2Q16 NGKF NY Office Market Overview
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Transcript of 2Q16 NGKF NY Office Market Overview
2Q16
NEW YORK CITY OFFICE MARKET OVERVIEW
Todd P. Hershman Associate Director
212.359.8520
2
TABLE OF CONTENTS
21 Manhattan Development Overview
22 Commercial Development Pipeline
23 Commercial Development Horizon Map
24 World Trade Center Development Overview
25 Far West Side Development Overview
26 Midtown East Development Overview
27 Boutique Development Overview
6 Manhattan Office Market Overview
7 Leasing Activity by Market
8 Top Transactions 2Q16
9 Industries Driving Leasing
10 Manhattan Submarket Comparison
11 Asking Rent Trends
12 Taking Rent Trends
13 Taking Rent Corridor and Submarket Comparisons
14 Net Effective Rent Trends
15 Concessions Analysis: Work Amount
16 Concessions Analysis: Free Rent
17 Triple-Digit Taking Rent Assets
18 Manhattan Top-Tier Trends
19 Midtown South Top-Tier Trends
20 Enhancing Image: Lobby Renovation Analysis
28 Brooklyn and Long Island City
Office Market Analysis
29 Brooklyn Office Development in the Pipeline Map
30 Brooklyn’s Changing Inventory
31 Brooklyn Market Trends: Overall
32 Brooklyn Market Trends: Prime
33 Brooklyn Submarket Snapshot
34 Asking Rent Comparison
35 Long Island City Trends
36 Long Island City Submarket Snapshot
3 Introduction
4 Executive Summary
5 NYC Market Perceptions: Broker Opinion Poll
3
2Q16
INTRODUCTION
4
Second quarter Manhattan leasing outpaced the 10-year quarterly average,
as renewal activity counterbalanced a drop in tenant relocations. A strong
quarter for Midtown outpaced below-average leasing for Midtown South and
Downtown.
FIRE and health care tenants drove top deals in the second quarter. TAMI
leasing was muted relative to recent quarters.
Asking and net effective rents continued to climb, with Midtown South
outpacing growth in Midtown and Downtown. Several Midtown South
submarkets are now priced competitively with Midtown.
Downtown asking and taking rents reached a historic high during second
quarter 2016, as the FIRE and TAMI sectors solidified their presence in the
market.
Availability held steady from the prior quarter and the prior year. However,
new construction combined with shadow space and future large-block lease
expirations are expected to push the availability rate up.
Property owners have increasingly considered strategies to enhance their
building’s competitive advantage ahead of large-block availabilities
anticipated in Midtown.
Over 15 million square feet of development projects in Manhattan are
scheduled for completion by 2020. Another 14 million square feet are in the
pipeline.
The financial sector and
renewals drove second
quarter leasing, while
pricing and other market
fundamentals held
steady.
EXECUTIVE SUMMARY
5
12% Other
47% Positive:
It will drive
additional
investment to
New York City
14% Negative: It will
create lasting
uncertainty in the
market
28% Negligible:
New York City’s
economy is not
entangled with the
U.K.
Broker Opinion Poll: A Survey of NGKF Brokers
NEW YORK CITY MARKET PERCEPTIONS
1. WHAT CAN WE EXPECT IN LEASING OVER THE NEXT YEAR? 2. WHAT IMPACT WILL BREXIT HAVE ON NEW YORK CITY’S COMMERCIAL
REAL ESTATE MARKET?
3. WHICH OF THE FOLLOWING ATTRIBUTES HAS THE GREATEST
IMPACT ON A BUILDING’S COMPETITIVENESS IN ATTRACTING
TENANTS?
2%
52%
0%
46%
0% 10% 20% 30% 40% 50% 60%
Other
Slow-Down
Improvement
Stability
Additional Comments:
• Negligible, as there will be a transition period of some length. If corporate tax
reduction here is effected, there should be a positive impact on U.S. companies.
With the initial uncertainty there should be an inflow of foreign capital seeking
relative safety.
• Positive to capital markets, negative to leasing.
• Slight positive with some financial institutions expanding.
• Long-term money will buy "cheap" properties in London. This will cool slightly the
NYC market.
0%
10%
20%
30%
40%
50%
60%
70%
80%
Amenities Location Stable andConsistentOwnership
Lobby andBuilding
Aesthetics
6
2Q16
MANHATTAN OFFICE MARKET OVERVIEW
7
Source: Newmark Grubb Knight Frank Research
Manhattan (MSF) Midtown (MSF)
Midtown South (MSF) Downtown (MSF)
Relocation activity kept Manhattan leasing stable
compared to the prior year and ten-year
average.
Key
Takeaway
19.2 MSF
0
5
10
15
20
25
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Relocations Renewals Average First Half Velocity
3.3 MSF
0
1
2
3
4
5
6
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Relocations Renewals Average First Half Velocity
5.6 MSF
0
1
2
3
4
5
6
7
8
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Relocations Renewals Average First Half Velocity
10.4 MSF
0
2
4
6
8
10
12
14
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Relocations Renewals Average First Half Velocity
First Half Leasing
LEASING ACTIVITY BY MARKET
8
Source: Newmark Grubb Knight Frank Research
• Seven of the top 10 transactions
were FIRE tenants, and two were
health care. None were TAMI.
• 60% of the top 10 deals were
renewals.
• Nine of the top 10 transactions
occurred in Midtown.
Company Address Market SF Lease Type Industry
UBS 1285 Avenue of the Americas Midtown 890,861 Renewal FIRE
NYU Langone Medical Center 222 East 41st Street Midtown 389,522 Direct New Health Care
PricewaterhouseCoopers 90 Park Avenue Midtown 240,605 Direct New FIRE
Visiting Nurse Services of New
York 220 East 42nd Street Midtown 237,434 Direct New Health Care
D.E. Shaw 1166 Avenue of the Americas Midtown 195,375 Renewal FIRE
Credit Suisse 11 Madison Avenue Midtown South 186,396 Renewal FIRE
Alston & Bird 90 Park Avenue Midtown 122,525 Renewal Professional
Services
Merrill Lynch 75 Rockefeller Plaza Midtown 122,418 Direct New FIRE
New York Life Insurance
Company 420 Lexington Avenue Midtown 114,709
Renewal &
Expansion FIRE
Wells Fargo Capital Finance 100 Park Avenue Midtown 103,000 Renewal FIRE
FIRE = Finance, Insurance, and Real Estate
TAMI = Tech, Advertising, Media, and Information
2Q16 Manhattan
TOP TRANSACTIONS
9
FIRE 50%
FIRE 21%
FIRE 47%
Prof Svcs 12%
Prof Svcs 12%
Prof Svcs 14%
TAMI 20%
TAMI 54%
TAMI 28%
Apparel & Retail, 2%
Apparel & Retail, 4%
Apparel & Retail, 4%
Other 16%
Other 10%
Other 8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Midtown Midtown South Downtown
2Q16 Leasing by Industry
INDUSTRIES DRIVING DEMAND
FIRE activity gained momentum while leasing
among TAMI industries dropped in comparison
to recent years.
Key
Takeaway
16
%
27
% 29
%
26
%
35
%
30
%
34
%
45
%
0%
10%
20%
30%
40%
50%
2013 2014 2015 2016 YTD
TAMI FIRE
FIRE versus TAMI Leasing Activity
Source: Newmark Grubb Knight Frank Research
10
Source: Newmark Grubb Knight Frank Research
Availability
Rate
Average Asking
Rent ($/SF)
MANHATTAN 11.1% $76.25
Midtown 11.5% $82.54
Eastside 9.3% $74.09
Far West Side 13.8% $83.19
Grand Central 15.5% $77.59
Murray Hill 10.4% $61.60
Park Avenue 11.3% $103.24
Penn Station 8.5% $64.52
Plaza District 14.2% $110.57
Sixth Ave/Rock Ctr. 11.1% $88.07
Times Square 10.6% $81.82
Times Square South 10.4% $62.18
Westside 9.0% $70.34
Midtown South 7.8% $71.98
Chelsea 7.6% $65.47
East Village 0.8% $60.78
Flatiron/Union Square 7.9% $71.07
Hudson Square/Meatpacking 10.7% $83.96
Soho/Noho 4.9% $70.22
Downtown 12.4% $61.85
Downtown East 11.3% $57.18
Downtown West 13.1% $67.73
Tribeca/City Hall 16.3% $61.26
MANHATTAN SUBMARKET COMPARISON
Asking Rent Growth Since 2010
49%
64%
59%
60%
200%
67%
120%
97%
67%
69%
44%
49%
69%
82%
57%
50%
50%
100%
57%
Tribeca/City Hall
Downtown West
Downtown East
Soho/Noho
Hudson Square/Meatpacking
Flatiron/Union Square
East Village
Chelsea
Westside
Times Square South
Times Square
Sixth Ave/Rock Ctr.
Plaza District
Penn Station
Park Avenue
Murray Hill
Grand Central
Far West Side
Eastside
Midtown South submarkets and the Far West
Side have seen the greatest growth in rental
rates during this market cycle.
Key
Takeaway
11
Source: Newmark Grubb Knight Frank Research
$89.02
$57.02
$82.54
$58.93
$40.76
$71.98
$51.56
$39.28
$61.85
$25
$35
$45
$55
$65
$75
$85
$95
2Q05 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16
Midtown Midtown South Downtown
Average Asking Rent by Market ($/SF)
ASKING RENT TRENDS
Average Annual Change
Since Trough (2010)
MT 6.4%
MTS 10.1%
DT 7.9%
Change since 2015
MT 6.8%
MTS 7.6%
DT 8.8%
Year-over-year asking rent growth continued
generally on pace with rent growth over the last
six years.
Key
Takeaway
12
Source: Newmark Grubb Knight Frank Research
$75.18
$54.01
$74.48
$53.07
$38.05
$68.38
$44.26
$34.70
$52.31
$25
$35
$45
$55
$65
$75
$85
$95
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
Midtown Midtown South Downtown
*Midtown 2016 YTD average impacted on a weighted basis by Citadel deal at 425 Park. Including that deal, the average is pushed to $80.74/SF.
Average Annual Change
Since Trough (2009-2010)
MT 4.7%
MTS 8.7%
DT 7.1%
Change Since 2015
MT 5.4%
MTS 2.7%
DT 3.1%
Average Annual Taking Rent by Market ($/SF)
TAKING RENT TRENDS
Midtown South and Downtown lead taking rent
growth in the recovery, but recently that growth
has slowed. Meanwhile, Midtown has picked up.
Key
Takeaway
13
Source: Newmark Grubb Knight Frank Research
By Submarket Market Average Base
Taking Rent ($/SF)
Park Avenue MT $117.20
Plaza District MT $98.18
Far West Side MT $81.83
Hudson Square/
Meatpacking MTS $81.29
Sixth Ave/Rock Ctr. MT $78.94
Westside MT $72.05
Eastside MT $68.05
Penn Station MT $67.78
Grand Central MT $66.64
Chelsea MTS $65.11
Flatiron/Union Square MTS $64.48
Times Square South MT $62.25
Downtown West DT $60.74
Times Square MT $59.80
Downtown East DT $49.65
By Corridor Market Average Base
Taking Rent ($/SF)
Park Avenue MT $109.99
Upper Fifth Avenue
(47th - 65th Streets) MT $105.85
Broadway MTS $83.28
Avenue of the
Americas MT $77.37
Madison Avenue MT $76.13
Lexington Avenue MT $76.02
Eighth Avenue MTS $69.63
East 40s MT $69.00
Park Avenue South MTS $68.70
Fifth Avenue MTS $67.31
West 40s MT $66.98
Lower Fifth Avenue
(32nd - 47th Streets) MT $66.07
Third Avenue MT $66.07
Madison Avenue MTS $65.30
Broadway MT $63.84
West 20s MTS $63.23
East 20s MTS $60.69
Broadway DT $53.65
Water Street DT $51.71
Midtown
Midtown South
Downtown
FLATIRON/ UNION
SQUARE CHELSEA
EAST VILLAGE NOHO/
SOHO
HUDSON SQUARE/
MEATPACKING
TRIBECA/ CITY HALL
DOWNTOWN EAST
DOWNTOWN WEST
EASTSIDE
GRAND CENTRAL
MURRAY HILL
FAR WEST SIDE
WESTSIDE
TIMES SQUARE SOUTH
PENN STATION
PARK AVE
PLAZA DISTRICT
SIXTH AVE/
ROCK CTR
UNION SQUARE
TIMES SQUARE
CITY HALL
PENN STATION
PORT AUTHORITY
G.C. STATION
CENTRAL PARK
41ST ST
30TH ST
32ND ST
14TH ST
6T
H A
VE
*Park Avenue Submarket and Corridor averages are impacted on a
weighted basis by Citadel deal at 425 Park.
Average taking rents for direct deals with +5-year terms
TAKING RENT CORRIDOR AND SUBMARKET COMPARISONS
The Far West Side and Hudson Square/
Meatpacking captured higher taking rents than
Sixth Avenue and six other Midtown submarkets.
Key
Takeaway
14
Source: Newmark Grubb Knight Frank Research
$41.91
$63.16
$61.56
$30
$35
$40
$45
$50
$55
$60
$65
$70
2010 2011 2012 2013 2014 2015 2016 YTD
Downtown Midtown Midtown South
*Midtown 2016 YTD average NER impacted on a weighted basis by Citadel deal at 425 Park. Including that deal, the average is pushed to $68.24SF.
25%
18%
11%
0%
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013 2014 2015 2016 YTD
Downtown Midtown Midtown South
Difference Between Taking Rent and NER NER Rent Trends
Average net effective rents for direct deals with +5-year terms
NET EFFECTIVE RENT TRENDS
Net effective rent growth slowed in the first half
of 2016. Meanwhile, the delta between Midtown
South and Downtown has nearly evaporated.
Key
Takeaway
Downtown property
owners boosted
concessions to
land large tenants
relocating from other
markets.
As conditions
improved and taking
rents increased, Midtown
owners pulled back on
concessions.
With large-block
availabilities expected
in Midtown, owners again
increased concessions.
15
$68.44
$70.00
$72.50
$76.15
$79.38
$83.39
$84.70
$96.05
$60.00
$62.50
$66.99
$63.08
Flatiron/Union Square
Chelsea
Downtown East
Hudson Square/Meatpacking
Eastside
Penn Station
Sixth Ave/Rock Ctr.
Times Square South
Westside
Park Avenue
Grand Central
Plaza District
Downtown Midtown South Midtown
Source: Newmark Grubb Knight Frank Research
2016 YTD Average Work Amount ($/SF)
3%
4%
5%
5%
14%
17%
22%
28%
3%
5%
18%
-6% Downtown East
Times Square South
Flatiron/Union Square
Eastside
Hudson Square/Meatpacking
Sixth Ave/Rock Ctr.
Westside
Park Avenue
Penn Station
Chelsea
Plaza District
Grand Central
Downtown Midtown South Midtown
Percent Change Year Over Year
Work amount for direct deals with +10-year terms, +10K SF
CONCESSIONS ANALYSIS
Work allowances have jumped in most
submarkets, particularly in Midtown.
Key
Takeaway
16
7
8
9
9
9
9
10
10
10
7
9
10
8
Times Square
Flatiron/Union Square
Downtown East
Eastside
Westside
Grand Central
Plaza District
Sixth Ave/Rock Ctr.
Chelsea
Hudson Square/Meatpacking
Park Avenue
Penn Station
Times Square South
Downtown Midtown South Midtown
Source: Newmark Grubb Knight Frank Research
2016 YTD Free Rent (Months)
-18%
-13%
-11%
-11%
11%
11%
13%
-13%
13%
Sixth Ave/Rock Ctr.
Times Square
Flatiron/Union Square
Westside
Eastside
Downtown East
Grand Central
Hudson Square/Meatpacking
Park Avenue
Penn Station
Times Square South
Chelsea
Plaza District
Downtown Midtown South Midtown
No Change
No Change
No Change
No Change
Percent Change Year Over Year
Free rent for direct deals with +10-year terms, +10K SF
CONCESSIONS ANALYSIS
Free rent has been more stable than work
allowances over the last year.
Key
Takeaway
17
15
39
34
11 8
16 17 21 20
26 26
11
17
15
3
4
7 8
8 12
15
0
10
20
30
40
50
60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
1Q-2Q 3Q-4Q
Source: Newmark Grubb Knight Frank Research
Buildings with $100+ Taking Rents
In 2016 YTD
Park Avenue
667 Madison Avenue
277 Park Avenue
280 Park Avenue
350 Park Avenue
375 Park Avenue
425 Park Avenue
450 Park Avenue
499 Park Avenue
601 Lexington Avenue
Plaza District
10 East 53rd Street
437 Madison Avenue
650 Madison Avenue
660 Madison Avenue
712 Fifth Avenue
767 Fifth Avenue
Sixth Avenue/Rockefeller Center
1095 Avenue of the Americas
1114 Avenue of the Americas
1330 Avenue of the Americas
Times Square South
7 Bryant Park
Westside
888 Seventh Avenue
250 West 55th Street
Chelsea
111 Eighth Avenue
Hudson Square/ Meatpacking
404 West 14th Street
860 Washington Street
Soho/Noho
770 Broadway
Number of buildings that signed $100+ taking rents each year
TRIPLE-DIGIT TAKING RENT ASSETS
The number of buildings that achieved triple-digit
rents remained on par with the same time last
year.
Key
Takeaway
18
Source: Newmark Grubb Knight Frank Research
34
74
58
10 17
38
24
38 31
46
19
7
16
26
6
9
16
13
22
19
9
15
11
29
18
3 1 1 1 3 7
3 4
4
12
8
3 2 4 8 6
11 13
5
0
25
50
75
100
Transactions with taking rents over $100/SF
MANHATTAN TOP-TIER TRENDS
Transactions Under 20K SF: Transactions Over 20K SF: Relocations Renewals and Expansions Relocations Renewals and Expansions
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
Most triple-digit deals are relocations under
20,000 square feet. Large relocations make up
the smallest share of top-market transactions.
Key
Takeaway
19
Source: Newmark Grubb Knight Frank Research
1 6 9 2
1 5
14
24
43
60
36
2
2
3
4
8
5
11
6
6 4 1 2 3
9
35
21
14
0
6 1
3
5
5
10
14
3
0
10
20
30
40
50
60
70
80
Transactions with taking rents over $60/SF
MIDTOWN SOUTH TOP-TIER TRENDS
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Like Midtown, smaller relocations make up the
majority of top-of-the-market transactions in
Midtown South.
Key
Takeaway
Transactions Under 20K SF: Transactions Over 20K SF: Relocations Renewals and Expansions Relocations Renewals and Expansions
20
Impact of Lobby Renovations for Select Class A Midtown Buildings
ENHANCING IMAGE: LOBBY RENOVATION ANALYSIS
Additional Lobby Renovations
in the Pipeline
1155 Avenue of the Americas
1271 Avenue of the Americas
575 Fifth Avenue
12 East 49th Street
65 East 55th Street
237 Park Avenue
399 Park Avenue
605 Third Avenue
Average Taking Rent
Pre-Renovation $62.28/SF
Lobby Renovation
Completed 2013-2015
Average Taking Rent
Post-Renovation $73.58/SF
Percent Change +18.1% (+27.3% when adjusted for floor)
21
2Q16
MANHATTAN DEVELOPMENT OVERVIEW
22
Manhattan (MSF)
COMMERCIAL DEVELOPMENT PIPELINE
Source: Newmark Grubb Knight Frank Research
The delivery of 10 Hudson Yards marked the
first building to open of a total 16.75M SF of new
construction planned at the Far West Side.
Key
Takeaway
0
2
4
6
8
10
12
14
16
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
TB
D
New
Construction
85.0 MSF
Expected
Delivery
15.4 MSF
Potential
Delivery
13.7 MSF
2014 837 Washington Street 1 WTC
2015 7 Bryant Park 430 West 15th Street 2016 10 Hudson Yards 860 Washington Street 855 Avenue of the Americas 432 Park Avenue 89 Bowery
2017 390 Madison Avenue 540 West 26th Street 512 West 22nd Street 76 Eleventh Avenue 2 Pike Street 2018 300 Lafayette Street 3 WTC 425 Park Avenue 55 Hudson Yards 61 Ninth Avenue 40 Tenth Avenue 414 West 15th Street
2019 1 Manhattan West 30 Hudson Yards 3 Hudson Boulevard 106 West 56th Street 2020 One Vanderbilt Avenue TBD 50 Hudson Yards 2 WTC 2 Manhattan West 66 Hudson Boulevard 15 Penn Plaza 438 Eleventh Avenue 75 Ninth Avenue 44 Union Square East
3Q14 MANHATTAN DEVELOPMENT UPDATE
4b
4a
5
1
3c
3d
3a
3b
2
MANHATTAN
WEST
4a
4b
55 HUDSON
YARDS
1
450 WEST
33rd
STREET
2
1 2
3
4
Memorial
2 WTC
WTC
Transportation
Hub
WORLD TRADE CENTER
AND DOWNTOWN
FAR WEST SIDE
3 HUDSON
BOULEVARD
5
7 BRYANT PARK
ONE
VANDERBILT
AVENUE
425 PARK
AVENUE
390 MADISON
AVENUE
1 WTC
3b
3a
Retail space 3c
3d
10, 30 & 50
HUDSON YARDS
4 WTC 3 WTC
6 66 HUDSON
BOULEVARD
6
MIDTOWN EAST
24
INFRASTRUCTURE AND AMENITIES
Fulton Center Retail at
Brookfield Place
WTC
Transportation
Hub
Westfield World
Trade Retail
2014 2015 2016 2016
Completed Completed Completed Completed
1 2
3
4
5 6 7 8
5
6
7
8
Source: Newmark Grubb Knight Frank Research
WORLD TRADE CENTER
PORT AUTHORITY
OF NY/NJ, DURST SILVERSTEIN PROPERTIES
1 World
Trade Center
2 World
Trade Center
3 World
Trade Center
4 World
Trade Center
3,000,000 SF 2,800,000 SF 2,500,000 SF 2,300,000 SF
4Q 2014 TBD 2018 4Q 2013
Completed Planned Under Construction Completed
104 stories 88 stories 80 stories 72 stories
Signed Condé Nast,
Moody’s, High 5
Games, xAd, and
others
Seeking an
anchor tenant Signed GroupM
Signed MediaMath,
Morningstar, IEX, and
public sector tenants
1 2 3 4
World Trade Center
DEVELOPMENT OVERVIEW
25
INFRASTRUCTURE AND AMENITIES
7 Train Extension
to 34th Street
East Platform
Over Rail Yards
15 Hudson Yards:
Residential
35 Hudson Yards:
Residential,
Hotel, Retail
Completed 2018 TBD TBD
Under Construction Under Construction Planned Mixed-use
development possible
1 8 7 6 5 4 3 2
Source: Newmark Grubb Knight Frank Research
9
1
2
3
4
7 8
5
6
9
Far West Side
DEVELOPMENT OVERVIEW
FAR WEST SIDE
THE RELATED
COMPANIES
BROOKFIELD
PROPERTIES, QIA
MITSUI FUDOSAN,
OXFORD,
RELATED
THE RELATED
COMPANIES
BROOKFIELD
PROPERTIES, QIA
BROOKFIELD
PROPERTIES, QIA
MOINIAN
GROUP
TISHMAN
SPEYER
THE RELATED
COMPANIES
10 Hudson
Yards
450 W 33rdSt /
5 Manhattan
West
55 Hudson
Yards
30 Hudson
Yards
1 Manhattan
West
2 Manhattan
West
3 Hudson
Boulevard
66 Hudson
Boulevard
50 Hudson
Yards
1,700,000 SF 1,800,000 SF 1,300,000 SF 2,600,000 SF 2,100,000 SF 2,100,000 SF 1,800,000 SF 2,850,000 SF 2,300,000 SF
2016 2016 (Renovation) 2018 2019 2019 TBD TBD TBD TBD
Completed Under Renovation Under Construction Under Construction Under Construction Planned Planned Planned Planned
52 stories 16 stories 50 stories 90 stories 67 stories 67 stories 66 stories 70 stories 62 stories
Tenants include
Coach, L’Oréal,
BCG, SAP, Vayner
Media
Tenants include
Chase Digital Media,
Markit Group
Signed Boies,
Schiller & Flexner
Tenants include
Time Warner, HBO,
CNN, KKR
Signed
Skadden Arps
Mixed-use
development
possible
Mixed-use
development
possible
Project in early
stages of planning
Project in early
stages of planning
1 2 5 6 4 3 9 7 8
26
1 2 3 4
EAST MIDTOWN REZONING
The Vanderbilt
Corridor
Greater
East Midtown
The City approved rezoning of the Vanderbilt Corridor
including zoning applications for One Vanderbilt. The
initiative will increase the potential for office
development in exchange for public improvements and
TDRs.
The City is also exploring a more comprehensive
rezoning of Greater East Midtown. A stakeholder
committee developed a set of principles that will shape
the rezoning effort.
The City approved zoning applications
(ULURP) in May 2015.
Stakeholder committee recommendations
released in 2015. Rezoning expected to
begin in 2016.
Source: Newmark Grubb Knight Frank Research, NYC Department of City Planning
Fifth
Ave
nu
e
37th Street
Se
co
nd
Ave
nu
e
1
4
2
59th Street
3
Midtown East
DEVELOPMENT OVERVIEW
MIDTOWN EAST
BANK OF CHINA L&L HOLDING, RREEF L&L HOLDING
COMPANY SL GREEN
7 Bryant
Park
390 Madison
Avenue
425 Park
Avenue
One Vanderbilt
Avenue
473,000 SF 843,710 SF 670,000 SF 1,800,000 SF
2015 2017 2018 2020
Completed Under Renovation Under Construction Planned
28 stories 32 stories 47 stories 65 stories
Signed Bank of China
and Schroeders
L&L will restack the
building to alter height and
bulk
Signed Citadel
Signed TD Bank.
Demolition has
commenced
27
Rendering
not yet
available
Source: Newmark Grubb Knight Frank Research
Rendering
not yet
available
Rendering
not yet
available
Boutique Development
DEVELOPMENT OVERVIEW
BOUTIQUE DEVELOPMENT
ROMANOFF EQUITIES CIM GROUP WING FUNG GROUP HFZ CAPITAL THE RELATED
COMPANIES
VORNADO REALTY
TRUST, ALBANESE
ORGANIZATION
860 Washington
Street
432 Park
Avenue 89 Bowery
76 Eleventh
Avenue
300 Lafayette
Street
512 West
22nd Street
Midtown South Midtown Midtown South Midtown South Midtown South Midtown South
120,413 SF 71,000 SF 23,831 SF 242,750 SF 81,000 SF 170,000 SF
2016 2016 2016 2017 2017 2017
Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction
10 stories 6 stories 9 stories 3 stories 7 stories 11 stories
BOUTIQUE DEVELOPMENT
SAVANNA YEUNG REAL ESTATE VORNADO REALTY TRUST LM LEGACY GROUP AURORA, WILLIAM
GOTTLIEB REAL ESTATE SAVANNA, ATOM ASSETS
540 West
26th Street 2 Pike Street 61 Ninth Avenue
414 West
15th Street 40 Tenth Avenue 106 West 56th Street
Midtown South Midtown South Midtown South Midtown South Midtown South Midtown
128,367 SF 93,000 SF 167,170 SF 144,273 SF 116,205 SF 90,000 SF
2017 2017 2018 2018 2018 2019
Planned Planned Planned Under Construction Planned Planned
9 stories 14 stories 10 stories 18 stories 12 stories 26 stories
28
2Q16
BROOKLYN AND LONG ISLAND CITY OFFICE MARKET ANALYSIS
29
Rendering
not yet
available
Rendering
not yet
available
Submarket
Owner/
Developer
Building
Address
Size (SF)
Year Open
Project Type
Status
Submarket
Owner/
Developer
Building
Address
Size (SF)
Year Open
Project Type
Status
Source: Newmark Grubb Knight Frank Research
New Construction and Repositioned Buildings
BROOKLYN OFFICE DEVELOPMENT PIPELINE
DUMBO DOWNTOWN BROOKLYN NAVY YARDS
Triangle
Assets
Cibrano
Family
Jehovah
Witnesses
JEMB Realty
Corp
Tishman
Speyer
Quinian Dev
Group, BLT
Brooklyn Navy Yard Development
Corp.
Boston
Prop, Rudin
Mgt
Westbrook
Partners, RXR
Madison
Realty Capital
10 Jay
Street
80 Hudson
Avenue
25-30
Columbia
Heights
420 Albee
Square
422 Fulton
Street
41 Flatbush
Avenue
GMC
Building 128
Building
77
Building
3
Dock
72
47 Hall
Street
29 Ryerson
Street
206,000 90,285 750,000 400,000 TBD 270,910 215,000 1,100,000 700,000 675,000 650,000 215,000
2016 2016 2018 2018 TBD 2016 2016 2017 2017 2018 TBD TBD
New
Construction Redevelop Redevelop
New
Construction Redevelop Redevelop Redevelop Redevelop Redevelop
New
Construction Redevelop Redevelop
Underway Underway Planned Proposed Planned Underway Underway Underway Planned Proposed Planned Proposed
SUNSET PARK RED HOOK WILLIAMSBURG BUSHWICK
Jamestown,
Belvedere Cap,
Angelo Gordon
Madison
Realty
Capital
Thor
Equities PWR
Estate
Four
Heritage
Equity
Two Trees
Management
Cayuga
Capital
Normandy,
Royalton,
Sciame
Heritage
Equity
Savanna,
Hornig
Capital
Lincoln
Property
Group
Industry City
32nd - 41st St.
Whale Square
14 53rd St.
280 Richards
Street
160 Van
Brunt Street
68 Ferris
Street
25 Kent
Avenue
Domino Sugar
Factory
Phase 1
87 Wythe
Avenue
333 Johnson
Avenue
215 N. Moore
Street
95 Evergreen
Avenue
455 Jefferson
Street
6,000,000 405,416 300,000 111,565 1,200,000 400,000 380,000 100,000 285,000 170,000 165,000 122,700
In phases
starting 2015 2016 TBD 2016 2020 2018 TBD 2017 2017 2017 2016 2016
Redevelop Redevelop New
Construction Redevelop
New
Construction
New
Construction Redevelop
New
Construction Redevelop Redevelop Redevelop Redevelop
Underway Underway Proposed Completed Proposed Proposed Planned Planned Planned Planned Completed Underway
30
DOWNTOWN
BROOKLYN
SUNSET
PARK DUMBO
WILLIAMSBURG/
BUSHWICK NAVY YARD
2013 Inventory (SF) 15,985,404 6,000,000 3,254,111 1,532,155 1,698,330
Current Inventory (SF) 16,104,268 6,405,416 3,908,181 1,615,245 2,875,330
Projected Inventory (SF) Through 2018
16,504,268 6,405,416 4,658,181 3,270,245 4,415,330
Inventory Differential
(SF) 2013-2018
518,864 405,416 1,404,070 1,738,090 2,717,000
3.2%
SF DIFFERENCE
2013-2018
6.8%
SF DIFFERENCE
2013-2018
43.1%
SF DIFFERENCE
2013-2018
113.4%
SF DIFFERENCE
2013-2018
Source: Newmark Grubb Knight Frank Research
160.0%
SF DIFFERENCE
2013-2018
Impact of New Construction and Repositioned Buildings
BROOKLYN’S CHANGING INVENTORY
31
Source: Newmark Grubb Knight Frank Research
Overall Average Asking Rent and Availability
BROOKLYN MARKET TRENDS
Average asking rents ended 2Q16 at
$39.95/SF, up 14.3% year-over-year.
This growth was driven by the
addition of newly repositioned prime
buildings over the last 12 months,
including 55 Water Street, 10 Jay
Street, and 95 Evergreen Avenue.
The spike in availability since the
start of 2013 is due to the
introduction of office supply in Sunset
Park and the Navy Yards, along with
newly repositioned buildings in
Downtown Brooklyn, Dumbo, and
Williamsburg/ Bushwick.
0%
2%
4%
6%
8%
10%
12%
14%
16%
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16
Average Asking Rent (Price/SF) Availability (%)
Across Brooklyn, new inventory continued to
push asking rents and availability up.
Key
Takeaway
32
Source: Newmark Grubb Knight Frank Research
Prime Assets Average Asking Rent and Availability
BROOKLYN MARKET TRENDS
Average asking rents for Brooklyn
Prime assets rose to $54.21/SF in
2Q16, up 27% year-over-year.
The availability rate jumped 710
basis points over the last 24 months,
driven by new construction and
repositioned buildings introduced as
new office inventory.
0%
2%
4%
6%
8%
10%
12%
14%
16%
$0
$10
$20
$30
$40
$50
$60
2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16
Average Asking Rent (Price/SF) Availability (%)
Brooklyn Prime assets saw much steeper
increases in average asking rent and availability
than the overall market.
Key
Takeaway
33
Source: Newmark Grubb Knight Frank Research
Greenpoint
Williamsburg
Bushwick
Bedford
Stuyvesant
Clinton
Hill Fort
Greene
Navy
Yard DUMBO
Cypress
Hills
East
New York Brownsville
Crown
Heights
East
Flatbush
Canarsie
Prospect
Heights Park
Slope
Red
Hook
Prospect
Park Lefferts
Gardens Sunset Park
Windsor
Terrace
Bay
Ridge Dyker
Heights
Fort
Hamilton Bensonhurst
Bath
Beach
Gravesend
Coney
Island
Sea
Gate
Brighton
Beach
Manhattan
Beach
Sheepshead
Bay Gerritsen
Beach
BK
Marine Park Barren
Island
Mill
Basin
Bergen
Beach Marine
Park
Flatlands
Midwood
Borough
Park Flatbush
Kensington
Prospect
Park
South
Jamaica Bay
Upper New York
Bay
Lower New York
Bay
Cobble Hill
BK Heights
Prime Assets are Class A and newly repositioned space. Standard Assets are all other office
inventory.
BROOKLYN SUBMARKET SNAPSHOT
Total Inventory: 16,104,268 SF
Availability Rate: 4.8%
Average Asking Rent, Prime Assets:
$48.26/SF
Average Asking Rent, Standard
Assets: $40.98/SF
YTD Absorption: -146,166 SF
DOWNTOWN BROOKLYN
Total Inventory: 1,615,245 SF
Availability Rate: 23.8%
Direct Average Asking Rent, Prime
Assets: $52.67/SF
YTD Absorption: -5,700 SF
WILLIAMSBURG / BUSHWICK
Total Inventory: 2,875,330 SF
Direct Average Asking Rent:
$37.00/SF
Developers of Dock 72 (new supply
due in 2018) are asking top Brooklyn
rents, which will push the submarket
average up when added to the
market.
BROOKLYN NAVY YARD
Total Inventory: 6,405,416 SF
Direct Average Asking Rent:
$27.50/SF
SUNSET PARK
Total Inventory: 3,908,181 SF
Availability Rate: 25.5%
Average Asking Rent, Prime Assets:
$57.62/SF
Average Asking Rent, Standard
Assets: $34.74/SF
YTD Absorption: -171,227 SF
DUMBO
34
$27.50
$37.00 $38.15
$48.26
$52.67
$57.62
$61.85
$71.98
$82.54
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Sunset ParkPrime
Brooklyn Navy YardPrime
Long Island CityPrime
Downtown BrooklynPrime
Williamsburg /Bushwick
Prime
DumboPrime
DowntownManhattan
Overall
Midtown SouthOverall
MidtownOverall
Source: Newmark Grubb Knight Frank Research
Average Asking Rents ($/SF)
ASKING RENT COMPARISON
Prime Assets are Class A and newly repositioned space.
Prime assets in Dumbo and Williamsburg
continue to compete with Manhattan, while
Sunset Park remains the most affordable option.
Key
Takeaway
35
Source: Newmark Grubb Knight Frank Research
Overall Average Asking Rent and Availability
LONG ISLAND CITY TRENDS
Asking rents reached new heights in
2Q16, rising to $37.66/SF, a 2.6%
increase from last quarter.
Fashion tenants drove 2Q16 leasing;
Madewell took 59,680 SF at the
Factory Building, and Eloquii took
10,807 SF at 37-18 Northern
Boulevard.
The availability rate rose to 13.9%,
driven by space hitting the market at
30-30 Northern Boulevard, 47-37
Austell Place, and the Falchi
Building.
0%
4%
8%
12%
16%
20%
$10
$15
$20
$25
$30
$35
$40
2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 2Q15 2Q16
Average Asking Rent (Price/SF) Availability (%)
Despite Long Island City’s relative affordability to
Manhattan and most of Brooklyn, asking rents
reached a new all-time high in 2Q16.
Key
Takeaway
36
Astoria
Factory District
Hunter’s Point/ LIC Waterfront
Source: Newmark Grubb Knight Frank Research
Total Inventory: 3,438,213 SF
Availability Rate: 20.0%
Average Asking Rent, Prime Assets: $35.86/SF
Average Asking Rent, Standard Assets:
$26.42/SF
YTD Absorption: -211,571 SF
ASTORIA
Total Inventory: 4,501,132 SF
Availability Rate: 16.7%
Average Asking Rent, Prime Assets: $39.59/SF
Average Asking Rent, Standard Assets:
$30.00/SF
YTD Absorption: -125,231 SF
THE FACTORY DISTRICT
Total Inventory: 3,733,385 SF
Availability Rate: 4.9%
Average Asking Rent, Prime Assets: $40.33/SF
Average Asking Rent, Standard Assets:
$29.55/SF
YTD Absorption: -28,731 SF
HUNTERS POINT/LIC WATERFRONT
Prime Assets are Class A and newly repositioned
space. Standard Assets are all other office inventory.
LONG ISLAND CITY SUBMARKET SNAPSHOT
www.ngkf.com
New York City
HEADQUARTERS
125 Park Avenue
New York, NY 10017
212.372.2000
Todd P. Hershman
Associate Director
212.359.8520
Jonathan Mazur
Managing Director, Research
212.372.2154
Stephanie Jennings
Tri-State Director, Research
212.372.2099
All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Grubb Knight Frank (NGKF) has not verified any such information, and the same constitutes the statements and representations only of the source thereof, and not of NGKF. Any recipient of this publication should independently verify such information and all other information that may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient’s choice with regard to all aspects of that decision, including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy, broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains.
Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our
data, there may be adjustments in historical statistics including availability, asking rents, absorption and effective rents.
Newmark Grubb Knight Frank Research Reports are also available at www.ngkf.com/research
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