/W from the Oculus and 4 World Trade Center. Improvements like these combined with Lower Manhattan’s robust infrastructure and dense business district provide commuters with unparalleled choice and access.

Photo Courtesy of NYC Ferry 2017

Lower Manhattan Real Estate Year in Review | 2017

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EMPLOYMENT & COMMERCIAL OFFICE MARKET Private Sector Employment Reaches Highest Level in 16 Years

one out of every five FIRE jobs in the city, other industries continue to expand their influence in Lower Manhattan. Since 2009, the number of FIRE sector jobs has hovered around 82,000 jobs. The industry has contracted from a 43 percent share to around 34 percent of total private sector employment, with other industries expanding and driving job growth.

Professional Services—a broad category which includes firms in consulting, accounting, advertising, public relations, law firms and more — and Healthcare are significant office space users in Lower Manhattan and comprise an increasing share of private sector

Above average commercial leasing in 2017 propelled private sector employment to its highest level in 16 years. Lower Manhattan reached 241,796 private sector employees in the second quarter, a significant milestone for the business district, according to the latest available data from the New York State Department of Labor. With this four percent year-over-year increase, Lower Manhattan’s private sector employment is at its highest point since September 11, 2001. Lower Manhattan generates about 6.5 percent of New York City’s overall private sector employment, a figure that has held steady since 2009.

The district’s nearly 242,000 private-sector jobs puts it on par with the entirety of Philadelphia Center City. This post-2001 peak reflects a 22 percent rate of growth from the market’s recession low in 2009, lagging slightly behind New York City’s 25 percent growth rate over the same period.

“Lower Manhattan is more vibrant, diverse, and connected than ever before, and Spotify’s expansion is the latest example of this community’s incredible potential for growth. New York is rapidly emerging as the nation’s leading hub for tech and innovation, creating more jobs and more opportunities and emerging as the epicenter of the 21st century economy. We are proud to welcome Spotify to 4 World Trade Center and to have the future of music be a part of the bright future of our dynamic tech community.”

The district’s economy is not only growing, it is increasingly diversified and offers jobs across sectors and skill levels. While Lower Manhattan is still home to a robust Financial Services, Insurance and Real Estate (FIRE) sector, accounting for nearly

- Andrew Cuomo, Governor of New York

LOWER MANHATTAN PRIVATE SECTOR EMPLOYMENT, 2001 - Q2 2017

Source: New York State Department of Labor, Q2 2017 is latest data available

11%

280,000 270,000 260,000 250,000

Peak Private Sector Employment since 9/11/01

9/11/2001

247,945

241,796

240,000 230,000 220,000 210,000

Recession Low

200,000

197,657 197,657 190,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2001

2002

2003

2004 2005

Lower Manhattan Real Estate Year in Review | 2017

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015 2016 2017

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employment. Professional Services now makes up 21 percent of private sector jobs, up from an 18 percent share in 2009 and Healthcare has risen to an 11 percent share over the same period.

RESIDENTIAL

CHANGES IN PRIVATE SECTOR EMPLOYMENT

BY INDUSTRY, Q3 2009 - Q2 2017 Source: New York State Department of Labor

Professional, Scientific and Technical Services 15,139

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Over the last year, Lower Manhattan gained a net 8,367 private sector jobs. The largest increases came from the Professional Services (4,218 jobs), Healthcare (3,207 jobs) and Hotel & Food Services (3,027 jobs) sectors. On the upswing in Lower Manhattan since the recession, these have been the strongest sectors for job growth. Since mid-2009, Healthcare employment is up 114 percent, more than four times the rate of growth seen citywide (25 percent). Hotel and Food Services was the second fastest growing sector (91 percent), while it grew 49 percent in New York City overall. Finally, Professional Services grew at 44 percent since the depth of the recession, outpacing the city’s 31 percent expansion in this sector.

Other bright spots includes growth in the Information industry, a part of Technology, Advertising, Media and Information (TAMI) sector, which is up 8 percent year-over-year and 18 percent from 2009 (NYC grew by 26 percent since 2009). Notably, employment in the retail sector is up 20 percent from the recession and 11 percent since the second quarter of 2016. While job losses in the retail sector are making headlines nationwide, Lower Manhattan’s expansion in retail employment can be attributed to significant addition of net new retail space to the market, including the more than 350,000 square feet and 300 stores that opened in Westfield World Trade Center in August 2016.

MAJOR PROJECTS UPDATE

Healthcare & Social Assistance 14,475 Accommodation & Food Service 7,228 Other Services 4,067 Educational Services 2,109 Information 1,739 Management of Companies 1,584 Retail Trade 1,314 Arts & Entertainment & Recreation 893 Construction 244 Transportation & Warehousing 29 Miscellaneous includes Wholesale Trade, Manufacturing, Utilities, Agriculture, Mining and Unclassified. Other Services includes personal services such as repair shops, laundries, hair salons, health clubs, etc. It also includes a variety of non-profits including unions, trade associations, foundations, religious organizations, political parties, etc.

FIRE (811) Miscellaneous (1,418) Administrative & Support (2,453) (5,000)

0

5,000

10,000

15,000

20,000

INDUSTRY COMPOSITION OF PRIVATE SECTOR EMPLOYMENT, Q2 2017 Source: New York State Department of Labor

LOWER MANHATTAN Educational Services 2%

Management of Companies

Construction Arts, Entertainment & Recreation 1% 1%

3%

Retail Trade 3%

Information 5%

Financial Services, Insurance & Real Estate (FIRE)

Administrative & Support 6%

34%

Accommodation & Food Service 6%

NEW YORK CITY Arts, Entertainment Transportation & Warehousing & Recreation 3% Construction 2% 4% Educational Financial Services Services, 5% Insurance Management & Real Estate of Companies (FIRE) 2% 12%

Retail Trade 9%

Information 5%

Other 7%

Healthcare & Social Assistance 11%

Professional, Scientific and Technical Services 21%

11%

Professional, Scientific and Technical Services

Healthcare & Social Assistance 19%

Administrative & Support 6%

Accommodation & Food Service

Other 12% Other 12%

10%

Lower Manhattan Real Estate Year in Review | 2017

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HEALTHCARE IS A KEY GROWING INDUSTRY IN LOWER MANHATTAN Healthcare has been the fastest growing employment sector in Lower Manhattan since 2009, growing by 114 percent. While healthcare occupies just 1 percent of leased office space in the district, the past several years have seen an increasing number of healthcare tenants relocating to office buildings in Lower Manhattan.

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Healthcare played an important role in the Lower Manhattan office market in 2017. The largest healthcare lease was inked by NYU Langone Medical Center, which renewed their 74,069-square-foot lease in 14 Wall Street in the fourth quarter. In the third quarter, Kofinas Fertility Clinic committed to relocate to 35,000 square feet in 65 Broadway and will be moving from Park Slope, Brooklyn. Also in the third quarter, Wellness Works, a coworking space focused on medical and wellness professionals, signed a lease for a 15,000-square-foot space in 115 Broadway and will offer short-term office solutions for service providers in the healthcare industry.

In 2016, Healthcare accounted for about 6.5 percent of all new leasing activity. In the third quarter of 2016, NewYork-Presbyterian Lower Manhattan Hospital expanded in Lower Manhattan by taking an additional 40,000 square feet in 156 William Street for a total building footprint of about 54,000 square feet. In 2013, William Macklowe and LaSalle Investment Management acquired the 252,000-square-foot building and repurposed it for medical offices. Today, the building is about 94 percent leased and other major tenants include a nonprofit focused on scientific research, a counseling center and doctors’ offices. In 2016 the Ronald Perelman and Claudia Cohen Center for Reproductive Medicine expanded in Lower Manhattan, taking 10,547 square feet in 255 Greenwich Street.

Other major healthcare anchors in Lower Manhattan include the New York City Health & Hospitals Corporation which occupies 256,000 square feet in 55 Water Street and Beth Israel Medical Center, located in a 107,000-square-foot office in 160 Water Street. Lower Manhattan is also home to five of New York area’s top 25 largest health care nonprofits (ranked by operating expenses according to Crain’s New York). They include the two largest: Catholic Medical Mission Board Inc., an international medical and developmental aid organization (located at 100 Wall Street), and Doctors without Borders, which moved into a 44,178-squarefoot commercial condominium in 40 Rector Street in 2017. Planned Parenthood, also ranks among the largest, after relocating to a 65,000-square-foot office in 123 William Street in early 2016 and executing one of 2015’s largest Lower Manhattan leases. JDRF International, a diabetes research charity, is located in 26 Broadway and Lifespire, an organization focused on providing services to individuals with developmental disabilities and their families in New York, is headquartered at 1 Whitehall Street.

Lower Manhattan Real Estate Year in Review | 2017

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Commercial Leasing Roars Back in 2017

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Spotify’s 481,000-square-foot lease at 4 World Trade Center (announced in the first quarter with a later expansion in the second quarter) was the largest new overall lease in 2017 (fifth largest new deal overall citywide) and the third largest TAMI relocation since Condé Nast’s deal in 2011. The digital music company’s decision to relocate and expand their NYC headquarters at the World Trade Center is transformative for this market and the district’s growing creative and technology community. With this lease, 4 World Trade Center became fully leased just a little over three years after opening its doors. Other significant TAMI announcements followed in 2017 making this industry the top sector in the Lower Manhattan market for the year.

TAMI accounted for 31.9 percent of all new activity this year, up from its 19.4 percent share in 2016, according to Jones Lang LaSalle.

2017 was a busy year for Lower Manhattan’s commercial office market as leasing jumped 63 percent over 2016’s volume, reflecting a welcome change after two years of belowaverage activity. Spotify’s first quarter announcement of its major relocation to the World Trade Center reinvigorated Lower Manhattan’s status as a location of choice for some of the world’s most exciting companies and kicked off what was the strongest quarter in nearly three years. Momentum continued throughout 2017 from other market-shaping creative companies announcing relocations to the district while Lower Manhattan’s existing key FIRE and government sector tenants continued to express confidence in the district’s future.

In another sign that the center of gravity for media publishing continues to shift south to Lower Manhattan, Macmillan Publishers completed the fourth largest new deal of 2017 in Lower Manhattan. The international publisher will relocate its headquarters from the historic Flatiron Building to 260,836 square feet in the landmarked Equitable Building at 120 Broadway. The publisher will join another Macmillan division,

Lower Manhattan logged an impressive 5.5 million square feet of new leasing activity in 2017, according to CBRE. The TAMI and Government sectors led the market, constituting nearly 60 percent of all new activity, nearly double their 33 percent share of activity in 2016. While activity slowed somewhat in the fourth quarter, total year-end activity was more than 20 percent higher than the ten-year average and marked the highest level since 2014.

Last year was boosted by the return of large deals from relocating brand-name tenants which joined the ranks of Lower Manhattan’s largest office occupiers. The year closed with eight new deals over 100,000 square feet (compared with only four deals of that size in 2016) with the majority coming from the TAMI (Technology, Advertising, Media and Information) and Government sectors.

5.5 MILLION SF Highest Leasing Activity since 2014

LOWER MANHATTAN ANNUAL NEW LEASING ACTIVITY, 2008 - 2017 Source: CBRE

8 Million 6.8 MSF

7 Million 5.9 MSF

6 Million 5 Million

2017 Leasing 20% Above 10-Year 5.5 MSF Average

5.7 MSF

4.6 MSF

4.5 MSF

4 Million 3.1 MSF

3 Million

2.9 MSF

3.4 MSF

3.3 MSF

2 Million 1 Million 0

2008

2009

2010

Lower Manhattan Real Estate Year in Review | 2017

2011

2012

2013

2014

2015

2016

2017

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LOWER MANHATTAN TOP LEASES, 2017

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

Location

1

Spotify

4 World Trade Center

481,263*

TAMI, Technology

2

RBC Capital Markets

200 Vesey Street

395,279

FIRE

3

New York State Attorney General

28 Liberty Street

342,484

Government

4

NYC Department of Investigation

180 Maiden Lane

5

Macmillan Publishers

120 Broadway

6

NYC Economic Development Corp. and Dept. of Small Business Services

1 Liberty Plaza

219,486

Government

7

AON Corporation

1 Liberty Plaza

201,931

FIRE

8

New York City Human Resources Administration

375 Pearl Street

193,281

Government

9

IP Soft

17 State Street

139,642

TAMI, Technology

10

Tullet Prebon

200 Vesey Street

11

Lewis Brisbois Bisgaard & Smith

12

Transaction Type Relocation Renewal

Moving Within LM

276,221

Expanding and Moving Within LM

260,836 Relocation Moving Within LM Moving Within LM Relocation Renewal & Expansion

128,974

Sector

Government TAMI, Media

Moving Within LM and Expanding

FIRE

77 Water Street

100,952

Professional Services, Law

New Avon

1 Liberty Plaza

91,116

Other, Manufacturing

13

Business Insider

1 Liberty Plaza

88,050

TAMI, Media

14

WeWork

115 Broadway

85,000

Professional Services, Other

Includes: SKDKnickerbocker, PMX Agency, Code and Theory, and Harris Insights

One World Trade Center

83,955

TAMI, Advertising

16

NYU Langone Medical Center

14 Wall Street

74,069

Healthcare

17

NYC Department of Sanitation

375 Pearl Street

72,180

Government

18

Tradition Energy

32 Old Slip

69,995

FIRE

19

Convene

101 Greenwich Street

58,487

Professional Services, Other

20

Momentum Worldwide

300 Vesey Street

58,000

TAMI, Advertising

22

National Urban League

80 Pine Street

57,245

Other, Organization

22

Integro Insurance Brokers

1 State Street

54,060

FIRE

23

Booking.com

28 Liberty Street

24

Sanctuary For Families

120 Broadway

50,734

Nonprofit

25

Rauxa

225 Liberty Street

50,578

TAMI, Marketing

15

*

SF Leased

Tenant Name

Stagwell Group.

Includes 378,243-square-foot deal signed in Q1 and 103,020-square-foot expansion signed in Q2.

Lower Manhattan Real Estate Year in Review | 2017

Renewal & Expansion Relocation Relocation New LM Location Relocation

Renewal

Relocation Renewal & Expansion New LM Location Relocation Moving Within LM Expansion

53,384

Moving Within LM and Expanding Moving Within LM Relocation

TAMI, Technology

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Macmillan Science and Education, which moved to One New York Plaza in 2015. After Macmillan Publishers moves in during 2019, Holtzbrinck Publishing, their parent company, will become one of the top 30 largest private sector tenants in Lower Manhattan. In 2018, there will be six TAMI companies among the top 30 largest private sector tenants in Lower Manhattan, with Spotify and GroupM joining the ranks.

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Lower Manhattan is Home to Advertising 55 Water Street Industry Giants

In 2018, Lower Manhattan will be home to offices for three of the top four largest advertising firms in the world.

These companies include Group M (opening offices in 3 World Trade Center in 2018), Momentum Worldwide (subsidiary of Interpublic Group, opening offices in 300 Vesey Street in May 2018) and OMD North America (subsidiary of Omnicom, located in 195 Broadway since 2012). Since 2008, more than 32 advertising tenants totaling over 1.33 million square feet of space have signed relocation deals in Lower Manhattan.

While large relocations were dominated by TAMI, the Government sector contributed significant new activity to the market from tenants moving within the Lower Manhattan area and in some cases expanding. In 2017, there were four major government sector leases topping 150,000 square feet. In the first quarter, the New York State Attorney General inked the second largest new deal in Lower Manhattan after completing its lease for 342,484 square feet in 28 Liberty Street, where they will be moving from 120 Broadway. The New York City Department of Investigation signed the third largest new deal of the year with a 276,000-square foot lease at 180 Maiden Lane, where they will be moving and expanding from other Lower Manhattan offices.

These government leases helped absorb space at two of the largest blocks in Lower Manhattan’s market. With these deals, 28 Liberty is now 73 percent leased, up from its 48 percent leased status at the end of 2016. 180 Maiden is now 75 percent leased as compared to 45 percent one year ago. In the fourth quarter,

“ In making the move Downtown, Macmillan joins a growing list of leading publishing, media and creative firms that have been attracted to Lower Manhattan for its vibrant mix of residences, open spaces, shopping, dining, cultural attractions and transit options.”

- Roger Silverstein, EVP of Silverstein Properties

LOWER MANHATTAN LEASING ACTIVITY BY QUARTER, Q4 2013 - Q4 2017 Source: CBRE

Q1 2017 was most active quarter since Q2 2014.

2 Million 1.8 Million

1.7 MSF

1.9 MSF

1.6 Million

Five-Year Quarterly Average: 1.3 MSF

1.4 Million 1.2 Million 1 Million

985K SF

800,000 600,000 483K SF

400,000 200,000

Q4 2013

Q1

Q2

Q3

Q4

2014

Lower Manhattan Real Estate Year in Review | 2017

Q1

Q2

Q3

2015

Q4

Q1

Q2

Q3

2016

Q4

Q1

Q2

Q3

Q4

2017

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two additional city agencies, the New York City Economic Development Corporation and Department of Small Business Services, signed a 219,486-square-foot lease at 1 Liberty Plaza, where over 649,000 square feet was leased just in 2017. The agencies will be relocating from their current 279,000-squarefoot headquarters at 110 William Street in 2019. Finally, the New York City Human Resources Administration signed a 216,000-square-foot lease in the second quarter at 375 Pearl Street and will be relocating from 250 Church Street.

2017 also enjoyed substantial new activity in the 40,000 to 100,000 square foot range, especially among TAMI tenants.

Among these leases:

•• IP Soft, a technology firm working on artificial intelligence, signed an expansion and renewal commitment at 17 State Street. The firm completed a deal for about 140,000 square feet and will grow their Lower Manhattan footprint by 40,000 square feet.

•• Business Insider, a business news site concentrated on financial, media, tech, and other industry verticals, announced its planned move to a new 88,000-square-foot headquarters in 1 Liberty Plaza in the second quarter. The New York City-based firm will be relocating from the Flatiron District.

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RELOCATIONS TO LOWER MANHATTAN

BY INDUSTRY, 2008 - 2017* Sources: Cushman & Wakefield, CoStar, Colliers International, CBRE and Downtown Alliance

Other Education

10%

Technology 8%

Marketing 3% Public Relations 1%

5%

Advertising 9%

Nonprofit

8%

Healthcare

3%

Government

TAMI 48%

2008 to 2017

1%

FIRE

Relocations to Lower Manhattan

by Industry

9%

Media

Professional Services 16%

27%

*

By square feet leased

•• In the third quarter, the Stagwell Group, an investment firm that owns digital marketing, communications, and advertising companies including SKDKnickerbocker, PMX Agency, and Code and Theory, signed a lease for a new 83,955-square-foot headquarters at One World Trade Center. At year-end, the tower reached 76 percent leased with 720,000 square feet available, largely concentrated on floors 64 through 88.

“ New York gives us access to the most diverse talent market in the world and we’re incredibly excited to build out our new space at 4 WTC.” - Horacio Gutierrez, General Counsel, Spotify

4 WORLD TRADE CENTER

Image Courtesy of Silverstein Properties, By Andrew Bordwin.

Lower Manhattan Real Estate Year in Review | 2017

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•• In the fourth quarter, Momentum Worldwide announced plans to relocate to 58,000 square feet in 300 Vesey Street from Hudson Square in May 2018. Momentum Worldwide, the Stagwell Group and GroupM will join an already impressive and diverse roster of advertising tenants located in Lower Manhattan including OMD North America, GroundTruth (formerly xAd), MediaMath, Barker DZP, Droga5, and many others.

•• Also in the fourth quarter, Booking.com, a travel accommodation website and part of Priceline.com, signed a lease for 53,384 square feet at 28 Liberty Street and will be moving and expanding from their current 8,044-square-foot office in 100 William Street.

Professional Services remained a strong sector in the market in 2017, accounting for about 18 percent of all new leasing, on par with 2016 levels. Coworking and shared office and event space providers, in particular, continued to be major players in the market with over 300,000 square feet of new deals inked including a WeWork lease signed at 115 Broadway in the third quarter (85,000 square feet). Specialization and corporate partnerships emerged as a strong trend in the coworking industry and among new Lower Manhattan locations in 2017. In the third quarter, Convene, operator of Condé Nast’s meeting and event venue at One World Trade Center, signed a lease for a flagship New York City location in 58,487 square feet at the recently repositioned 101 Greenwich Street (formerly 2 Rector Street).

Convene will be partnering with building owners, Cove Property Group and Bentall Kennedy, to offer a “full-service office building” to tenants by designing and managing a suite of amenities and hospitality services. In 2017, Lower Manhattan also gained a new office space provider, Knotel, which currently operates a total of 32 locations citywide. Knotel offers company sized workspaces and allows companies to design and brand their space. Knotel committed to 77,000 square feet across three locations in Lower Manhattan in 2017 including 23,429 square feet at 123 William Street and 27,000-square-foot locations at 40 Exchange Place and 1 State Street. Other specialized coworking spaces new to the scene include Wellness Works, a “medical coworking” space, which is designed to offer healthcare practitioners full and part-time office solutions. The provider signed a lease for a 15,000-square-foot space at 115 Broadway, which is now about 22 percent leased to coworking tenants.

In the fourth quarter, more major news was reported at the World Trade Center when McKinsey & Co. announced that it will be relocating from Midtown East to 3 World Trade Center. McKinsey is the top management consulting firm in the world by revenue and part of the “Big Three” which also includes Boston Consulting Group and Bain & Company. Of the three, McKinsey has the largest presence in New York City and is expected to take about

Lower Manhattan Real Estate Year in Review | 2017

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MAJOR PROJECTS UPDATE

NEW LEASING ACTIVITY BY INDUSTRY IN LOWER MANHATTAN, 2016 vs. 2017* Source: Jones Lang LaSalle

Apparel & Other Services Retail Trade Education, Healthcare 3.9% 1.0% 3.7% & Nonprofit

Professional Services 18.1%

2017

TAMI

31.9%

New Leasing Activity by Industry

FIRE

14.5% Government

27.0%

Education, Healthcare & Nonprofit 18.8%

Apparel & Trade Other Services Retail 2.1% 2.3%

19.4%

2016

New Leasing Activity by Industry

FIRE

26.1%

*

TAMI

By square feet leased

Government

13.8%

Professional Services

17.5%

200,000 square feet on floors 60 to 64. With this lease, McKinsey will also move its largest global office (by number of employees) to 3 World Trade Center and become the first major management consultant in Lower Manhattan, after being located in Midtown East since 1998. If the deal closes, 3 World Trade Center will be 36 percent leased to two anchor tenants when it opens in June 2018.

In 2017, the FIRE sector slowed from 2016 levels of new activity but still posted the largest annual renewal for the second year running. In the first quarter, RBC Capital Markets, a global investment bank, headquartered at 200 Vesey Street since 2008, signed the largest renewal in Lower Manhattan in 2017 and the third largest financial sector renewal citywide. The Canadianbased firm will occupy 395,279 square feet at Brookfield Place through 2032. RBC Capital Markets is one of Lower Manhattan’s largest FIRE sector tenants ranking behind Moody’s Corporation and EmblemHealth.

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LOWER MANHATTAN’S 30 LARGEST PRIVATE SECTOR TENANTS IN 2018PRIC 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

Goldman Sachs Deutsche Bank American Express Company Condé Nast Morgan Stanley Bank of America Corporation American International Group (AIG) McGraw-Hill JPMorgan Chase & Co. Bank of New York Mellon WeWork Citigroup Inc. Moody’s Corporation GroupM, (Including: Mindshare, MEC, MediaCom, Maxus & ESP)* Meredith Corporation (now owner of Time Inc.) Sullivan & Cromwell Verizon Communications, Inc. EmblemHealth Royal Bank of Canada Cleary Gottlieb Spotify* Cadwalader, Wickersham & Taft LLP Hudson’s Bay Company Fried, Frank, Harris, Shriver & Jacobson LLP United Federation of Teachers City University of New York (CUNY) Jones Day Omnicom Group, Inc. Brown Brothers Harriman & Co. R.R. Donnelley & Sons Company

2,100,000 1,530,500 1,349,051 1,268,132 1,253,529 1,234,752 1,184,378 1,151,111 980,011 970,000 906,789 895,433 866,882

FIRE FIRE FIRE TAMI, Media FIRE FIRE FIRE FIRE FIRE FIRE Professional Services, Coworking FIRE FIRE

702,843

TAMI, Advertising

701,647 634,108 560,030 533,880 520,961 501,413 481,839 431,675 405,091 378,960 365,203 354,070 330,210 325,136 316,317 310,683

TAMI, Media Professional Services, Law TAMI, Technology FIRE FIRE Professional Services, Law TAMI, Technology Professional Services, Law Retail Trade Professional Services, Law Other Education Professional Services, Law TAMI, Advertising FIRE Other *

New to the list for 2018

LOWER MANHATTAN’S FIVE LARGEST PUBLIC SECTOR TENANTS IN 2018 1 2 3 4 5

Tenant Name

SF Occupied

City of New York New York State Government United States Federal Government Metropolitan Transportation Authority Port Authority of New York & New Jersey

7,810,749 2,283,914 2,028,867 1,474,981 807,042

Source: Downtown Alliance, CBRE, CoStar

Lower Manhattan Real Estate Year in Review | 2017

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Lower Manhattan is the Sole Manhattan Submarket to Tighten Year-over-Year Over the course of 2017, strong leasing helped drive down the overall vacancy rate to the lowest level since the first quarter of 2013. Lower Manhattan was the only Manhattan submarket to post an overall decline in its vacancy rate in 2017. The district’s overall vacancy rate is currently 8.7 percent, according to Cushman & Wakefield, and has held steady from last quarter. A robust leasing market helped Lower Manhattan drop to the 14th lowest year-end vacancy rate among central business districts nationwide.

World Trade Center Hits New Leasing Milestones In 2017, significant leasing activity at the World Trade Center helped drop the district’s overall Class A vacancy rate. Four World Trade Center is now fully leased after 20 percent of the building was leased to Spotify during the course of 2017. One World Trade Center is now 76 percent leased after completing 195,647 square feet of deals across 14 tenants in 2017. Finally, 3 World Trade Center announced its first new lease since GroupM expanded in December 2015. McKinsey is expected to sign a lease which will bring the tower to 36 percent leased.

Overall, Lower Manhattan’s vacancy rate is down 1.5 percentage points from the end of 2016, helped largely by an impressive drop in the Class A vacancy rate. Strong Class A market leasing drove this class’s vacancy rate down 3.1 percentage points over the year to 9.5 percent -- its lowest level since before One and 4 World Trade Center opened. Brisk leasing at Brookfield Place, 4 World Trade Center, One World Trade Center and 1 Liberty Plaza helped drive down the vacancy rate in the World Trade Class A submarket from 15.7 percent to 10.9 percent.

OVERALL VACANCY RATES BY MANHATTAN SUBMARKET, 2013 - 2017 Source: Cushman & Wakefield

13% 12% 11%

10.1%

10%

9.5%

9% 8% 7%

8.7%

Lowest Lower Manhattan Vacancy Rate since Q1 2013

8%

6.9%

6.9%

6% 5%

Q1

Q2

Q3

2013

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

2014

2015

2016

Lower Manhattan

Midtown

Midtown South

Lower Manhattan Real Estate Year in Review | 2017

Q4

Q1

Q2

Q3

Q4

2017

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Other Manhattan submarkets trended differently. Midtown’s overall vacancy rate hovered around 10 percent during 2017, ending the year at 9.5 percent. Midtown South’s vacancy rate is up slightly from the end of 2016 to 6.9 percent. In Midtown, the Class A vacancy rate remained stable at or just below 10 percent throughout 2017.

Available Class A space in Midtown South continues to be scarce and the vacancy rate remains among the lowest in the country.

However, significant sublease space pushed the figure up slightly year-over-year to 4.7 percent.

14

th Lowest Vacancy Rate

One Liberty Plaza 55 Water Street

Inks Over 649,000 SF of Deals in 2017 Thanks to robust leasing at properties like 1 Liberty Plaza, 4 World Trade Center and Brookfield Place, the Class A Submarket q1rate 13in the to World q4 Trade Center submarket dropped vacancy 4.8 percentage points in 2017. The Class A vacancy rate in this Lower Manhattan submarket is now 10.9 percent.

among CBD’s Nationwide Overall Vacancy By

VACANCY RATES IN LOWER MANHATTAN BY CLASS, 2013 - 2017 Source: Cushman & Wakefield

16% Lowest Class A

9.5% vacancy rate in

14%

over 4 years

12%

9.5%

10% 8.9% 8%

8.1% 7.6% 7.1%

6% 4.8% 4%

Q1

Q2

Q3

2013

Q4

Q1

Q2

Q3

Q4

2014

Q2

Q3

Q4

Q1

2015 Class A

Lower Manhattan Real Estate Year in Review | 2017

Q1

Class B

Q2

Q3

2016

Q4

Q1

Q2

Q3

Q4

2017

Class C

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Class B Asking Rents Reach New Heights

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Overall Average Asking Rents

Reflecting the strength of leasing, Lower Manhattan’s average overall asking rent inched up for the third consecutive quarter to $60.20, according to data from Cushman & Wakefield. This marks the first time the average has exceeded $60 per square foot in the history of this submarket. This is largely driven by record asking rents achieved in the Class B market, especially in renovated and repositioned buildings.

$60.20 Midtown South $68.90 Midtown $76.90

Lower Manhattan

The average asking Class B rent is now up a dramatic 11.4 percent from the end of 2016 and an even greater 41 percent from the end of 2014. The recent repositioning of several Class B properties drove this increase. In the fourth quarter alone, the average Class B asking rent rose 5.7 percentage points due to the addition of higher priced space at the recently renovated 101 Greenwich Street (formerly 2 Rector Street). Asking rents at the 476,000-square-foot Class B building range from $68 to $75 per square foot. There is currently about 2.1 million square feet of Class B space on the market, making up 27 percent of all available space in Lower Manhattan.

Lower Manhattan Class A Rents

26% Below Midtown South 25% Below Midtown

LOWER MANHATTAN ASKING RENTS BY CLASS, Q4 2013 - Q4 2017 Source: Cushman & Wakefield

$65

$62.80

$60

Highest Class B Asking Rent in Market’s History $56.20

$55 $53.20 $50

$48.30

$45

$40 $36.60 $35

$30

$35

Q4 2013

Q1

Q2

Q3

Q4

Q1

2014

Q2

Q4

2015 Class A

Lower Manhattan Real Estate Year in Review | 2017

Q3

Q1

Q2

Q3

2016 Class B

Q4

Q1

Q2

Q3

Q4

2017

Class C

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Class B rents in other submarkets are trending differently.

Rents in available Class B Midtown South product are down 6.1 percent year-over-year, after decreasing for the fourth consecutive quarter, to just under $66 per square foot. In Midtown, Class B rents have hovered around $60 per square foot for at least two years.

The average Lower Manhattan Class A rent has held stable over last quarter at $62.80 and has lingered around $62 for the last 12 quarters, even as higher priced space at the World Trade Center has been leased over this period. In both Midtown and Midtown South, the Class A average asking rent hovered close to $84 for the second consecutive quarter. In Midtown South, Class A rents have trended down by about 4.1 percent from last year due to the lease-up of higher priced space. At the same time, Midtown’s Class A average has remained stable.

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With these changes, Lower Manhattan’s pricing advantage for available Class B space has narrowed significantly compared to to other Manhattan options, while Class A space has maintained its pricing advantage over the past year. Class B space in Lower Manhattan offers a 5 percent discount relative to Midtown, down from a 16 percent discount one year ago. The pricing advantage for Lower Manhattan Class B space as compared to Midtown South has been cut nearly in half; Lower Manhattan Class B rents are about 14.7 percent lower than Midtown South as compared to about 28 percent at the end of 2016. Lower Manhattan Class A rents continue to be about 25 percent lower than average asking rents in Midtown and Midtown South.

101 Greenwich is Lower Manhattan’s Latest Repositioned Property Cove Property Group, a privately owned real estate company and Bentall Kennedy, a global real estate investment manager, recently completed a major repositioning of 101 Greenwich Street. Formerly known as 2 Rector Street, the building was owned by CIM Group and the Kushner Companies until early 2016.

In the third quarter, Convene, signed the first lease in the repositioned building and will take 58,487 square feet. The tenant will also be a partner in the building’s management, offering tenants a suite of amenities and hospitality services, including on-demand meeting space as well as community programming and more. Building owners are marketing the property as the first ‘lifestyle’ office building. 101 Greenwich is currently marketing space in the $68 to $75 per square foot range.

101 Greenwich Street is the latest in a string of Class B repositionings that are pushing up the average Class B rent and demonstrating the market’s confidence in the viability of Lower Manhattan’s older commercial properties. Other recent repositionings include 40 Exchange Place, 44 Wall Street and 30 Broad Street, where asking rents have all been above average. 80 Broad Street, a 423,000-square-foot tower, received an investment from Invesco in the fourth quarter. In a joint venture with Broad Street Development, significant capital improvements including lobby renovations and new amenity spaces are planned.

Lower Manhattan Real Estate Year in Review | 2017

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Office Building Sales Dominate Investment Sales Market in 2017

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INVESTMENT SALES VOLUME ($) BY PROPERTY TYPE Source: Newmark Knight Frank, Closed transactions only

Retail Condo

The overall Lower Manhattan investment sales market slowed in 2017 from the prior year, which mirrored citywide trends.

Sales volume totalled $2.9 billion, based on closed transactions provided by Newmark Knight Frank. This represented a 20 percent decrease in volume year-over-year. Bright spots included the office market, where activity was up over 2016 levels, totaling about $2.1 billion in sales.

Mixed -Use 2%

1%

Retail 1%

Hotel 6%

Residential

Office Building Sales

15%

In 2017, investment activity in office buildings was up 33 percent from 2016 and made up more than 71 percent of the total property sales volume south of Chambers Street. Six office buildings changed hands in 2017, ranging from Class A to C properties. Among these transactions (listed in descending order by purchase price):

Office Condo 3%

$2.9 Billion Investment Sales Volume Office 72%

•• The year’s largest transaction took place in the first quarter when GIC, a Singaporean sovereign wealth fund purchased a 95 percent stake in 60 Wall Street, a 1.6 million square foot Class A property, from Paramount Group, a New York City-based publicly owned real estate company, and Morgan Stanley for $988 million. Based on this transaction, the building is now valued at about $1.1 billion or approximately $645 per square foot. Deutsche Bank, currently headquartered at the property leases the building under a 2007 sale-leaseback deal with Paramount Group and Morgan Stanley. The bank is currently evaluating relocation options within Manhattan and is expected to make a decision in 2018.

•• In the second quarter, Callahan Capital Partners, a U.S. based private equity firm, and Ivanhoé Cambridge, a Canadian real estate company, acquired 85 Broad Street, a 1.1 million square foot Class A property, for $652 million or about $580 per square foot from Beacon Capital and MetLife. Major tenants include Vox Media, the Nielsen Company and WeWork. MetLife purchased the property in 1985, two years after completion, for $74.4 million. In 2014, Beacon Capital bought the majority stake in the property from MetLife, when it was last valued at $350 million or about $313 per square foot.

33%

Office Sales Volume Up Year-Over-Year

Lower Manhattan Real Estate Year in Review | 2017

Office 43%

80 Broad Street

Land - Fee Interest 3%

Mix Use Res

Hotel

Invesco purchased the majority stake in 80 Broad 8% Street, a 423,000-square-foot Class B office building, for $223 million in the fourth quarter andCondo plans significant Retail improvements to the property. This1% is the latest in a string of investments in Class BStudent office buildings Housing in Lower Manhattan. In the last two years, five5% Class B office buildings, including 2 Rector Street (now 101 Greenwich Street), 30 Broad Street, 44 Wall Street and 80-90 Maiden Lane, have changed hands in Lower Manhattan totaling over $816 Million in investment activity. All have been repositioned (or are in process) as updated commercial office buildings.

21%

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•• In the fourth quarter, Invesco, an Atlanta-based investment management firm, purchased a 95 percent interest in 80 Broad Street, a 423,000-square-foot Class B office building, for $223 million or about $555 per square foot from Broad Street Development, RXR Realty and Colony Capital. Broad Street Development will retain an interest in the building and is planning a repositioning and capital improvements. Broad Street Development is a longtime Lower Manhattan office investor and previously owned 61 Broadway and 55 Broadway. The largest tenant at 80 Broad Street is Regus, followed by the Robert Allen Group, a home furnishings and fabric design company.

•• Several transactions at 80-90 Maiden Lane reshaped ownership at the 544,654-square-foot, Class B office building over the course of 2017. In 2017, Meadow Partners, a private investor based in New York and London, purchased a 30 percent stake in 80-90 Maiden Lane from Normandy Real Estate Partners for $87.9 million or $538 per square foot. In August, Normandy Real Estate Partners purchased a 19 percent stake from Read Property Group, a Brooklyn-based developer, for $54.1 million. The property was last traded in 2014 when Normandy Real Estate Partners and Kushner Companies announced the purchase of a 50 percent stake in 80 and 90 Maiden Lane from The Chetrit Group for $105 million (or approximately $385 per square foot). Currently, 80 Maiden Lane has about 11,200 square feet of retail available for lease, formerly occupied

by Duane Reade and Jersey Mike’s Sub Shop. Gristedes currently occupies about 5,500 square feet on the ground floor at 90 Maiden Lane, but a search for a subtenant is underway.

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Office Condominium Sales Two office condominiums closed in the fourth quarter. They include:

•• TH Real Estate, part of TIAA Global Asset Management, closed on a 114,000-square-foot commercial condominium at the base of 86 Chambers Street for $67 million or $582 per square foot. The condominium includes a 7,000-squarefoot retail space currently leased to Chase Bank and about 72,258 square feet currently leased to the United States Attorney General’s office.

•• The United Cerebral Palsy Association, a health nonprofit,

purchased a 21,752-square-foot office condominium at 40 Rector Street for $21.8 million or about $1,000 per square foot.

•• In the first quarter of 2017, a partnership between Paramount Group and Savanna, a real estate private equity firm, closed on a minority stake in 55 Broadway, a 346,000-square-foot Class A tower, for $53.8 million from Harbor Group International. The property is now valued at $215 million or about $600 per square foot. Savanna has been an active Lower Manhattan office investor, making investments in at least five other properties over the past decade including 2 Rector Street, 5 Hanover Square, 100 Wall Street, 80 Broad Street and 110 William Street. Harbor Group International purchased 55 Broadway in 2014 for $157 million at a valuation of approximately $453 per square foot.

•• In the third quarter, Greenroad Capital purchased 27 Cliff Street, a 21,519-square-foot Class C office building located just south of Fulton Street for $12.5 million or about $581 per square foot. It is adjacent to The Exhibit, a recently completed 120-unit rental building.

Lower Manhattan Real Estate Year in Review | 2017

180 Water Street MetroLoft purchased the majority stake in 180 Water Street in a deal that valued the property at $405 million or about $785,340 per residential unit. 180 Water Street, a 565-unit residential conversion, opened in 2017. It is the largest office-to-residential conversion completed since 70 Pine Street and its 612 units opened in 2016.

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Multifamily Building Sales

Retail Condominium Sales

Two residential buildings traded in Lower Manhattan in 2017 totaling over $430 million in sales volume. These transactions include:

Three retail condominiums traded in 2017 for a total volume of $29 million, down from 2016’s $46 million in sales volume.

•• In the fourth quarter, Metro Loft purchased the majority stake in 180 Water Street, a recently completed 565-unit rental conversion, from its development partner, Vanbarton Group, for $405 million or about $785,340 per residential unit. This transaction values the property at about $450 million. By contrast, 63/67 Wall Street, adjoining rental buildings with a combined 810 units, closed for about $545,000 per unit in the third quarter of 2016.

•• W Brothers Realty, a family owned real estate company, purchased a 32,843-square-foot residential condominium containing 42 rental units at 66 Pearl Street (1 Coenties Slip) for $26.8 million in the second quarter from the Northwind Group. The deal valued the rental apartments at about $637,000 per unit. The 12,190-square-foot retail condominium at the base of the building was purchased in 2016 by the Gindi Family, owners of Century 21, for $19 million or $1,559 per square foot, from the Northwind Group.

Hotel Sales Two hotels traded in Lower Manhattan in 2017 totaling about $167 million in activity.

•• In the first quarter, Sam Chang, owner of the McSam Hotel Group, purchased the 289-key Club Quarters Wall Street at 52 William Street from Rockwood Capital for $95 million or $328,720 per key. Chang developed the 50-story, 492-key Holiday Inn Manhattan - Financial District at 99 Washington Street, which opened in 2014.

•• In the fourth quarter, a partnership between Shorewood Realty, the Prodigy Network, Korman Communities and the Vanbarton Group, closed on the 100-key Smyth Hotel located at the corner of Chambers Street and West Broadway for $72.2 million. This purchase values the property at $722,260 per key. Prodigy Network and Shorewood Realty are currently working on redeveloping 17 John Street as “The Assemblage,” an 81-unit extended stay hotel expected to be complete later this year. Prodigy Network and Shorewood Realty have also worked with Korman Communities to convert 84 William Street to the AKA Wall Street, a 140-unit extended stay property.

Lower Manhattan Real Estate Year in Review | 2017

•• In the first quarter, HUBB NYC purchased a 6,290-squarefoot retail condominium at the base of The Croft, a 71-unit luxury condominium building at 71 Nassau Street, from a partnership between Yair Levy and the Kash Group. The previous owners completed a conversion of the former office building to luxury residential condominiums in 2005.

The $19.5 million purchase valued the retail space at $3,108 per square foot. The retail condominium is fully occupied with 12 separate tenants, including four quick service eateries. In 2016, HUBB NYC also purchased a Courtesy of CoStar 4,211-square foot retail condominium in 37 Warren Street for $2,660 per square foot.

•• In the third quarter, Black Horse Capital, purchased the 4,400 square foot ground floor retail condominium at 105 Nassau Street, a nine-unit residential condominium building, for $5 million or $1,125 per square foot. The property was previously occupied by two retail tenants, Penguini Fashion and the African American Art Gallery.

•• Ariel Aber purchased a 6,392-square foot retail condominium from Rugby Realty at the base of 56 Pine Street, a 90-unit condominium building for $4.5 million in the first quarter. The retail space was valued at $696 per square foot in the transaction. Currently, the property is vacant but was previously occupied by ISE, a Japanese restaurant. The property was last purchased in 2012 for $3.5 million.

Retail Building Sales •• The Gindi family purchased 173 Broadway, a two-story, 5,000-square-foot retail building at the corner of Broadway and Cortlandt Street in the fourth quarter for $38.6 million.

The property is adjacent to two Century 21 properties and combined would offer 106,000 square feet of development potential on the corner site. On the same block, SL Green Realty plans to build a new mixed-income residential rental tower at 183-187 Broadway with an expected completion date in 2020.

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Mixed-Use Building Sales Four mixed-use buildings traded, accounting for $69.7 million of sales volume in 2017 overall. Among these transactions:

•• In the second quarter, Cape Advisors sold 57 and 59 Murray Street, two adjacent mixed use buildings totaling 9,550 square feet, to Barry Lipsitz for $25 million or about $2,600 per square foot. Cape Advisors still owns the adjacent four properties and had filed plans to build an eight-story, 21-unit condominium building for the full site in April 2016. Future or potential development plans for the site are currently to be determined.

•• Also in the second quarter, Andrea Woodner, the founder of NYC’s Design Trust for Public Space, purchased 23 Park Place, a 21,840-square-foot mixed use building, for $15 million from Rossrock Fund who foreclosed on the property in 2011. The landmarked building, which was the 1920’s headquarters of the New York Daily News, now includes five residential units and a 8,975-square-foot retail space. The retail tenant is Barleycorn Craft Bar & Grill, an American gastropub, which opened in 2015.

Lower Manhattan Real Estate Year in Review | 2017

•• Castellan Real Estate Partners, purchased 90 Chambers Street, a 8,885-square-foot mixed use building, for $10.7 million or about $1,200 per square foot from Claude Castro in the second quarter. The building includes 2,175 square feet of retail, where the current tenant is Kaede Sushi, and five residential units.

•• In the first quarter, an unknown LLC purchased 165 William Street, a 31,000-square-foot building including 12 residential rental units and 2,500 square feet of retail, for $19 million or $611 per square foot from Princeton Holdings and the Bluestone Group. It was last purchased for $21.5 million in 2014.

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RETAIL MARKET Lower Manhattan has emerged as a major shopping and dining destination spurred by a growing and affluent residential base, a rapidly diversifying office tenancy, strong tourism and ongoing investments in new infrastructure. 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.

Expansion of Restaurants at All Price Points At the end of 2017, the district had 1,180 stores and restaurants. A total of 111 new stores and restaurants opened in Lower Manhattan in 2017. 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. Over sixty full-service dining restaurants, casual eateries and nightlife spots across a variety of cuisines and price points opened this year, including Kesté, Hole in the Wall, Latin Social, Treadwell Park, Clinton Hall, Wooly Public, Vin Sur Vingt, Tomorrow and Van Leeuwen.

Several signature restaurants opened in 2017 joining the surging number of culinary talents that have come to Lower Manhattan in recent years, including:

• • • •

Photo by Stephanie Hildebrand

Nobu relocated from Tribeca to the landmarked lobby at 195 Broadway.

amed Japanese restaurant, Nobu, relocated from Tribeca to F the landmarked lobby of 195 Broadway; Del Frisco’s Grille debuted at 250 Vesey Street in Brookfield Place; Blue Ribbon Federal Grill opened in the new AKA Wall Street hotel at 84 William Street; and The once-sleepy area at the end of Wall Street welcomed Westville, Milk Bar and Fuku, all at 110 Wall Street. A subterranean speakeasy and nightclub, The Mailroom, also opened at 110 Wall Street.

Over the course of the next year, many more restaurants will open in Lower Manhattan: Sant Ambroeus at Brookfield Place; concepts by celebrated chefs Jean-Georges Vongerichten and David Chang on Pier 17 in the Seaport District; and a Danny Meyer restaurant and event space on the 60th-floor penthouse of 28 Liberty Street.

Lower Manhattan Real Estate Year in Review|2017

Photo by Robert McKinley

The Mailroom, a bar & nightclub owned by the team behind Montauk’s Surf Lodge, opened at 110 Wall Street.

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Grocery Stores, National Brands & Entertainment Venues Commit to Lower Manhattan The growing residential population and the district’s increasingly diverse office mix are helping diversify the food markets serving the district.

In addition to the recent arrivals of Eataly and Le District, City Acres Market opened a 13,000-square-foot grocery store at 70 Pine Street (facing Pearl Street), complete with outposts from Artichoke Pizza, Cinnamon Snail, Vanessa’s Dumplings, Juice Brothers and Beyond Sushi. Construction continues at the One Wall Street residential conversion, where Whole Foods will open a 44,000-square-foot grocery store. The grocer expects to open in late 2019/early 2020.

Courtesy of The Wooly

The Wooly Public, a restaurant and cocktail bar, opened in the Woolworth Building at 11 Barclay Street.

Large brand-name stores continue to open throughout the district, providing shopping at all price points. Anthropologie unveiled its 20,000-square-foot store in the landmarked lobby at 195 Broadway, while Marshalls opened a 68,000-square-foot location in the lower levels of 140 West Street (facing Washington Street). Additionally, Alamo Drafthouse announced it will open a ten-screen, 40,000-square-foot movie theater in the lower levels of 28 Liberty Street. The 600-seat multiplex is set to open in early 2019 and will expand entertainment options for Lower Manhattan residents and workers alike.

Retail Anchors March Onward Westfield World Trade Center had an active 2017 coming off the heels

Courtesy of City Acres Market

City Acres Market opened a full-service grocery store and food hall at 70 Pine Street.

Courtesy of Blue Ribbon Federal Grill

Blue Ribbon Federal Gril opened in the AKA Wall Street at 84 William Street.

Lower Manhattan Real Estate Year in Review| 2017

of its opening in August 2016 in Santiago Calatrava’s Oculus and at the base of 3 and 4 World Trade Centers.

• Several notable shops and cafes joined the existing offerings, including: FordHub, Havaianas, Crabtree & Evelyn, Solstice, Philosophy, UGG, Casper, Neuhaus, Wasabi Sushi & Bento, Blue Bottle Coffee, Nobletree, T2 and Joe Coffee. In addition, Westfield welcomed the return of the Greenmarket to the Oculus plaza - which left the World Trade Center site after 9/11.

• On the horizon, Breads Bakery, Nunu Chocolates and grocer Market Lane are expected to open soon at the base of 4 World Trade Center.

Further along the horizon, London steakhouse Hawksmoor and Daniel Humm’s Made Nice will open in 3 World Trade Center.

• In December 2017, Unibail-Rodamco, Europe’s largest retail landlord, agreed to buy Westfield Corporation for $15.8 billion, creating the largest shopping center operator in the world. Nationwide, the retail sector has struggled with changing consumer behavior and intense competition from online retailers. This consolidation reflects a desire to concentrate, diversify and innovate in the world’s most attractive retail markets and wealthiest catchment areas.

Several notable retailers joined the shopping and dining offerings at Brookfield Place, including Allen Edmonds, Oliver Peoples, UNTUCKit, Suit Supply, SUISTUDIO, Rhone, Peloton, a Louis Vuitton pop-up and a dedicated Saks Fifth Avenue Men’s department store. Del Frisco’s Grille opened in the summer along Vesey Street, Fuku opened in Hudson Eats in January and will be joined later this year by Sant Ambroeus along West Street.

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The Seaport District had an active 2017, with a number of openings, community initiatives, public programs, and announcements setting the stage for what the future of the District will look like when Pier 17 debuts this summer. The Howard Hughes Corporation is finalizing work on Pier 17, which will feature a one-and-a-half-acre rooftop entertainment space.

The new pier and revitalized historic area will provide more than 400,000 square feet of retail, dining, entertainment and commercial office space.

•

•

•

•

T hroughout 2017, The Howard Hughes Corporation continued to activate the historic Seaport with innovative programming and events, including the Seaport Food Lab and the Garden Bar. Scotch & Soda, Clinton Hall Seaport and Mr. Cannon, a speakeasy, all debuted along the cobblestones of Fulton Street. McNally Jackson Books, DITA Eyewear, Fellow Barber and by Chloe, a fast-casual vegan restaurant, will open in the coming months. Milan-based 10 Corso Como is building out its experiential store in Fulton Market Building, anticipating to open this fall.

ESPN announced it will open a 19,000-square-foot television, radio and digital studio on Pier 17 in spring 2018. Pier 17’s third and fourth floors will encompass roughly 150,000 square feet of office space.

Jean-Georges Vongerichten will be the culinary anchor within the Seaport District with a 10,000-square-foot restaurant in the newly opened Pier 17. Joining Jean-Georges on the pier is David Chang’s Momofuku. Both are scheduled to open in summer and fall 2018, respectively. In late 2019, Jean-Georges will also open a 40,000-square-foot fresh food marketplace inside the Tin Building which will undergo reconstruction.

RESIDENTIAL

MAJOR PROJECTS UPDATE

Positive Outlier on Retail Rents While the overall Manhattan retail leasing market saw softening ground floor average asking rents, Lower Manhattan remained a positive outlier. Average asking rents for ground floor retail along lower Broadway (Battery Park to Chambers Street) increased slightly (up two percent) over the past year to an average of $374 per square foot, according to the Real Estate Board of New York (REBNY). Historically, Lower Manhattan retail rents have been affordable compared to areas in Times Square and along Fifth and Madison avenues where ground floor retail can range from $1,300 to nearly $4,000 per square foot. In recent years, Lower Manhattan has benefited from strong demand drivers and the arrival of several new retail projects, allowing retail rents to remain better insulated than traditional high streets further uptown.

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

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

The Howard Hughes Corporation is finalizing work on Pier 17, which will feature a oneand-a-half-acre rooftop entertainment space.

The Seaport District, which includes the new pier and revitalized historic area, will provide roughly 400,000 square feet of retail, dining, entertainment and commercial office space.

Tenants, including Jean-Georges Vongerichten, David Chang, ESPN Studios, McNally Jackson and 10 Corso Como, will have anticipated openings throughout the upcoming summer and fall of 2018.

Lower Manhattan Real Estate Year in Review| 2017

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Lower Manhattan Adapts to a Changing Retail Market The growth in online shopping and changing consumer spending patterns over the last several years has clouded the future of traditional brick-and-mortar retailers. While the struggles of some prominent national retailers and mall operators have been well documented, New York City and Lower Manhattan, in particular, are well poised to weather these changes. The strengths lie in having a dynamic neighborhood with strong population growth, robust and diverse employment, a growing tourism market and excellent connectivity to booming residential areas in Manhattan, Brooklyn and the New Jersey waterfront.

Lower Manhattan’s landlords and retailers are proving adept at offering innovative solutions to adapt to the changing realities of retail. Westfield World Trade Center, Brookfield Place and the Seaport District, among others, are creating compelling events to drive traffic to stores, increasing food, beverage and entertainment outlets and offering unique short and long-term leasing opportunities to innovative retailers. Some of the innovations adopted by retailers and landlords in the district to respond to the rapidly shifting retail landscape include:

Daybreaker, an early morning dance party, held at Westfield World Trade Center this past summer

Photo by AJRphotography

Lower Manhattan Real Estate Year in Review| 2017

•

Unique Public Events - Westfield has been rolling out brand activations and live music, while Arts Brookfield has a strong track record in creating unique draws to its center. The Seaport District has partnered with established New York City cultural institutions to diversify programming, as well as with LiveNation to run future events on Pier 17;

•

Expanded Food and Entertainment Offerings - Where department stores once were the staple anchors of retail projects, new anchors have emerged. Eataly in the World Trade Center and iPic Theaters in the Seaport draw locals and visitors at all days and hours of the week;

•

Experiential Stores/Pop-Ups - In an effort to drive sales and build customer engagement for their brands, internet-only retailers and traditional brick-and-mortar retailers, like Bonobos, Peloton, FordHub, Casper and Louis Vuitton, have opened permanent and shortterm physical locations across Lower Manhattan. Longtime Lower Manhattan discount retailer Century21 unveiled Next Century, a concept store highlighting unique designers;

•

Emerging Brands - Strong demand drivers have been appealing for international retailers relatively new to the American market, like SUISTUDIO, COS, Scotch & Soda and 10 Corso Como, which are located at each retail project;

•

Growth in Discount Retailers - Marshalls opened a large store in an underutilized lower level space, which followed Target’s entry into the local market in 2016;

•

Increased Customer Service - World Trade Center and Brookfield Place both offer in-house concierge services, ranging from foreign language assistance, dinner reservations and exclusive shopping events;

•

Incubator Initiatives - Brookfield Place partnered with Appear Here, an incubator initiative that connects landlords and retailers in search of short-term leases, to activate its public spaces with emerging brands. Seaport Studios was developed with Women’s Wear Daily to highlight emerging fashion brands; and

•

Recalibrated and Sweetened Lease Terms - Lower Manhattan has historically had lower retail rents compared to traditional high streets further uptown in Manhattan, but landlords are adapting by offering tenant improvements, allowances and periods of free rent. Leasing strategies are now also being informed with retail as a building amenity, not solely by achieving highest retail rents. Often, the right retail mix on a building’s ground floor helps drive office or residential rents upstairs.

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TOURISM & HOSPITALITY MARKET 2016 was a record-breaking year for hospitality, as 58.3 million people visited New York City1. As the city experiences a steady growth in tourism, Lower Manhattan welcomed 14.8 million unique visitors2 in 2016. While international travel to New York City dipped in 2016, domestic travel picked up. Strong growth in leisure and business travel helped Lower Manhattan hotels maintain favorable occupancy and room rate growth despite the continuing growth in hotel construction. The number of hotel rooms in Lower Manhattan is expected to grow by 18 percent by the end of 2018.

Record Year for Tourism Lower Manhattan welcomed 14.8 million unique visitors in 2016. The National September 11 Memorial Museum, which opened in May 2014, was steady year-over-year, with 3.1 million visitors in 2017. The Statue of Liberty and Ellis Island attracted 4.4 million visitors last year. Construction continues on a new 26,000-square-foot museum on Liberty Island. The new $70 million space, scheduled to open in 2019, will feature expanded exhibition space and a rooftop terrace.

Hotels Check-in to Lower Manhattan By the end of 2017, inventory reached 7,000 rooms in 32 hotels throughout Lower Manhattan — doubling the number of hotel rooms since mid-2010. While Lower Manhattan makes up just six percent of New York City’s total hotel inventory of 117,000 hotel rooms, nine percent of hotel rooms under construction in all of New York City are in Lower Manhattan.

Compared to 2016 when nearly 1,300 rooms opened in seven hotels,

A Fairfield Inn & Suites opened in November 2017 at 100 Greenwich Street with 192 rooms.

Lower Manhattan Real Estate Year in Review|2017

only two hotels opened in 2017. The 442 new rooms represent the local market briefly catching its breath. The hotels that opened are:

• Hilton Garden Inn at 6 Water Street with 250 rooms.

• Fairfield Inn & Suites at 100 Greenwich Street with 192 rooms.

Over 1,800 hotel rooms in 13 hotels are currently in the development pipeline. In 2018, hotel room inventory in Lower Manhattan is expected to grow by 18 percent. More than 1,200 rooms in eight properties will come online throughout the year. If all these projects meet current deadlines, the hotel inventory in Lower Manhattan will reach 8,268 rooms by year-end 2018 - an increase of 100 percent from just five years ago. The hotel development boom is bringing a diversity of brands, targeting both business and leisure travelers, across multiple-price points. For example, the market share of mid-priced hotel rooms in Lower Manhattan will grow from 34 percent in 2015 to 49 percent in 2020. Those scheduled for completion in 2018 include:

• • • • • • • •

The Assemblage at 17 John Street, 81 rooms; Mr. C Seaport at 33 Peck Slip, 66 rooms; The Artezen Hotel at 24 John Street, 89 rooms; Marriott Residence Inn at 215 Pearl Street (upper floors), 120 rooms; Courtyard by Marriott at 215 Pearl Street (lower floors), 200 rooms; AC Hotel by Marriott at 151 Maiden Lane, 271 rooms; Moxy Hotel at 26 Ann Street, 298 rooms; and TBA Hotel at 11-13 Stone Street, 143 rooms.

A Hilton Garden Inn opened in September 2017 at 6 Water Street with 250 rooms.

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This past year, two 2020 hotel openings were announced. The Battery Maritime Building boutique hotel project resumed under a new development team, Centaur Properties, with 41 hotel rooms planned for the landmarked ferry building. Additionally, the Roe Corporation is planning a hotel/condo building at 265 Broadway with 80 hotel rooms and 37 condos.

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LOWER MANHATTAN HOTEL DEVELOPMENT PIPELINE Source: Downtown Alliance

Occupancy and Average Daily Room Rate Up Year-Over-Year The fourth quarter’s average occupancy was 89 percent, slightly below citywide trends at 91 percent. The occupancy rate of Lower Manhattan hotels ticked up slightly over the past year and up three percentage points since the fourth quarter of 2015, even as the local market absorbed over 1,700 hotel rooms since the beginning of 2016. Lower Manhattan’s average daily room rate (ADR) in the fourth quarter of 2017 was $294, up four percent year-over-year and six percent from the end of 2015, as newer luxury hotel properties gained steam. New York City’s ADR, about $32 more than Lower Manhattan’s ADR, held steady year-over-year at $3253.

Demand appears to be keeping pace with the growing supply of hotels in Lower Manhattan. Occupancy is growing, especially in select service hotels, helping to absorb the district’s growing supply of rooms, while stronger performance in room rates can be attributed to newer luxury hotel properties, like the Four Seasons Downtown and Beekman Hotel, entering the local market. Positive signs on the horizon include growing tourism, expanded retail and restaurant offerings, and new and repositioned office product which are expected to continue to drive business and leisure travel.

LOWER MANHATTAN HOTEL INVENTORY, 2010 - 2020 Source: Downtown Alliance

Hotel & Address

Owner/ Developer

Rooms

Floors

Open Date

1

The Assemblage 17 John Street

Prodigy Network

81

23

2018

2

The Artezen Hotel 24 John Street

3

Mr. C Seaport 33 Peck Slip

Westbury Realty Associates Atlantic Pearl/ Cipriani

89

21

2018

66

5

2018

4

Marriott Residence Inn Lam Group 215 Pearl Street

40

2018

5

Courtyard by Marriott 215 Pearl Street

Lam Group

40

2018

6

AC Hotel | Marriott 151 Maiden Lane

Fortis Property Group

271

33

2018

7

Moxy Hotel 26 Ann Street

Tribeca Associates

298

26

2018

8

TBD Hotel 11 Stone Street

Premier Emerald LLC

143

27

2018

9

Hotel Indigo 120-122 Water Street

Atlas Hospitality

122

31

2019

Indigo 10 Hotel 8-12 Maiden Lane

10-12 MLane Inc.

190

25

2019

Hotel 11 Aloft 50 Trinity Place

173

29

2019

Boutique Hotel 12 Battery Maritime Building

Fit Investment Group Centaur Properties/ Cipriani

41

5

2020

Hotel 13 TBD 265 Broadway

Roe Corporation

80

12 (of 42)

2020

Total Hotels in the Pipeline Total Hotel Rooms in the Pipeline

120 (upper floors) 200 (lower floors)

13 1,874

Source of New York City-wide tourism figures: NYC & Company Source of Lower Manhattan tourism estimates: Audience Research & Analysis 3 Source of New York City-wide hotel figures: STR 1 2

$294 Lower Manhattan Real Estate Year in Review| 2017

Average Daily Room Rate (ADR) Up 4% Year-Over-Year in Lower Manhattan

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RESIDENTIAL MARKET 2017 was another strong year for the Lower Manhattan residential market. With many high-profile projects completed and leasing and closings commencing throughout the year, over 1,100 units came to market. 2018 will add more residential product to the market with 980 units coming online by year’s end.

Inventory and Development Continue to Expand Lower Manhattan has over 31,800 units in 330 mixed-use and residential buildings. The estimated population of approximately 61,000 held steady over the past year as several anticipated openings were delayed. Across existing residential buildings, approximately 58 percent are rentals, 35 percent are condos/co-ops and seven percent have an unknown tenure. There are more than 3,300 units in 23 buildings under construction or planned for development, with 45 percent currently planned as rental units and 55 percent condos.

According to the New York Building Congress, Lower Manhattan will be home to five percent of the 46,000 housing units anticipated to be completed citywide between 2018 and 2019.

This year 1,106 residential units in seven buildings came on the market (77 percent rental and 23 percent condo), including: • 50 West Street - In early 2017, the 65-story, 191-condo unit tower developed by Time Equities, received its certificate of occupancy. Construction of the Robert Douglass Pedestrian Bridge began late last year, which will connect a new plaza adjacent to 50 West Street to Battery Park City in late 2018; • 12 Warren Street - DDG’s bluestone-clad building was unveiled, featuring 13 condominiums; • 180 Water Street - Metroloft finalized the conversion of this former office building into 565 rental units. The conversion also included the addition of seven stories to the building and over 11,000 square feet of retail; • 101 Wall Street - The Claremont Group completed its conversion of the building into 52 condominiums; • 60 Fulton Street - The former parking garage has now been replaced by a 23-story, 120-unit rental building. The building, called Exhibit, was developed by the Parkland Group and Socius Development Group. It includes 5,900 square feet of retail and 24 affordable units; • 1 Dutch Street - The long-delayed conversion, which stalled in 2009, was completed. Formerly known as 45 John Street, the project includes 84 rental units; and • 106 Fulton Street - The former Pace University dormitory reopened as a residential rental building with 81 units.

Lower Manhattan Real Estate Year in Review|2017

Courtesy of Socius Development Group

The Exhibit opened at 60 Fulton Street with 120 rental units at the site of a former parking garage.

Rendering by DBOX for Time Equities

In early 2017, 50 West Street opened with 191 condo units. A pedestrian bridge is under construction and will connect a new adjacent plaza to the tower with Battery Park City.

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The pipeline of residential development includes over 980 units in eight buildings under construction (54 percent rental and 46 percent condo) with plans to open in 2018. Among them: • 19 Park Place - The narrow 21-story, 24 condominium tower, developed by ABN Real Estate, is wrapping up construction and expects a temporary certificate of occupancy in early 2018; • 2 Park Place - Alchemy Properties continues its historic conversion of the top 30 floors of the Woolworth Building. The Woolworth Residences will have 34 condo units; • 20 Broad Street - MetroLoft is undertaking the conversion of a 27-story office building adjacent to the New York Stock Exchange, into 533 rental apartments. The building will also include the addition of 70,000 square feet of retail; • 161 Maiden Lane - Fortis Property Group continues construction on a 60-story, 80-condo unit tower, known as 1 Seaport. The property will also be adjacent to a new 271-room AC Hotel by Marriott. The hotel and condo tower both anticipate 2018 completions; • 111 Murray Street - Fisher Brothers and the Witkoff Group continue construction on a 62-story, 157-unit condo tower. The building, the site of a former St. John’s University building, is expected to be completed in late 2018; and • One Beekman Street - Urban Muse began foundation work last year for a 25-story, 31-unit condo tower adjacent to City Hall Park, anticipating a late 2018 completion.

Residential development activity is anticipated to increase throughout the next couple years, as plans for 16 projects comprising over 2,300 units (60 percent condo and 40 percent rental) come to market in 2019 and beyond: • 19 Dutch Street - The 63-story, 483-rental unit building, formerly known as 112-118 Fulton Street, topped out in late 2017 and expects to be completed in 2019. 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 when acquiring the parcels and air rights.

• One Wall Street - Macklowe Properties continues construction on the conversion of the landmarked office tower into 336 rental apartments and 188 condominiums. The building will offer 157,000 square feet of retail, including a 44,000-square-foot Whole Foods.

The tower was purchased for $585 million in 2014 and completion is anticipated in 2019.

• 125 Greenwich Street - Bizzi & Partners broke ground on its 88-story, Rafael Vinoly-designed building with 273 condo units and retail at the base. The building is anticipated to be completed in 2019.

• 77 Greenwich Street - The redevelopment of the former SYMS clothing store by Trinity Place Holdings began. The 40-story tower will comprise of 90 condo units, a public primary school and incorporates the landmarked Robert & Ann Dickey House. The company anticipates a 2019 completion.

• 45 Park Place - Soho Properties’ 43-story, 50-unit luxury condo tower began to rise this year. Planned for a 2020 opening, it will also include a public plaza connected to a three-story Islamic museum and prayer space.

Lower Manhattan Real Estate Year in Review| 2017

RESIDENTIAL

MAJOR PROJECTS UPDATE

LOWER MANHATTAN RESIDENTIAL DEVELOPMENT Source: Downtown Alliance

Address & Building Name Rental Units Under Construction

Lease & Building Type TOTAL

Units

Open Date

1,352

1

20 Broad Street

Rental Conversion

533

2018

2

19 Dutch Street

Rental New Construction

483

2019

Condo Units Under Construction

TOTAL

1,553

1

19 Park Place

Condo New Construction

24

2018

2

2 Park Place Woolworth Residences

Condo Conversion

34

2018

3

161 Maiden Lane 1 Seaport

Condo New Construction

80

2018

4

49 Chambers Street

Condo Conversion

99

2018

5

1 Beekman Street

Condo New Construction

31

2018

6

111 Murray Street

Condo New Construction

157

2018

7

30 Warren Street

Condo New Construction

23

2018

8

45 Park Place

Condo New Construction

50

2019

9

125 Greenwich Street

Condo New Construction

273

2019

10 1 Wall Street

Rental/Condo Conversion

336/ 188

2019

11 23-31 Park Row

Condo New Construction

110

2019

77 Greenwich 12 Street Former Syms site

Condo New Construction

90

2019

13 130 William Street

Condo New Construction

244

2020

14 45 Broad Street

Condo New Construction

150

2020

Condo & Rental Units In Development

TOTAL

402

1

81 Warren Street

Condo New Construction

2

75-83 Nassau Street

Rental/Condo New Construction

197

2020

3

267 Broadway

Hotel/Condo New Construction

37

2020

4

183-187 Broadway

Rental New Construction

TBD

2020

5

86 Warren Street

Rental New Construction

40

TBD

6

69 West Broadway

Condo New Construction

24

TBD

7

102 John Street

Rental New Construction

92

TBD

TOTAL UNITS IN THE PIPELINE

12

2019

3,307

Note: Chart displays selected properties. For complete pipeline, please click here.

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• 130 William Street - Foundation work began on Lightstone

•

•

•

Group’s 61-story, 244-condo unit tower. The new building, designed by David Adjaye, adjoined lots on William and Fulton Streets and will include a new plaza along William Street.

Completion is set for spring 2020.

45 Broad Street - Madison Equities began construction on its 64-story, 150-unit condo tower. The tower will have roughly 50,000 square feet of office space at the base. Completion is anticipated for 2020.

23 Park Row - The collection of buildings along Park Row, once occupied by J&R Music and Computer World, will soon become a new 54-story, 110-unit condo tower. The new residential tower, developed by L&M Development, will also include 52,000 square feet of retail and a late 2020 completion is anticipated.

183-187 Broadway - SL Green announced plans to build a mixed-income residential tower at this spot. The developer is currently demolishing three buildings at 183 and 187 Broadway and 5-7 Dey Street. Thirty percent of the units will be affordable and completion is anticipated for 2020.

Courtesy of Macklowe Properties

One Wall Street’s conversion will include 336 rentals, 186 condos, a 44,000 SF Whole Foods and an additional 157,000 SF of retail.

Residential Sales Market Cools Slightly Figures were abnormally high in the middle of 2017 due to a flurry of legacy contract closings (older contracts that finally closed in the past few months) at high-end residential projects, like 30 Park Place, 100 Barclay Street and 50 West Street. By the end of the year, metrics cooled down.

The median sales price for co-ops and condos dropped to $1.295 million in the fourth quarter, down two percent from the previous quarter, but still up nearly four percent from last year. Median sales prices hit a high water mark during the second quarter of 2017 at $2.02 million.

The average price per square foot (PPSF) in Lower Manhattan dropped 11 percent over the past year to $1,718. The district’s PPSF has still grown by 23 percent since year end 2015. With 132 sales in 2017, the number of transactions was down 17 percent over the past year. Condos have been staying on the market longer as sellers are more willing to negotiate on price.

Courtesy of Lightstone Group

130 William Street will be a 61-story, 244-condo unit tower. A new plaza will front along William Street.

The new tax legislation that passed at the end of 2017 is expected to slightly impact the market as sellers reacclimate. Greater impact is anticipated in higher-priced sales.

Growth in Supply of Residential Rental Market According to residential statistics published by Miller Samuel/Douglas Elliman, Lower Manhattan median rents increased to $3,775, up 3.1 percent from the prior year and a new neighborhood record. Lower Manhattan saw a five percent increase over the past year in the number of new rentals in the local market (850). Manhattan’s overall median rent trended down slightly, at 1.3 percent year-over-year to $3,350.

Lower Manhattan Real Estate Year in Review| 2017

Courtesy of Fisher Brothers/Witkoff Group

The 60-story, 157-condo unit tower at 111 Murray Street in Tribeca wraps up construction this year.

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LOWER MANHATTAN MEDIAN RESIDENTIAL RENT, 4Q 2014 - 4Q 2017 Source: Miller Samuel/Douglas Elliman

Lower Manhattan Record in 4Q17: $3,775

LOWER MANHATTAN MEDIAN CONDO SALES PRICE, 4Q 2014 - 4Q 2017 Source: Miller Samuel/Douglas Elliman

Lower Manhattan Record in 2Q17: $2.02 Million

LOWER MANHATTAN AVERAGE SALES PRICE PER SQUARE FOOT (PPSF), 4Q 2014 - 4Q 2017 Source: Miller Samuel/Douglas Elliman

Lower Manhattan Record in 2Q17: $2,350 PPSF

Lower Manhattan Real Estate Year in Review| 2017

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MAJOR PROJECTS UPDATE Lower Manhattan’s unparalleled accessibility was further enhanced in 2017 with several new projects that make it easier than ever to get into and around the district. The new NYC Ferry service has proven to be very popular, with all lines stopping at Pier 11-Wall Street. Additional subway access continues to open at the World Trade Center Transportation Hub, which debuted in 2016.

Construction continues on new pedestrian bridges across the Hugh Carey Tunnel and West Street.

World Trade Center The World Trade Center Transportation Hub Three subway entrances opened on the east side of the World Trade Center Transportation Hub in late 2017 providing access to the World Trade Center E station near Vesey Street and the Cortlandt Street R/W station from the Oculus and 4 World Trade Center. There is now a free connection between the E and R/W stations. The Cortlandt Street 1 Train station and an entrance to 3 World Trade Center are expected to open by late 2018. The temporary PATH station entrance is now demolished in preparation for the Ronald O. Perelman Performing Arts Center at the World Trade Center.

The Ronald O. Perelman Performing Arts Center (The Perelman Center) In September 2016, designs for The Ronald O. Perelman Center for Performing Arts at the World Trade Center were made public. The approximately 110,000-square-foot cube-shaped building will feature three theaters of varying sizes, which can be combined in different seating configurations and formats for an array of unique performance environments.

The project is well along the way to its ultimate funding goal. In addition to numerous private pledges and contributions, the Lower Manhattan Development Corporation (LMDC) has committed $100 million in federal funds awarded after September 11th for the project’s design, construction and administrative costs.

The Perelman Center will be located at the site of the now demolished PATH entrance at Greenwich and Vesey streets, which closed when the World Trade Center Transportation Hub opened in summer 2016.

In fall of 2017, The Perelman Center contracted Sciame Construction as the construction manager for the project, and began the laying of below-grade steel. The project is expected to enter the construction document phase in spring 2018, with groundbreaking for aboveground construction scheduled for early 2019.

3 World Trade Center The 2.5 million-square-foot office tower will be completed in June 2018. Anchor tenant GroupM Worldwide anticipates moving into its 690,000-square-foot space this summer. In fall 2017, management consulting firm McKinsey & Co. announced plans to relocate from

Lower Manhattan Real Estate Year in Review| 2017

Midtown to a 200,000-square-foot space in the building. If the deal is finalized, the office tower will be 36 percent leased.

Infrastructure & Resiliency NYC Ferry Four of the six routes making up NYC Ferry, the new citywide ferry service, were launched this past summer, including the existing East River Ferry service and new routes to the Rockaways, South Brooklyn and Astoria.

Service to the Lower East Side and Soundview (Bronx) will come in summer 2018. The new routes have proven popular, as ridership hit approximately 2.89 million riders in 2017 - exceeding projections by 34 percent, or nearly 800,000 additional riders. Due to the higher than anticipated demand, six boats have been ordered with a capacity to hold 364 passengers -- a significant increase over the current fleet which have a capacity of 150 passengers.

These routes will have 22 total landings across the city by summer 2018, including a newly-announced homeport landing at the Brooklyn Navy Yard that will be part of the East River Route. All routes will have a stop at Pier 11-Wall Street. One-way tickets cost $2.75, and 4.6 million trips are projected annually.

South Ferry Terminal After being closed since Superstorm Sandy poured 15 million gallons of water into the station, the MTA reopened the South Ferry 1 Train Terminal in summer 2017. During restoration, the old South Ferry station served as a connection for commuters to the Staten Island Ferry and the R and W trains at Whitehall Street. The $340 million project included reconstruction and the installation of permanent flood protection measures. Additionally, subway tunnel

Do Allianwntown Out Pe ce Rolls d Countestrian Sensoing rs

In the fall of 2017, the Downtown Alliance, in partnership with Motionloft, rolled out 12 sensors in seven key locations across Lower Manhattan.

The sensors track pedestrian flows on a 24/7 basis and are available to the public on our website.

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projects initiated in the wake of Hurricane Sandy continue with improvements being made in the Clark Street Tunnel used by the 2/3 subway lines.

Street Reconstruction Reconstruction of Warren Street, stretching from Broadway to West Street, began in February 2017 and is scheduled to be finished in the summer of 2019. After the Warren Street work 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.

Morris Street Pedestrian Overpass The Morris Street Pedestrian Overpass, which stretches across the entrance/exit to the Hugh Carey Tunnel, was replaced by the MTA. The new bridge, spanning across the tunnel plaza with no piers, will allow for better traffic management, be compliant with the Americans with Disabilities Act (ADA) and will include illuminated handrails and glass panel posts. Closed in summer 2017, the new bridge reopened in early 2018. Additionally, cashless tolling has replaced toll booths at the tunnel.

MAJOR PROJECTS UPDATE

NYC Ferry Launches: All Routes Centered at Pier 11Wall Street With the East and Hudson rivers on both sides, Lower Manhattan is at an advantageous location when it comes to commuting by water—more than 97 percent of jobs in the neighborhood are within a 10 minute walk of at least one ferry landing.

Waterborne transportation has expanded greatly with the addition of NYC Ferry service. Wall Street’s Pier 11 rose to new prominence with the launch of NYC Ferry in May 2017 and now hosts nine routes, including new ones to the Rockaways, South Brooklyn and Astoria.

Additional routes to the Lower East Side and Soundview are expected to launch this summer.

Total annual ridership at Pier 11 in 2017 was 3.75 million, an increase of nearly 14 percent year-over-year.

Lower Manhattan Ferry Transit Services

Robert R. Douglass Pedestrian Bridge Construction on the Robert R. Douglass pedestrian bridge (formerly known as the West Thames Street pedestrian bridge) began in 2017. Spanning West Street, the bridge will bring pedestrians to a new, privately-owned, public plaza at 50 West Street. According to the New York City Economic Development Corporation, completion is anticipated in late 2018. The new structure will replace the Rector Street pedestrian bridge.

RESIDENTIAL

1

Commuter Line Peak Hour Frequency

Hudson River

Harrison

St

Jay St Duane St

2 Brookfield Place 3

Wa rre n

West S t

EMPLOYMENT & OFFICE

4

Ve s

1

Port Imperial/Hoboken 14th St. - 20-30 mins

1

Staten Island - 20 mins

2

Hoboken - 20 mins

1

Astoria - 20 mins

3

Paulus Hook - 6-8 mins

2

Lower East Side- TBD

4

Liberty Landing - 30 mins

3

Soundview - TBD

5

Belford - 30-40 mins

4

East River - 20 mins

5

South Brooklyn - 30 mins

6

Rockaway - 60 mins

7

Highlands - 3 to 4 ferries

8

Belford - 30-50 mins

St

ey S

t

d Av e

Jo

hn

Lib e

Bat tery Pl

Beaver St

W Exc han all S t ge Pl

Stone St Bridge St

r

RD

St

FD

St er St at W ront F

ge id Br

dP l

St

yn kl

r ty

2n

St

oo Br

Wash ingto n St Gree nwic h St Trin ity Pl Bro ad wa y

S En

Fu lto n

t

r Pl

S ce ru

Recto

9 Port Liberte - 40 mins Harbor/ 10 Hoboken/Liberty Paulus Hook - 15 mins 11 Port Imperial - 20 mins

Sp

5

Coming 2018 Coming 2018

East River

Pier 11 / Wall Street 1

2

3

4 Whitehall 9

1

Landing Name

10

Lower Manhattan

Operating Ferry Line

Ferry Landing

Ferry Line scheduled to open in summer 2018

Ferry Catchment Area

Lower Manhattan Real Estate Year in Review| 2017

11

2

5

6 8

7

±

Miles 0

0.1

0.2

0.3

0.4

Ferry Route

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

Lower Manhattan: New York City’s Premier Transit Hub, a report demonstrating the strength of Lower Manhattan as one NYC’s premier multimodal hubs and needs/opportunities for future improvements; 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, an updated report on how the region’s shifting demographics continue to favor the Lower Manhattan Business District. Previously released in 2012, the 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 changes 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; and 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.

Alliance for Downtown New York 120 Broadway Suite 3340 New York, NY 10271 212.566.6700 DowntownNY.com Telephone: 212-835-2787 Email: Research@DowntownNY.com