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DRAFT 10-13-2010
Market OverviewFourth Quarter 2010
NEW YORK CAPITAL MARKETS GROUP
2NEW YORK CAPITAL MARKETS GROUP
• Executive Summary
– Economic Overview• Global Capital Markets
• U.S. Economic Snapshot
• U.S. Capital Markets—Investment Market
• U.S. Capital Markets—Debt Market
– Manhattan Capital Markets
– Manhattan Leasing Market
– New York City Residential Market
• Addendum
MANHATTAN CAPITAL MARKETS
NEW YORK CAPITAL MARKETS GROUP
Richard BaxterVice Chairman+1 212 812 [email protected]
Jonathan Caplan Vice Chairman +1 212 812 [email protected]
Yoron CohenVice Chairman+1 212 812 [email protected]
Scott LathamVice Chairman+1 212 812 [email protected]
3NEW YORK CAPITAL MARKETS GROUP
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
Snapshot
• 2010 global investment sales increased nearly 50% (vs. 2009) to $317 billion, approximately 59% below peak volume in 2007 of $759 billion
• Cap rates compressed considerably from mid-2009, and, varying by market, have stabilized at lower levels or are moving downward more slowly
• 2011 global investment sales volumes are projected to increase by an additional 20% - 25% with the Americas anticipated to show the largest increase
Global Capital Markets Overview
U.S. Economic Overview
• Lack of employment growth and an anemic housing market pose potential drag on growth entering 2011
• However, heightened “jobless recovery” and “double dip recession” anxiety has lessened during the past quarter, as GDP growth and consumer spending have improved
• Q42010 retail sales reflect an approximate 7% increase year-over-year, in non-auto, non-gasoline sales
• 4-week, moving average jobless claims dropped from 490,000 in August to 410,000 at the end of 2010
• Record corporate profits anticipated to accelerate hiring as the new year progresses
* Additional data can be found in the addenda (Slides 56-75)
4NEW YORK CAPITAL MARKETS GROUP
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
Snapshot (cont’d)
U.S. Capital Markets – Investment Market Overview
U.S. Capital Markets – Debt Market Overview
• Transactions from all product types, led by office and multifamily, surged 122% (versus 2009) to $120 billion; still down 76% from 2007 peak
• Market remains highly differentiated with core Class A office and multifamily product in primary markets heavily favored by investors
• Cap rates are down as much as 200 basis points over past year for top tier product in strongest markets
• 2011 sales volume anticipated to increase significantly, with broadening market (geography and asset quality), as economy recovers
• Demand will continue to outpace supply
• De-leveraging continues to be a slow process. The “extend and pretend” strategy chosen by many lenders in 2009 and early 2010 looks like a good decision in retrospect
• 157 FDIC-insured banks failed in 2010, following 140 such failures in 2009. Closings will remain highly elevated for some time, with more than 900 “problem” institutions accounting for over $400 billion in total assets at the beginning of 2011
• Large national banks, insurance companies and international banks increased production levels as rebounding core property values, stabilizing market fundamentals and an improving economy, combined with accommodative monetary policy, sparked renewed lender interest in commercial real estate
• The CMBS market is showing new signs of life, with 2011 volume of $11.6 billion. A more recent series of larger bond issuances are underway, anticipated to be sold in early 2011
5NEW YORK CAPITAL MARKETS GROUP
Global Commercial Real Estate Investment
Source: Jones Lang LaSalle New York Capital Markets Group
$266 $275$327
$399 $402
$219
$130 $130
$89$118
$168
$301
$357
$159
$79 $70
0
100
200
300
400
500
600
700
800
2003 2004 2005 2006 2007 2008 2009 3Q2010
Domestic Cross-border
Global Annual TotalUS$ billions
US
$ b
illio
ns
$354bn$393bn
$495bn
$700bn
$759bn
$378bn
$209bn $200bn
2009 down 72%, 2010 YTD annualized down 65% from 2007 peak.
Domestic: Refers to any investor that originates from within the country in which the relevant transactions occur. Transactions involving both “domestic” purchaser and seller are referred to as “domestic” activity. Cross-border: Refers to any purchaser, vendor or both that originates from outside the country in which the relevant transaction occurs. Categorized into Inter-regional and Intra-regional transactions.
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
2003-3Q10
6NEW YORK CAPITAL MARKETS GROUP
1Q07 – 4Q10
Global Commercial Real Estate Investment
* Totals do not include multi-family salesSource: Jones Lang LaSalle New York Capital Markets Group
0
10
20
30
40
50
60
70
80
90
100
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410
Americas EMEA Asia Pacific
Global Quarterly Total *US$ billions
$188
$206$205
$160
$137
$103
$90
$49
$40 $35
$64
$70
$65 $68
The Americas sales volume experienced the most dramatic decline from 2007 to 2009.
$759 Billion
$379 Billion
$209 Billion
$317 Billion
ECONOMIC OVERVIEWU
S$ b
illio
ns
GLOBAL CAPITAL MARKETS
$73
$111
7NEW YORK CAPITAL MARKETS GROUP
Transaction Volume In U.S. $ Billions (Properties $10 Million And Greater)
Top Investment Markets
$10
$11
$11
$16
$17
$18
$22
$24
$42
$50NYC Metro
London Metro
Paris
SF Metro
LA Metro
DC Metro
Tokyo
Seattle
Chicago
Boston
2007
$4
$4
$4
$5
$5
$6
$10
$15
$15
$17Tokyo
NYC Metro
London Metro
Paris
Stockholm
Madrid
Seoul
DC Metro
Singapore
LA Metro
2008
$2
$2
$3
$3
$3
$4
$5
$7
$9
$13London Metro
Tokyo
Paris
Seoul
Shanghai
Hong Kong
Moscow
NYC Metro
DC Metro
Beijing
2009
$4
$5
$5
$5
$8
$8
$9
$10
$15
$16London Metro
Tokyo
Paris
SF Metro
NYC Metro
Hong Kong
DC Metro
LA Metro
Singapore
Shanghai
2010*
Source: Real Capital Analytics, Jones Lang LaSalle New York Capital Markets Group
* Represents transactions greater than $10 closed thru 3Q2010
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
8NEW YORK CAPITAL MARKETS GROUP
Office Supply Pipeline (2011-2012)
Major Global Markets
Source: Jones Lang LaSalle New York Capital Markets Group
Major U.S. gateway cities have almost no supply pipeline.
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
0 10 20 30 40 50 60
ChicagoNew York
San FranciscoLos Angeles
TorontoWashington
FrankfurtBrusselsMadridLondon
AmsterdamParis
Hong KongSydneyMoscowTokyo
SingaporeDubai
ShanghaiMumbai
2011
2012
Completions as % of existing stock
9NEW YORK CAPITAL MARKETS GROUP
Prime Office Yields - Global Cities
Source: Jones Lang LaSalle Capital Markets Group
2%
3%
4%
5%
6%
7%
8%
Q2 2000 Q2 2001 Q2 2002 Q2 2003 Q2 2004 Q2 2005 Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q4 2009 Q2 2010 Q3 2010 Q4 2010
New York Paris Frankfurt
London Tokyo
Due to differences in reporting metrics across the globe, data is not strictly comparable.
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETSC
ap
Rate
10NEW YORK CAPITAL MARKETS GROUP
0 2 4 6 8 10
Spain
Italy
JapanFrance
United KingdomGermany
United States
CanadaSweden
AustraliaSouth Korea
Mexico
RussiaPoland
TurkeyBrazil
India
China
% GDP Change
Asia PacificEMEAAmerica
Source: Global Insight, October 2010
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
Projected economic growth led by China, India and Brazil
The Hierarchy of Economic Performance, 2011-2012
% % % % % %
11NEW YORK CAPITAL MARKETS GROUP
2%
4%
6%
8%
10%
12%
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Recessions NYC Unemployment Rate U.S. Unemployment Rate
Historical U.S. and NYC Unemployment Rates
Source: NYS Department of Labor, U.S. Department of Labor
5.6%
10.8%
5.0%
7.8%
3.9%
6.3%
4.4%
10.2%
7.9%
10.4%
4.2%
12.1%
9.0%
4.4%
10.5%10.2%
As of December 2010, New York City unemployment rate at 9.1% vs. U.S. unemployment rate at 9.4%.
ECONOMIC OVERVIEW
Unemployment Rate
U.S. ECONOMIC SNAPSHOT
9.4%
9.1%
12NEW YORK CAPITAL MARKETS GROUP
(7)
(6)
(5)
(4)
(3)
(2)
(1)
0
1
0 5 10 15 20 25 30 35 40 45
Number of Months After Peak Employment
(Percent)
1974 1981 1990 2001 2007
Past 40 years
Current Recession’s Job Decline vs. Notable Recessions
Source: Bureau of Labor Statistics, Moody’s Economy.com, Jones Lang LaSalle
U.S. job market has formidable ground to regain; job creation has been sluggish.
U.S. ECONOMIC SNAPSHOT
Recessions:
ECONOMIC OVERVIEW
13NEW YORK CAPITAL MARKETS GROUP
(800,000)
(600,000)
(400,000)
(200,000)
0
200,000
400,000
600,000
Feb-06
Apr-06
Jun-06
Aug-06
Oct-06
Dec-06
Feb-07
Apr-07
Jun-07
Aug-07
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
(Net Change in Employment)
4
5
6
7
8
9
10
11
(Percent)
Net Jobs Added Unemployment Rate
Labor Market Overview
Source: Bureau of Labor Statistics, Moody's Economy.com, Jones Lang LaSalle
* As of November 2010
Employment growth slowly returning in near-term.
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
Jan ‘06 – Dec ‘10
14NEW YORK CAPITAL MARKETS GROUP
25
45
65
85
105
125
145
Jan-80
Jan-81
Feb-82
Mar-83
Apr-84
May-85
May-86
Jun-87
Jul-88
Aug-89
Sep-90
Sep-91
Oct-92
Nov-93
Dec-94
Jan-96
Jan-97
Feb-98
Mar-99
Apr-00
May-01
Jun-02
Jun-03
Jul-04
Aug-05
Sep-06
Oct-07
Oct-08
Nov-09
Dec-10
(198
5 = 10
0)
Consumer Confidence 30-Year Average
Consumer Confidence Levels
Source: Bloomberg, Jones Lang LaSalle
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
Jan ‘80 – Dec ‘10
15NEW YORK CAPITAL MARKETS GROUP
(3)
(2)
(1)
0
1
2
3
4
5
6
7
8
9
Jul-94
Feb-95
Sep-95
Apr-96
Nov-96
Jun-97
Jan-98
Aug-98
Mar-99
Oct-99
May-00
Dec-00
Jul-01
Feb-02
Sep-02
Apr-03
Nov-03
Jun-04
Jan-05
Aug-05
Mar-06
Oct-06
May-07
Dec-07
Jul-08
Feb-09
Sep-09
Apr-10
Nov-10
(Percent)
US Personal Consumption Expenditures
Year-Over-Year Retail Sales Growth
U.S. Personal Consumption
Source: Bloomberg, Jones Lang LaSalle
Strong fourth quarter rebound in consumer spending.
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
* As of November 2010
16NEW YORK CAPITAL MARKETS GROUP
600
700
800
900
1,000
1,100
1,200
1,300
1,400
2003Q2
2003Q3
2003Q4
2004Q1
2004Q2
2004Q3
2004Q4
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
($, b
illions)
(3)
(2)
(1)
0
1
2
3
4
5
6
7
8
9
10
(Percent)
Corporate Profits After Tax Labor Productivity
Labor Productivity and Corporate Profits
Source: Bloomberg, Jones Lang LaSalle
Strong corporate profits point to near-term acceleration in hiring.
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
03Q1 – 10Q3
17NEW YORK CAPITAL MARKETS GROUP
Total Debt Outstanding Relative to GDP
Total U.S. debt is almost 360 percent of GDP.
ECONOMIC OVERVIEW
Source: Federal Reserve Board of Governors, Jones Lang LaSalle
60Q1 – 10Q3
U.S. ECONOMIC SNAPSHOT
25
75
125
175
225
275
325
375
1960Q1
1961Q2
1962Q3
1963Q4
1965Q1
1966Q2
1967Q3
1968Q4
1970Q1
1971Q2
1972Q3
1973Q4
1975Q1
1976Q2
1977Q3
1978Q4
1980Q1
1981Q2
1982Q3
1983Q4
1985Q1
1986Q2
1987Q3
1988Q4
1990Q1
1991Q2
1992Q3
1993Q4
1995Q1
1996Q2
1997Q3
1998Q4
2000Q1
2001Q2
2002Q3
2003Q4
2005Q1
2006Q2
2007Q3
2008Q4
2010Q1
(Percent)
Household Debt Business Debt State, Local, & Federal Gov. Debt Financial Sector Debt Foreign Debt
18NEW YORK CAPITAL MARKETS GROUP
$82
$103
$127
$224
$310
$362
$514
$146
$54
$120
50
100
150
200
250
300
350
400
450
500
550
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
($, billions)
Commercial Property Sales
U.S. Historical Investment Sales Volume
Source: Real Capital Analytics, Jones Lang LaSalle New York Capital Markets Group
Transaction volume up 122% in 2010 versus 2009. 2010 volume down 76% vs. 2007 peak.
*2010 total sales volume is preliminary and includes property sales greater than $2.5 million
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – INVESTMENT MARKET
2001 – 2010*
19NEW YORK CAPITAL MARKETS GROUP
500
1,500
2,500
3,500
4,500
5,500
6,500
7,500
8,500
DC & DC Suburbs
New
York C
ity
Los Angeles
Houston
Boston
Chicago
Orange C
ounty
Dallas
Atlanta
San D
iego
No. N
ew Jersey
San F
rancisco
San Jose
Denver
Phoenix
($, m
illions)
Full Year 2009 Through Nov 2010
2009 and 2010 YTD*
U.S. Investment Sales Volume – Major Markets
Source: Real Capital Analytics, Jones Lang LaSalle New York Capital Markets Group
*As of November 2010.
ECONOMIC OVERVIEW
‘Gateway’ markets, office, and multifamily sectors leading recovery in sales activity.
U.S. CAPITAL MARKETS – INVESTMENT MARKET
20NEW YORK CAPITAL MARKETS GROUP
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Jul-01
Nov-01
Mar-02
Jul-02
Nov-02
Mar-03
Jul-03
Nov-03
Mar-04
Jul-04
Nov-04
Mar-05
Jul-05
Nov-05
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10(Percent)
Multifamily Industrial Office Retail
National Cap Rates
Source: Real Capital Analytics, Jones Lang LaSalle New York Capital Markets Group
*As of November 2010.
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – INVESTMENT MARKET
6-Month Moving Average
21NEW YORK CAPITAL MARKETS GROUP
REIT Prices Vs Overall Commercial Property Values
Pricing Trends
Source: Real Capital Analytics, Jones Lang LaSalle New York Capital Markets Group
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – INVESTMENT MARKET
Moody’s Property Index down 42% since 2007 peak. NAREIT Equity REIT Index down 41% over same period.
*As of December 2010.
50
75
100
125
150
175
200
225
Dec-00
May-01
Nov-01
May-02
Nov-02
May-03
Nov-03
May-04
Nov-04
May-05
Nov-05
May-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
(Dec '00 = 10
0)
Moody's Property Index NAREIT Equity REIT Index
22NEW YORK CAPITAL MARKETS GROUP
All Other
8%
REITs
1%
Finance Co's
2%
State, Local & Federal
Government
5%
Agency & GSE
Portfolios
10%
Life Co's
9%
CMBS, CDO,
other ABS
20%
Commercial &
Savings
Banks
45%
Real Estate Debt Outstanding
Source: Mortgage Bankers Association, Federal Reserve Board of Governors, Jones Lang LaSalle
Banks and ABS make up 65% of outstanding Real Estate Debt
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – DEBT MARKET
Commercial and Multifamily
Lender Type $Billions
Commercial & Savings Banks $1,428,069
CMBS, CDO, other ABS $639,944
Life Co's $298,646Agency & GSE Portfolios $317,206
State, Local & Federal Government $168,677
Finance Co's $69,915REITs $31,622
All Other $248,447
Total $3,202,526
*As of Q3 2010.
23NEW YORK CAPITAL MARKETS GROUP
CMBS Maturities
Source: Wells Fargo, Intex, Trepp, Jones Lang LaSalle
$72
$52
$40
$53
$98
$134$139
$7$3
$0
$20
$40
$60
$80
$100
$120
$140
$160
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CMBS (Fixed and Floating Rate)
US$ billions Cumulative CMBS Debt Maturities
Thru 2020 - $605 Billion
CMBS: $563.1 Billion Fixed-Rate loans due to mature by 2020.
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – DEBT MARKET
CMBS Maturity Schedule 2011-2020
$7
24NEW YORK CAPITAL MARKETS GROUP
Distressed Property Levels
Source: Real Capital Analytics, Jones Lang LaSalle
Resolutions increasing, offset by additional troubled assets
Distressed Property’s include only properties or portfolios $5M or greater that are in foreclosure, bankruptcy, restructured/modified status.
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – DEBT MARKET
Jan ‘08 – Dec ‘10
0
25
50
75
100
125
150
175
200
225
250
275
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
($, billions)
Troubled REO Restructured
25NEW YORK CAPITAL MARKETS GROUP
(200)
(150)
(100)
(50)
0
50
100
150
200
250
300
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010Q1
2010Q2
2010Q3
($, billions)
Multifamily Commercial
Net Borrowing
Deleveraging of Commercial Real Estate Industry
Source: Federal Reserve Board of Governors, Jones Lang LaSalle
Debt market correction still impacted by prevalence of loan extensions.
Deleveraging: Amount of commercial mortgage debt paid back exceeds new borrowing.
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – DEBT MARKET
26NEW YORK CAPITAL MARKETS GROUP
Treasury and 1-Month LIBOR Yields
Source: Bloomberg, Jones Lang LaSalle
Ten-Year Treasury trading near 3.4% in December, up about 75 basis points since September.
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – DEBT MARKET
Jan ‘90 – Dec ‘10
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
Sep-90
Jun-91
Mar-92
Dec-92
Sep-93
Jun-94
Mar-95
Dec-95
Sep-96
Jun-97
Mar-98
Dec-98
Sep-99
Jun-00
Mar-01
Dec-01
Sep-02
Jun-03
Mar-04
Dec-04
Sep-05
Jun-06
Mar-07
Dec-07
Sep-08
Jun-09
Mar-10
Dec-10
(Yield, percent)
5-Year Treasury 7-Year Treasury 10-Year Treasury 1-Month LIBOR
27NEW YORK CAPITAL MARKETS GROUP
• Executive Summary
– Economic Overview• Global Capital Markets
• U.S. Economic Snapshot
• U.S. Capital Markets—Investment Market
• U.S. Capital Markets—Debt Market
– Manhattan Capital Markets
– Manhattan Leasing Market
– New York City Residential Market
• Addendum
MANHATTAN CAPITAL MARKETS
28NEW YORK CAPITAL MARKETS GROUP
Overview
• 2010 witnessed much greater than anticipated improvements in debt liquidity, equity liquidity and New York City employment and office market fundamentals.
• This has led to a surge in domestic and foreign capital seeking New York City real estate, accompanied by cap rate compression and more optimistic underwriting.
• 2010 sales volume (transactions valued over $10 million) totaled $12.43 billion, more than three times the 2009 annual total of $3.5 billion. However, 2010 sales volume still 50% lower than 2004-2008 average.
• 2009 saw only seven sales above $100 million, most reflecting some form of distress. In 2010, 35 transactions over $100 million closed.
• Pricing for core properties approaching 2006 levels, with sub 5% cap rates in certain cases.
• A recent example of the quickly rebounding investment sales market was the recapitalization of 1540 Broadway, a 49% interest sale based on a price of approximately $586 per square foot, a 50% premium over the prior sale price of $392 per square foot when the building traded just over a year earlier.
* Additional data can be found in the addenda (Slides 76-81).
MANHATTAN CAPITAL MARKETS
29NEW YORK CAPITAL MARKETS GROUP
Unemployment Rate – US/NYC MSA/Manhattan
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
2006Q
1
2006Q
2
2006Q
3
2006Q
4
2007Q
1
2007Q
2
2007Q
3
2007Q
4
2008Q
1
2008Q
2
2008Q
3
2008Q
4
2009Q
1
2009Q
2
2009Q
3
2009Q
4
2010Q
1
2010Q
2
2010Q
3
2010Q
4
% U
nem
plo
ym
en
t
United States NYC Metropolitan Statistical Area Manhattan
US
NYC MSA
Manhattan
Source: Moody’s Economy.com
MANHATTAN CAPITAL MARKETS
9.4%
8.6%
7.5%
30NEW YORK CAPITAL MARKETS GROUP
70.7
61.8
58.4
10.0
21.1
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
1960s 1970s 1980s 1990s 2000s
Sq
uare
Feet
(Mil
lio
ns)
Average = 63.6 MSF per decade
Average = 15.6 MSF per decade
Net addition to supply over past 2 decades = 6.1 MSF. Long term, NYC faces space supply shortage, which will be magnified by lack of recent, modern building stock.
New Office Building Construction by Decade
New York Market Perspective
Inventory reduced by 25 MSF due to World Trade Center (15 MSF) and residential conversions (10 MSF)
270 Park Ave - 1,132,460
1285 Aven of the Ame - 1,473,950
643 West 43rd St - 1,128,000
1 Chase Manhattan Plz - 1,898,158
399 Park Ave - 1,250,000
60 Broad St - 1,014,041
200 Park Ave - 2,254,274
1290 Ave of the Ame - 1,987,328
277 Park Ave - 1,529,945
1301 Ave of the Ame - 1,764,411
59 Maiden Ln - 1,043,007
245 Park Ave - 1,611,046
26 Federal Plz - 1,109,969
140 Broadway - 1,200,000
909 Third Ave - 1,125,000
767 Fifth Ave - 1,637,379
1345 Ave of the Ame - 1,640,000
2 Penn Plz - 1,500,000
1 NY Plz -2,103,750
345 Park Ave - 1,600,519
450 West 33rd St - 1,500,000
153 East 53rd St - 1,492,860
1166 Ave of the Ame - 1,430,000
1211 Ave of the Ame - 1,734,105
1 Bankers Trust Plz - 1,363,334
1633 Broadway - 2,240,000
1 Penn Plz - 2,072,136
1 Liberty Plz - 2,121,437
55 Water St - 3,600,000
9 West 57th St - 1,500,000
1114 Ave of the Ame - 1,310,000
1185 Ave of the Ame - 1,000,000
1221 Ave of the Ame - 2,200,000
1251 Ave of the Ame - 1,893,652
1515 Broadway - 1,417,450
1 WTC - 3,958,091
2 WTC - 3,958,091
2 NY Plz - 1,345,919
237 Park Ave - 1,142,196
55 East 52nd St - 1,050,000
101 Park Ave - 1,137,000
590 Madison Ave - 1,016,413
335 Madison Ave - 1,046,984
85 Broad St - 1,040,000
101 Barclay St - 1,140,000
787 Seventh Ave - 1,429,610
1 WFC - 1,461,365
3 WFC - 2,300,000
4 WFC - 1,600,000
2 WFC - 2,200,000
7 WTC - 1,855,000
Financial Sqr - 1,000,301
825 Eighth Ave - 1,550,212
388 Greenwich St - 1,600,000
60 Wall St - 1,587,849 1585 Broadway - 1,220,732
4 Times Square - 1,477,631
383 Madison Ave - 1,200,000745 Seventh Ave - 1,036,7415 Times Square - 1,062,203Columbus Center - 1,016,000 731 Lexington Avenue – 1,300,000300 Madison Ave - 1,200,0007 Times Square - 1,000,000 7 WTC - 1,700,000 1101 Ave of the Ame - 2,100,000 620 Eighth Ave - 1,500,000
Note: Total construction SF includes all new office buildings above 100,000 SF.
Source: Jones Lang LaSalle Research
MANHATTAN CAPITAL MARKETS
31NEW YORK CAPITAL MARKETS GROUP
$590
$335
$941
$875
$749
$549
$434$475
$443$421
$340$308$336
$253
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
$55.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Total Midtown and Midtown South Downtown Weighted Average Midtown Class A Office Price PSF
Sales Activity (Billions) Price PSF
Annual Investment Sales Activity
(2)
(1) 2008 Average price PSF excluding GM Building: $832 PSF(2) Based on the only two MT Class A sales in 2009
$12.4B
(1)
346259 66170# of Deals 83 16558155128 173 111 78 191 136
Source: Jones Lang LaSalle New York Capital Markets Group
MANHATTAN CAPITAL MARKETS
32NEW YORK CAPITAL MARKETS GROUP
Investment Sales by Investor Profile
Source: Jones Lang LaSalle New York Capital Markets Group
MANHATTAN CAPITAL MARKETS
Based on 2008 Total Sales of $19.8 Billion
Based on 2007 Total Sales of $48.5 Billion
Based on 2010 Total Sales of$12.4 Billion
Pension Fund
4%
Corporate / User
1%
Foreign
13%
REIT
18%
Private
Capital
56%
Other
3%
Corporate / User
6% REIT
11%
Private
Capital
33%
Foreign
39%
Pension Fund
10%
Other
1%
Pension
Fund
33%
Foreign
10%
Private
Capital
39%
Other
2%Corporate / User
16%
Google’s purchase of 111 Eighth Avenue for $1.77 billion represents 14% of the total 2010 sales volume.
Based on 2009 Total Sales of$3.5 Billion
Pension
Fund
15%
Foreign
5%
Private
Capital
45%
Other
4%
REIT
17%
Corporate / User 14%
33NEW YORK CAPITAL MARKETS GROUP
7.91%
7.30%7.58%
7.34%
6.34%
4.93%4.64%
4.04%3.55%
4.45%
5.85%
5.24%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
Cap Rate
Weighted Overall Cap Rates, 1999 – 2010
Cap rates in New York City are lower than most US markets.Some Class A assets selling at sub 5% cap rates.
Midtown - Class A Cap Rates
Source: Jones Lang LaSalle New York Capital Markets Group
MANHATTAN CAPITAL MARKETS
34NEW YORK CAPITAL MARKETS GROUP
Notable Manhattan Transactions 2010
600 Lexington Avenue
• Office• 303,515 s.f.• Closed: May 2010• Seller: Hines US Core Fund• Buyer: SL Green• $193,000,000• $636 per s.f.
452 Fifth Avenue
• Office• 896,102 s.f.• Closed: April 2010 (arranged in late 2009)
• Seller: HSBC• Buyer: Midtown Equities & IDB Holding Corporation
• $330,000,000• $368 per s.f.
HSBC leasing floors 12-29 (290,000 s.f.) for 1 year and floors 1-11 (550,000 s.f.) for 10 years.
299 Park Avenue(49.5% Interest)
• Office• 1,084,890 s.f.• Closed: Jan 2010 (arranged in late 2009)
• Seller: UBS• Buyer: Rockpoint• $310,000,000• $572 per s.f. (imputed value)
Rockpoint paid $150 million cash and assumed a portion of the $310 million mortgage that matures in 2025. UBS lease in-place through 2018, currently paying $115 per s.f.
1221 Avenue of the Americas(45% Interest)
• Office• 2,500,000 s.f.• Closed: May 2010• Seller: SL Green• Buyer: Canada Pension Plan Investment Board
• $576,000,000• $512 per s.f. (imputed value)
Sale of a non-controlling interest.
340 Madison Avenue(49% Interest)
• Office• 750,00 s.f. • Closed: May 2010• Seller: DE Shaw• Buyer: RXR• $279,300,000• $760 per s.f. (imputed value)
Sale represents a 5.3% cap rate. Property is currently 93.6% occupied, with 54% of the space expiring over the next 3 years.
Sale represents a 6.2% cap rate. Property is currently 92% occupied.
MANHATTAN CAPITAL MARKETS
35NEW YORK CAPITAL MARKETS GROUP
Notable Manhattan Transactions 2010
693 Fifth AvenueTakashimaya
• Office / Retail• 100,000 s.f.• Closed: July 2010• Seller: Takashimaya• Buyer: Thor Equities• $142,000,000• $1,420 per s.f.
Property delivered with Takashimaya space vacant (through 8th floor). Ground floor retail market rents > $2,000 PSF.
55 East 52nd Street Park Avenue Plaza(49.9% interest)
• Office• 1,137,452 s.f. • Closed: July 2010• Seller: Fisher Brothers• Buyer: Rockpoint• $335,000,000• $590 per s.f. (imputed value)
Recapitalization of property.
680 Madison Avenue (Carlton House)
• Hotel / Residential Redevelopment
• 220,000 s.f.• Closed June 2010• Seller: Helmsley Trust• Buyer: Extell & Angelo Gordon• $170,000,000• $773 per s.f.
Residential conversion to coops planned (leasehold interest). Property contains 14,667 s.f. of prime retail space on Madison Avenue.
6 Times Square (Knickerbocker Hotel)
• Office (vacant)• 257,461 s.f.• Closed June 2010• Seller: Istithmar• Buyer: Ashkenazy, Stanley Chera & Highgate Holdings
• $170,500,000• $662 per s.f.
Property includes an adjacent lot. Property to be redeveloped into hotel and retail.
1540 Broadway (49% Interest)
• Office• 905,533 s.f. • Closed: September 2010• Seller: CBRE Investors• Buyer: Edge Fund Advisors (HSBC)
• $259,700,000 (49%)• $586 per s.f.
Sale of a 49% interest in the office condominium portion. Represents a 5.5% cap rate on in-place income. Property is 90% leased
MANHATTAN CAPITAL MARKETS
36NEW YORK CAPITAL MARKETS GROUP
Notable Manhattan Transactions 2010
510 Madison Avenue
• Office• 330,400 s.f.• Closed: September 2010• Seller: Harry Macklowe• Buyer: Boston Properties• $274,419,609• $831 per s.f.
Newly constructed, boutique, Class A trophy, 100% vacant. Lease-up costs including TIs and commissions estimated at $150-$200 PSF.
660 Madison Avenue
• Office• 254,000 s.f.• Closed: November 2010• Seller: Risanamento SpA• Buyer: Safra Bank• $285,000,000• $1,122 per s.f.
Sale of the office condominium above Barneys Department Store.
111 Eighth Avenue
• Office• 2,961,071 s.f.• Closed December 2010• Seller: Taconic Partners, Jamestown and NY State Common Retirement Fund
• Buyer: Google• $1,770,000,000• $598 per s.f.
Property is 99% leased and sale price represents a 5.5% cap rate on in-place income.
1330 Avenue of the Americas
• Office• 534,222 s.f.• Closed November 2010• Seller: Caisse Depot• Buyer: RXR• $400,000,000• $749 per s.f.
Sale price represents a 3.4% cap rate. RXR partnered with Edmund Safra and PSP a Canadian Pension Fund. Property requires approximately $50 in additional capital to lease remaining vacant space.
MANHATTAN CAPITAL MARKETS
37NEW YORK CAPITAL MARKETS GROUP
• Executive Summary
– Economic Overview• Global Capital Markets
• U.S. Economic Snapshot
• U.S. Capital Markets—Investment Market
• U.S. Capital Markets—Debt Market
– Manhattan Capital Markets
– Manhattan Leasing Market
– New York City Residential Market
• Addendum
MANHATTAN LEASING MARKET
38NEW YORK CAPITAL MARKETS GROUP
Overview
Source: Economy.com/JLL Research Services
MANHATTAN LEASING MARKET
* Additional data can be found in the addenda (Slides 82-114).
New York City’s Economy
• New York City has outpaced the national economy during the recovery. In 2010, employment rose in every major industry, including the vital financial services sector.
• Manhattan unemployment rate was 7.5% in November 2010, down from 9.2% in October 2009.
• The outlook for employment, while positive, remains tepid. Growth has slowed in office-using employment since mid-year. The most recent forecasts do not call for a return to sustained employment growth until mid-to-late 2011.
Real Estate Trends
• Although vacancy fell steadily throughout the year, average asking rents have been mostly flat and will finish the year at levels similar to that of January 2010. Midtown Class A asking rents moved slightly higher at year end, finishing at $65.81 per square foot, up from $65.00 in September.
• Pricing among Midtown Class A properties peaked back in May 2008 and have declined by more than 30%. Net effective rents (NER), which are taking rents inclusive of landlord concessions, have declined approximately 40 – 50% since the peak.
• At the highest end of the market, rents have increased. Pricing for trophy space in Midtown moved higher to $77.65 per square foot, up from $72.11 in the first quarter of 2010.
• Downtown Class A vacancy rates are still lower than Midtown but have crept up steadily since the beginning of summer. Even though the amount of available space has risen, Downtown rates remain below the 15-20% predictions of last year.
• Leasing activity in Manhattan increased from 24 million square feet in 2009 to almost 35 million in 2010, a 46% increase.
39NEW YORK CAPITAL MARKETS GROUP
Current Office Market StatisticsFourth Quarter 2010
$47.168.7%14,764,836Midtown South Class A
$41.639.2%46,489,144Midtown South Class B
$52.18
$43.01
$38.22
$34.91
$40.95
$59.14
$47.32
$65.81
ASKING RENT
9.1%61,253,980Midtown South Overall
11.9%427,658,764MANHATTAN OVERALL
12.8%96,350,773Downtown Overall
12.2%270,054,011Midtown Overall
11.9%106,647,194Midtown Class B
12.3%163,406,817Midtown Class A
16.3%35,069,104Downtown Class B
10.9%61,281,669Downtown Class A
VACANCYINVENTORY (R.S.F.)MARKET SEGMENT
MANHATTAN LEASING MARKET
40NEW YORK CAPITAL MARKETS GROUP
Yearly Comparison by Major Market
11.3
%
7.1
%
7.7
% 10.1
%
14.7
%
11.3
%
8.6
%
12.9
%
12.3
%
8.7
% 10.9
%
11.7
%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Midtown Midtown South Downtown Manhattan
4Q08 4Q09 4Q10
Manhattan Class A Vacancy Rates$90.0
4
$65.1
5
$52.9
4
$81.6
1
$65.1
9
$46.5
4
$40.3
2
$60.1
7
$65.8
1
$47.1
6
$40.9
5 $59.0
0
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Midtown Midtown South Downtown Manhattan
4Q08 4Q09 4Q10
Manhattan Class A Asking Rents
11.3
%
7.1
%
7.7
% 10.1
%
14.3
%
11.2
%
10.9
% 13.1
%
12.2
%
9.1
%
12.8
%
11.9
%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Midtown Midtown South Downtown Manhattan
4Q08 4Q09 4Q10
$80.5
8
$55.1
9
$47.3
7
$70.1
9
$59.4
8
$43.1
8
$37.8
9 $53.6
4
$59.1
4
$43.0
1
$38.2
2 $52.1
8
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Midtown Midtown South Downtown Manhattan
4Q08 4Q09 4Q10
Manhattan Overall Vacancy Rates
Manhattan Overall Asking Rents
PSF PSF
MANHATTAN LEASING MARKET
41NEW YORK CAPITAL MARKETS GROUP
Landlord Concessions by Year
Tenant Improvements Free Rent
CLASS
B
CLASS
A
5.2
3.1
6.5
6.2
5.4
3.8
6.36
.8
0
1
2
3
4
5
6
7
8
4Q07 4Q08 4Q09 4Q10
Midtown Downtown
$3
3.3
5
$2
3.4
1
$4
4.8
0
$4
1.6
3
$3
6.3
3
$2
6.0
0
$2
4.6
8
$3
5.0
0
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
4Q07 4Q08 4Q09 4Q10
Midtown Downtown
$2
1.2
5
$3
7.5
0
$5
1.4
3
$4
0.0
0
$6
0.0
3
$3
7.5
0
$2
1.6
7 $3
2.5
0
$3
3.1
3
$1
6.5
9
$2
3.1
9
$1
7.5
0
$0
$10
$20
$30
$40
$50
$60
$70
4Q07 4Q08 4Q09 4Q10
Midtown Downtown Midtown South
3.8
5.0
10
.2
5.2
6.3
5.8
2.5
4.4
4.3
4.3
8.0
3.2
0
2
4
6
8
10
12
4Q07 4Q08 4Q09 4Q10
Midtown Downtown Midtown South
PSF
PSFMonths
Months
MANHATTAN LEASING MARKET
*
* Note: Downtown Class A free rent is skewed due to two large leases with outsized free rent periods.
42NEW YORK CAPITAL MARKETS GROUP
$65.81
$53.04
$95.08
$93.66
$40
$50
$60
$70
$80
$90
$100
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Asking Rent Net Effective Rent (NER)
$40.95
$26.56
$55.16
$50.83
$20
$25
$30
$35
$40
$45
$50
$55
$60
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Asking Rent Net Effective Rent (NER)
Asking Rent vs. Net Effective RentPeak 2Q08 to Present (Direct/Renewal/Expansion)
Net Effective Rent (-48%)
Asking Rent
(-26% )
Downtown - Class A
Asking Rent
(-31% )
Net Effective Rent
(-43%)
Midtown - Class A
MANHATTAN LEASING MARKET
43NEW YORK CAPITAL MARKETS GROUP
Historical Absorption and Leasing Activity
3.807.71
11.87 10.42
6.32
-19.45
3.386.70
9.467.06
1.96
-13.46-10.05
4.14
-2.03-1.14
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Millio
n Squ
are
Fee
t
29
35
41
4742
4540
36 34
4340
36
2629
24
35
0
5
10
15
20
25
30
35
40
45
50
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Million Squ
are Fee
t
MANHATTAN LEASING MARKET
Absorption (MSF) Leasing Activity (MSF)
44NEW YORK CAPITAL MARKETS GROUP
$65.81
$90.57
$53.74
$86.13
$67.94
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Recorded Asking Rent CPI Adjusted 2000 Rent
Midtown Class A Asking Rent
MANHATTAN LEASING MARKET
Adjusted for Inflation (CPI)
2010 asking rents 25% below 2000 inflation adjusted rents
45NEW YORK CAPITAL MARKETS GROUP
Midtown and Downtown - Class A Asking Rents
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Midtown Downtown
1997-2000 rent increaseMidtown 67%Downtown 42%
2004-2007 rent increaseMidtown 57%Downtown 54%
2008-2009 rent decreaseMidtown -28%Downtown -24%
$49.14 $70.282006$32.67$59.712005$33.09$57.582004$35.36$53.742003$39.32$57.922002
DowntownMidtownCLASS A ASKING RENTS
$44.20 $65.252001
$51.21 $90.572007$52.94 $90.042008$40.17 $65.192009$40.95 $65.812010
MANHATTAN LEASING MARKET
46NEW YORK CAPITAL MARKETS GROUP
2025 23 22 20 22
2
27
16 1626 20
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010
Number of Deals
New Renewals
22
52
39 38
46
36%
32%
18%
8%
7%
Manhattan Deals Greater Than 100,000 SFNew and Renewal Transactions
Total 2010 Leasing Activity By Block SizeNew and Renewal Transactions (# of deals)
42
Leasing Activity by Block Size
MANHATTAN LEASING MARKET
Less than 10,000 (36%)
10,000-24,999 sf (32%)
25,000-49,999 sf (18%)
50,000-99,999 sf (8%)
100,000 + sf (7%)
47NEW YORK CAPITAL MARKETS GROUP
14
35
57
8069
1726
14
18
50
8191
14
12
0
20
40
60
80
100
120
140
160
180
2004 2005 2006 2007 2008 2009 2010
Nu
mb
er
of
Deals
$100 and Greater
$80 to $99
Top-Tier TransactionsNumber of Deals with Starting Rents Greater Than $80
$1849,777712 Fifth Ave.Westgate Capital$19032,0009 W 57th St.Silver Lake Partners $19532,8009 W 57th St.Apollo Management$2038,0009 W 57th St.Mousse Partners$20531,0009 W 57th St.Providence Equity Partners
2008$1101,500375 Park Ave.Banco de Bogotá S.A.$11010,800390 Park Ave.Wellspring$11014,4301095 A.O.A.China Construction Bank$11310,752405 Lexington Ave.New Holland Capital$13324,629767 Fifth Ave.Banco Itau
2009$11317,589375 Park Ave.Aviva Investors$12018,190375 Park Ave.Star Financial Bank$1205,891510 Madison Ave.Chieftain Capital$12010,700390 Park Ave. Fashion Concepts$1253,052590 Madison Ave.Kokomo Trading
Starting Rent
S.F.AddressTenant / 2010
Top 5 Leases 2008-2010
MANHATTAN LEASING MARKET
48NEW YORK CAPITAL MARKETS GROUP
• Executive Summary
– Economic Overview• Global Capital Markets
• U.S. Economic Snapshot
• U.S. Capital Markets—Investment Market
• U.S. Capital Markets—Debt Market
– Manhattan Capital Markets
– Manhattan Leasing Market
– New York City Residential Market
• Addendum
NEW YORK CITY RESIDENTIAL MARKET
49NEW YORK CAPITAL MARKETS GROUP
4949
• 2010 Sales activity outperformed 2009 as positive economic indicators reinforced New York City’s strengthening economy
– Sales volume 35% greater than the previous year
– Inventory modestly declined as new building permits reached lowest levels in decades
– Average days for units on market sharply declined from 4Q09. 39% Decline for Co-ops and 21.8% less for Condos
– Financing more readily available than the previous two years
• Shift towards larger units drove median sales price: up 4.3% from the same period last year
• As economic and financial benchmarks continue to improve, further rental growth is expected
– 2010 rents rose for all unit types from 4Q09
– Rental Concessions have sharply declined. Last year, approximately 60% of transactions included a concession. By December 2010, transactions with concessions were down to 22%.
– From 2009, rental vacancy contracted 39.9%
• The 2010 residential market showed stabilization and growth, but still off peak levels
– Condo sale price is 11.07% below peak values of 2008
– Sales volume is 25.1% below 2007 peak
Overview
* Additional data can be found in the addenda (Slides 115-121).
NEW YORK CITY RESIDENTIAL MARKET
50NEW YORK CAPITAL MARKETS GROUP
4Q10
$1,198
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Average Unit Price Average Price Per Square Foot
5050
$ Per Unit $ PSF
Source: Miller Samuel, Inc.
1998 – 4Q2010
Average unit pricing increased 9.3% since 4Q09, and has risen 3.8% over the prior quarter.
Condo Sale Prices
NEW YORK CITY RESIDENTIAL MARKET
51NEW YORK CAPITAL MARKETS GROUP
5151
$ Per Unit $ PSF
4Q10
$928
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Average Unit Price Average Price Per Square Foot
Source: Miller Samuel, Inc.
1998 – 4Q2010
Co-op Sale Prices
Average Co-op unit pricing is up 23.1% since the same period last year, but has decreased 4.1% since the prior quarter.
NEW YORK CITY RESIDENTIAL MARKET
52NEW YORK CAPITAL MARKETS GROUP
5252
$ Per Unit $ PSF
1998 – 4Q2010
Source: Miller Samuel, Inc.
Note: Luxury market accounts for top 10% of all Condo and Co-op Sales
Luxury unit pricing is up 26.3% over the prior year to $6.14 million, with price per square foot up 18.8% over the last quarter to $2,101.
4Q10
$2,101
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Average Unit Price Average Price Per Square Foot
Luxury Residential Condo and Co-op Sale Prices
NEW YORK CITY RESIDENTIAL MARKET
53NEW YORK CAPITAL MARKETS GROUP
5353
Volume of Condominium and Co-op Sales
Source: Miller Samuel, Inc.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Condos Co-ops
2010 sales volume is 35% greater than all of 2009.
NEW YORK CITY RESIDENTIAL MARKET
1998 – 4Q2010
54NEW YORK CAPITAL MARKETS GROUP
5454
Volume of Luxury Condominium and Co-op Sales
Source: Miller Samuel, Inc.
1998 – 4Q2010
Note: Luxury market accounts for top 10% of all Condo and Co-Op Sales
0 200 400 600 800 1,000 1,200 1,400 1,600
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2010 sales volume of luxury units up 11% over prior year.
NEW YORK CITY RESIDENTIAL MARKET
55NEW YORK CAPITAL MARKETS GROUP
5555
Residential Unit Permits Issued
Source: U.S. Department of Housing and Urban Development
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2010 permits issued have dropped by 83% from 2008 peak, the lowest level since 1992.
NEW YORK CITY RESIDENTIAL MARKET
56NEW YORK CAPITAL MARKETS GROUP
• Executive Summary
– Economic Overview - Addendum• Global Capital Markets
• U.S. Economic Snapshot
• U.S. Capital Markets—Investment Market
• U.S. Capital Markets—Debt Market
– Manhattan Capital Markets
– Manhattan Leasing Market
– New York City Residential Market
• Addendum
ADDENDUM
ADDENDUM
57NEW YORK CAPITAL MARKETS GROUP
4Q10
Office Vacancy Rates in Major Markets
0%
5%
10%
15%
20%
25%
Toronto
New
York
Washington DC
San Francisco
Los Angeles
Chicago
London
Paris
Madrid
Brussels
Frankfurt
Moscow
Amsterdam
Dubai CBD
Hong Kong
Mum
bai
Singapore
Tokyo
Shanghai
Sydney
Source: Jones Lang LaSalle, January 2011
Europe10.2%
Asia Pacific11.4%
Regional vacancy rates based on 34 markets in North America, 24 markets in Europe and 24 markets in Asia Pacific
North America17.5%
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
ADDENDUM
58NEW YORK CAPITAL MARKETS GROUP
-300 -250 -200 -150 -100 -50 0
Bp change
Prime Office Markets - Yield Shift
Europe
Source: Jones Lang LaSalle, January 2011
AmsterdamBrusselsFrankfurtLondonMadridMoscowParis
ChicagoLos AngelesNew YorkSan FranciscoTorontoWashington DC
Hong KongMumbaiShanghaiSingaporeSydneyTokyo
Sharp trophy market cap rate compression in N. American gateway cities in 2010.
4Q09 – 4Q10
ECONOMIC OVERVIEW
North America
Asia Pacific
GLOBAL CAPITAL MARKETS
ADDENDUM
59NEW YORK CAPITAL MARKETS GROUP
Rental Clock
ECONOMIC OVERVIEW
Prime Offices
GLOBAL CAPITAL MARKETS
ADDENDUM
Note
• This diagram illustrates where Jones Lang LaSalle estimates each prime office market is within its individual rental cycle as at end of December 2009
• Markets can move around the clock at different speeds and in different directions
• The diagram is a convenient method of comparing the relative position of markets in their rental cycle
• Their position is not necessarily representative of investment or development market prospects.
• Their position refers to Prime Face Rental Values
Source: Jones Lang LaSalle IP, December 2009 Source: Jones Lang LaSalle IP, December 2010
Note
• This diagram illustrates where Jones Lang LaSalle estimate each prime office market is within its individual rental cycle as at end of December 2010
• Markets can move around the clock at different speeds and directions
• The diagram is a convenient method of comparing the relative position of markets in their rental cycle
• Their position is not necessarily representative of investment or development market prospects.
• Their position refers to Prime Face Rental Values
SingaporeWashington DC
Hong Kong
Shanghai
Q4 2010As of Q4 2010
The Jones Lang LaSalle Property Clocks SM
Shanghai
Rental Value growth slowing
Rental Value growth
accelerating
Rental Values bottoming out
Rental Values falling
London, Sao Paulo Hong Kong, Sydney
Singapore
Chicago, Los Angeles
Mumbai
Amsterdam, Brussels Frankfurt, Madrid
Toronto
Tokyo
Q4 2009
New York, San Francisco Rental Value growth slowing
Rental Value growth
accelerating
Rental Values bottoming out
Rental Values falling
Moscow
ParisWashington DC
Dubai
AmericasEMEAAsia Pacific
TokyoMumbaiParis
Sydney
Dubai
ChicagoLos Angeles
New York, AmsterdamSan Francisco
London
Madrid
Brussels
Toronto, Frankfurt
Moscow
Sao Paulo
60NEW YORK CAPITAL MARKETS GROUP
-35 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35
DubaiMadrid
Los Angeles
FrankfurtTokyo
AmsterdamNew York
ChicagoMumbaiSydney
TorontoParis
Washington DC
San FranciscoBrusselsLondon
Shanghai
MoscowSingaporeHong Kong
% change
Asia Pacific Europe AmericasSource: Jones Lang LaSalle, January 2011
Prime Class A Office - Rental Change4Q09 – 4Q10
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
ADDENDUM
61NEW YORK CAPITAL MARKETS GROUP
Source: Jones Lang LaSalle, January 2011
Prime Office – Rental Rate Trends 2007-2010
70
80
90
100
110
120
130
140
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Asia Pacific
North America
Europe
North America – average of 6 markets; Asia Pacific – average of 5 markets: Europe – weighted average of 24 markets
Rental Index (Q1 2007 = 100)
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
ADDENDUM
62NEW YORK CAPITAL MARKETS GROUP
Properties of at least $5 millionSource: Jones Lang LaSalle, Real Capital Analytics
Transaction Volume Market Share By Investor Type
ECONOMIC OVERVIEW GLOBAL CAPITAL MARKETS
ADDENDUM
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
2004 2005 2006 2007 2008 2009 2010Q2 2010Q3 2010Q4
% M
arket Share
Foreign Fund Institution Private REIT User/Other
63NEW YORK CAPITAL MARKETS GROUP
(5)
(4)
(3)
(2)
(1)
0
1
2
3
4
5
6
7
8
1980Q1
1980Q3
1981Q1
1981Q3
1982Q1
1982Q3
1983Q1
1983Q3
1984Q1
1984Q3
1985Q1
1985Q3
1986Q1
1986Q3
1987Q1
1987Q3
1988Q1
1988Q3
1989Q1
1989Q3
1990Q1
1990Q3
1991Q1
1991Q3
1992Q1
1992Q3
1993Q1
1993Q3
1994Q1
1994Q3
1995Q1
1995Q3
1996Q1
1996Q3
1997Q1
1997Q3
1998Q1
1998Q3
1999Q1
1999Q3
2000Q1
2000Q3
2001Q1
2001Q3
2002Q1
2002Q3
2003Q1
2003Q3
2004Q1
2004Q3
2005Q1
2005Q3
2006Q1
2006Q3
2007Q1
2007Q3
2008Q1
2008Q3
2009Q1
2009Q3
2010Q1
2010Q3
(Percent)
Real GDP Growth Employment Growth
Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Jones Lang LaSalle
Historical GDP and Employment Growth
ECONOMIC OVERVIEW
Declines in GDP and Employment turned in 2010.
U.S. ECONOMIC SNAPSHOT
ADDENDUM
80Q1 – 10Q3
64NEW YORK CAPITAL MARKETS GROUP
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1929
1931
1933
1935
1937
1939
1941
1943
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2010Q2
($, billions)
5
10
15
20
25
30
35
40
45
50
(Percent)Government Consumption & Expenditures Government Spending-to-GDP
U.S. Government Spending-to-GDP
Source: Bureau of Economic Analysis, Jones Lang LaSalle
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
ADDENDUM
1929 – 10Q3
65NEW YORK CAPITAL MARKETS GROUP
0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
Jan-00
Jul-00
Feb-01
Aug-01
Mar-02
Sep-02
Apr-03
Nov-03
May-04
Dec-04
Jun-05
Jan-06
Jul-06
Feb-07
Sep-07
Mar-08
Oct-08
Apr-09
Nov-09
May-10
Dec-10
Euros per US Dollar
U.S. Dollar vs. Euro
Source: Bloomberg, Jones Lang LaSalle
Recent Euro weakness due to the continent’s sovereign debt crisis and fiscal issues.
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
ADDENDUM
Jan ‘00 – Dec ‘10
66NEW YORK CAPITAL MARKETS GROUP
100
125
150
175
200
225
Jan-00
Aug-00
Mar-01
Oct-01
May-02
Nov-02
Jun-03
Jan-04
Aug-04
Feb-05
Sep-05
Apr-06
Nov-06
Jun-07
Dec-07
Jul-08
Feb-09
Sep-09
Mar-10
Oct-10
(Jan '00 = 100)
S&P / Case-Shiller Composite 20-City Index
Home Prices
Source: S&P/Case-Shiller, Jones Lang LaSalle
Home Prices: Pricing dragging in Q4 following expiration of tax incentives.
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
ADDENDUM
Jan ‘00 – Oct ‘10
67NEW YORK CAPITAL MARKETS GROUP
250
750
1,250
1,750
2,250
2,750
Jan-60
Nov-61
Aug-63
May-65
Feb-67
Nov-68
Aug-70
May-72
Feb-74
Nov-75
Aug-77
May-79
Feb-81
Nov-82
Aug-84
May-86
Feb-88
Nov-89
Aug-91
May-93
Feb-95
Nov-96
Aug-98
May-00
Feb-02
Nov-03
Aug-05
May-07
Feb-09
Nov-10(Thousands)
Privately Owned Housing Units Started 50 Year Average
New Privately Owned Housing Units Started
Housing starts remain depressed after worst performance on record.
Jan ‘60 – Nov ‘10
Source: Federal Reserve Bank of St. Louis, Jones Lang LaSalle
U.S. ECONOMIC SNAPSHOT
ADDENDUM
ECONOMIC OVERVIEW
68NEW YORK CAPITAL MARKETS GROUP
96
98
100
102
104
106
108
110
112
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34
Number of Months After Start of Recession
(Mon
th 0 = 100
)
1973 1981 1990 2001 2007
Real Consumption
Source: Bureau of Economic Analysis, Federal Reserve Bank of St. Louis, Jones Lang LaSalle
Recovery in real consumption remains exceptionally low compared to previous recessions.
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
Recessions:
ADDENDUM
69NEW YORK CAPITAL MARKETS GROUP
Consumers Are Deleveraging
Source: Bloomberg, FactSet, EcoWin, Jones Lang LaSalle
4Q09 was the first period on record where total household borrowing declined. The bulk of the declines have been in consumer credit borrowing.
ECONOMIC OVERVIEW U.S. ECONOMIC SNAPSHOT
ADDENDUM
53Q1 – 10Q3
(3)
0
3
6
9
12
15
18
1953Q1
1955Q3
1958Q1
1960Q3
1963Q1
1965Q3
1968Q1
1970Q3
1973Q1
1975Q3
1978Q1
1980Q3
1983Q1
1985Q3
1988Q1
1990Q3
1993Q1
1995Q3
1998Q1
2000Q3
2003Q1
2005Q3
2008Q1
2010Q3
(Percent)
YoY Change in Household Debt Outstanding
70NEW YORK CAPITAL MARKETS GROUP
0
1
2
3
4
5
6
Feb-01
May-01
Aug-01
Nov-01
Feb-02
May-02
Aug-02
Nov-02
Feb-03
May-03
Aug-03
Nov-03
Feb-04
May-04
Aug-04
Nov-04
Feb-05
May-05
Aug-05
Nov-05
Feb-06
May-06
Aug-06
Nov-06
Feb-07
May-07
Aug-07
Nov-07
Feb-08
May-08
Aug-08
Nov-08
Feb-09
May-09
Aug-09
Nov-09
Feb-10
May-10
Aug-10
Nov-10
(Percent)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
($, millions)
Monthly Property Sales Cap Rate to 10-Year Treasury Spread
National Cap Rates to 10-Year Treasury Spread vs.
Monthly Property Sales
Source: Real Capital Analytics, Jones Lang LaSalle New York Capital Markets Group
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – INVESTMENT MARKET
ADDENDUM
Property sales have improved as cap rate to Treasury spreads have widened.
*As of November 2010.
71NEW YORK CAPITAL MARKETS GROUP
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
(Sales, $ million)
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
225,000
250,000(Troubled, $ m
illion)
Troubled Property Level Monthly Property Sales
Distressed Property Level vs. New Property Sales Jan ’07 – Dec ‘10
Source: Real Capital Analytics, Jones Lang LaSalle
Distress grew rapidly in 2009 and 2010; loss recognition coming slowly.
Distressed Property’s include only properties or portfolios $5M or greater and are in foreclosure, bankruptcy, restructured/modified status.
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – INVESTMENT MARKET
ADDENDUM
72NEW YORK CAPITAL MARKETS GROUP
75
150
225
300
375
450
525
600
675
750
825
900
975
1,050
1,125
1,200
1,275
1,350
1,425
Jan-08
Mar-08
May-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
(Bps)
AAA 10-Year CMBS REIT Senior Debt Inv. Grade A 10-Year Corporate BBB 10-Year Corporate
Historical Interest Rates
Source: Bloomberg, Jones Lang LaSalle New York Capital Markets Group
Rational pricing has returned to the debt market.
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – DEBT MARKET
ADDENDUM
Dec ’07 – Dec ‘10
73NEW YORK CAPITAL MARKETS GROUP
0
200
400
600
800
1,000
1,200
1,400
Feb-05
Apr-05
Jun-05
Aug-05
Oct-05
Dec-05
Feb-06
Apr-06
Jun-06
Aug-06
Oct-06
Dec-06
Feb-07
Apr-07
Jun-07
Aug-07
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
(Bps)
AAA Spread to Swaps
CMBS Spreads
Source: Bloomberg, Jones Lang LaSalle
CMBS spreads inched downward in second half of 2010.
As spreads tightened, Banks are more likely to lend as originating loans is in favor of positive leverage.
U.S. CAPITAL MARKETS – DEBT MARKETECONOMIC OVERVIEW
ADDENDUM
Feb ’05 – Dec ‘10
74NEW YORK CAPITAL MARKETS GROUP
$26,338
$36,798
$74,332
$56,571
$47,039 $67,150
$52,074 $7
8,000
$92,838
$169,507
$204,381
$233,677
$12,146
$2,104
$10,936
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
225,000
250,000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010($, m
illions)
CMBS Issuance
CMBS Issuance Peaked in 2007 at $230 Billion
Source: Credit Suisse, JP Morgan, Jones Lang LaSalle
CMBS anticipated to grow in 2011.
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – DEBT MARKET
ADDENDUM
1996 – 2010
75NEW YORK CAPITAL MARKETS GROUP
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
Mar
-08
Apr-0
8M
ay-0
8Ju
n-08
Jul-0
8Aug
-08
Sep-0
8O
ct-0
8N
ov-0
8D
ec-0
8Ja
n-09
Feb-0
9M
ar-0
9Apr
-09
May
-09
Jun-
09Ju
l-09
Aug-0
9Sep
-09
Oct
-09
Nov
-09
Dec
-09
Jan-
10Feb
-10
Mar
-10
Apr-1
0M
ay-1
0Ju
n-10
Jul-1
0Aug
-10
Sep-1
0O
ct-1
0N
ov-1
0
CMBS Delinquency Balance
Delinquency Balance (Billions)
Source: RealPoint, Jones Lang LaSalle
Delinquency percentage finished at 8.126 at end of 2010. Between 1998 and March 2009 delinquency balance did not exceed $5 billion.
Trailing 12 Months CMBS Delinquency
ECONOMIC OVERVIEW U.S. CAPITAL MARKETS – DEBT MARKET
ADDENDUM
76NEW YORK CAPITAL MARKETS GROUP
• Executive Summary
– Economic Overview• Global Capital Markets
• U.S. Economic Snapshot
• U.S. Capital Markets—Investment Market
• U.S. Capital Markets—Debt Market
– Manhattan Capital Markets - Addendum
– Manhattan Leasing Market
– New York City Residential Market
• Addendum
MANHATTAN CAPITAL MARKETS
ADDENDUM
77NEW YORK CAPITAL MARKETS GROUP
Investment Sales Summary
Source: Jones Lang LaSalle New York Capital Markets Group
Note: Includes commercial transactions of $10 million and higher.
MANHATTAN CAPITAL MARKETS
ADDENDUM
Midtown Midtown South Downtown TOTAL
Closed $8,465,000,000 $3,403,000,000 $563,000,000 $12,430,000,000
Total $8,465,000,000 $3,403,000,000 $563,000,000 $12,430,000,000
Percent of Total 68% 27% 5% 100%
Summary of Manhattan Sales Activity
As of December 31, 2010
(Rounded to the nearest $1 Million)
78NEW YORK CAPITAL MARKETS GROUP
Year-to-Year Comparison
Source: Jones Lang LaSalle New York Capital Markets Group
MANHATTAN CAPITAL MARKETS
ADDENDUM
Midtown Midtown South Downtown TOTAL % Change vs. '09
Class A Office $3,287 $1,770 $0 $5,057 332%
Other Office $1,617 $501 $369 $2,487 322%
Multifamily $1,174 $397 $62 $1,633 233%
All Other $2,386 $735 $132 $3,252 160%
TOTAL $8,464 $3,403 $563 $12,430 255%
Midtown Midtown South Downtown TOTAL
Class A Office $1,170 $0 $0 $1,170
Other Office $330 $100 $160 $590
Multifamily $437 $18 $35 $490
All Other $1,132 $117 $0 $1,249
TOTAL $3,069 $235 $195 $3,500
2010 Closed Sales, as of December 31 ($ Million)
2009 Closed Sales, as of December 31 ($ Million)
79NEW YORK CAPITAL MARKETS GROUP
Investment Sales: By MarketClosed as of December 31, 2010 ($12.43 Billion)
Source: Jones Lang LaSalle New York Capital Markets Group
MANHATTAN CAPITAL MARKETS
ADDENDUM
Midtown
$8.465 Billion – 68%
Midtown South
$3.403 Million – 27%Downtown
$563 Million – 5%
80NEW YORK CAPITAL MARKETS GROUP
Investment Sales: By Product TypeClosed as of December 31, 2010 ($12.43 Billion)
Source: Jones Lang LaSalle New York Capital Markets Group
MANHATTAN CAPITAL MARKETS
ADDENDUM
Land Development,
$943 - 8%
Retail
$611 Million – 5%
Hotel
$1.3 Billion – 10%
Multifamily
$1.6 Billion – 13%
Other Office
$2.5 Billion – 20%
Class A Office
$5.05 Billion – 41%
All Other
$425 Million – 3%
81NEW YORK CAPITAL MARKETS GROUP
700
750
800
850
900
950
1,000
1,050
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Th
ou
san
ds o
f Jo
bs
Office-Using Employment
Source: Moody’s Ecomomy.com
MANHATTAN CAPITAL MARKETS
ADDENDUM
82NEW YORK CAPITAL MARKETS GROUP
• Executive Summary
– Economic Overview• Global Capital Markets
• U.S. Economic Snapshot
• U.S. Capital Markets—Investment Market
• U.S. Capital Markets—Debt Market
– Manhattan Capital Markets
– Manhattan Leasing Market - Addendum
– New York City Residential Market
• Addendum
MANHATTAN LEASING MARKET
ADDENDUM
83NEW YORK CAPITAL MARKETS GROUP
4.0%
7.5%
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
1Q08 4Q010
$93.15
$68.81
12.3%
7.9%
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
1Q08 4Q10
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
Asking Rent Vacancy
Manhattan Unemployment
Midtown Class A - Asking Rent and VacancyDowntown Class A - Asking Rent and Vacancy
Class A Large Blocks Available (50K and up)
$53.63
$40.95
10.9%
5.2%$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
$55.00
$60.00
1Q08 4Q10
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
Asking Rent Vacancy
89
139
0
20
40
60
80
100
120
140
160
1Q08 4Q10
Manhattan - Peak to Present (1Q08 vs. 3Q10)
MANHATTAN LEASING MARKET
ADDENDUM
84NEW YORK CAPITAL MARKETS GROUP
Midtown - Peak to Present by Month (Aug. 08 – Dec. 10)
Average Asking Rent & Vacancy Rate
8.6
% 9.0
%
9.7
%
10
.7% 11
.3%
13
.0%
13
.4%
13
.5%
14
.8%
15
.0%
15
.0%
14
.9%
14
.7%
14
.7%
14
.6%
14
.6%
14
.7%
14
.3%
14
.1%
13
.9%
13
.9%
13
.4%
13
.4%
13
.1%
12
.9%
12
.6%
12
.8%
12
.6%
12
.3%
7%
8%
9%
10%
11%
12%
13%
14%
15%
16%
Aug-0
8
Sep-0
8
Oct
-08
Nov-
08
Dec-
08
Jan-0
9
Feb-0
9
Mar-09
Apr-09
May-
09
Jun-0
9
Jul-0
9
Aug-0
9
Sep-0
9
Oct
-09
Nov-
09
Dec-
09
Jan-1
0
Feb-1
0
Mar-10
Apr-10
May-
10
Jun-1
0
Jul-1
0
Aug-1
0
Sep-1
0
Oct
-10
Nov-
10
Dec-
10
$60
$65
$70
$75
$80
$85
$90
$95
$100
Vacancy Asking Rent
Class A
9.0
% 9.3
% 9.7
%
10
.0%
10
.2%
10
.5%
11
.4%
11
.7%
12
.0%
12
.8%
13
.2%
13
.0%
13
.0%
13
.2%
13
.4%
13
.6%
13
.7%
13
.2%
13
.3%
13
.2%
12
.8%
12
.9%
12
.8%
12
.8%
12
.4%
12
.5%
12
.5%
12
.1%
11
.9%
7%
8%
9%
10%
11%
12%
13%
14%
15%
Aug-0
8
Sep-0
8
Oct
-08
Nov-
08
Dec-
08
Jan-0
9
Feb-0
9
Mar-09
Apr-09
May-
09
Jun-0
9
Jul-0
9
Aug-0
9
Sep-0
9
Oct
-09
Nov-
09
Dec-
09
Jan-1
0
Feb-1
0
Mar-10
Apr-10
May-
10
Jun-1
0
Jul-1
0
Aug-1
0
Sep-1
0
Oct
-10
Nov-
10
Dec-
10
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
Vacancy Asking Rent
Class B
MANHATTAN LEASING MARKET
ADDENDUM
85NEW YORK CAPITAL MARKETS GROUP
Downtown - Peak to Present by Month (Aug. 08 – Dec. 10)
Average Asking Rent & Vacancy Rate
7.6
%
7.4
%7
.4% 7
.8%
7.7
%8
.2%
8.1
%
8.3
%
8.4
% 8.7
%
8.8
%
8.6
%8
.5%
8.7
%
8.9
%8
.7%
8.6
%
8.8
%8
.8%
9.6
%
9.6
%9
.4%
9.3
%
10
.9%
10
.9%
10
.8%
11
.0%
10
.8%
10
.9%
5%
6%
7%
8%
9%
10%
11%
Aug-0
8
Sep-0
8
Oct
-08
Nov-
08
Dec-
08
Jan-0
9
Feb-0
9
Mar-09
Apr-09
May-
09
Jun-0
9
Jul-0
9
Aug-0
9
Sep-0
9
Oct
-09
Nov-
09
Dec-
09
Jan-1
0
Feb-1
0
Mar-10
Apr-10
May-
10
Jun-1
0
Jul-1
0
Aug-1
0
Sep-1
0
Oct
-10
Nov-
10
Dec-
10
$35
$40
$45
$50
$55
$60
Vacancy Asking Rent
Class A
10
.5%
10
.6%
10
.7%
13
.0%
13
.2%
13
.6%
13
.8%
14
.0%
13
.7%
14
.0%
14
.3%
14
.2%
14
.4%
14
.8%
14
.8%
14
.9%
15
.1%
15
.0%
14
.8%
14
.7%
16
.5%
17
.0%
16
.9%
16
.5%
16
.1%
15
.9%
16
.5%
16
.4%
16
.3%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
16%
17%
Aug-0
8
Sep-0
8
Oct
-08
Nov-
08
Dec-
08
Jan-0
9
Feb-0
9
Mar-09
Apr-09
May-
09
Jun-0
9
Jul-0
9
Aug-0
9
Sep-0
9
Oct
-09
Nov-
09
Dec-
09
Jan-1
0
Feb-1
0
Mar-10
Apr-10
May-
10
Jun-1
0
Jul-1
0
Aug-1
0
Sep-1
0
Oct
-10
Nov-
10
Dec-
10
$33
$38
$43
$48
Vacancy Asking Rent
Class B
MANHATTAN LEASING MARKET
ADDENDUM
86NEW YORK CAPITAL MARKETS GROUP
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Midtown Downtown Manhattan Midtown South
The Midtown vacancy rate has increased sharply since 2007, but appears to have turned the corner. Downtown vacancy continues to climb.
Overall Vacancy Rate(1995-2010)
4.8%7.5%10.8%14.3%12.2%Midtown ManhattanDowntown
Midtown SouthYear
6.1%10.3%4.8%20067.1%7.5%4.5%200710.2%9.8%6.3%200813.1%10.9%11.2%200911.9%12.8%9.1%2010
MANHATTAN LEASING MARKET
ADDENDUM
87NEW YORK CAPITAL MARKETS GROUP
0%
2%
4%
6%
8%
10%
12%
14%
16%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Midtown Class A Downtown Class A Manhattan Class A Midtown South Class A
Manhattan - Class A Vacancy Rate(1995-2010)
7.7%7.2%11.3%14.7%12.3%Midtown ManhattanDowntown
Midtown SouthYear
7.9%9.15%5.3%20066.6%5.7%1.9%200710.1%7.7%7.1%200812.9%8.6%11.3%200911.7%10.9%8.7%2010
MANHATTAN LEASING MARKET
ADDENDUM
88NEW YORK CAPITAL MARKETS GROUP
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Midtown Class A Downtown Class A Manhattan Class A Midtown South Class A
Manhattan - Class A Asking Rent(1995-3Q10)
After falling sharply in 2008 / 2009, asking rents seem to have stabilized, particularly in Midtown.
$70.28 $90.57$90.04$65.19$65.81Midtown ManhattanDowntown
Midtown SouthYear
$60.30$49.14$41.28 2006$80.90$51.21$69.192007$81.61$52.94$65.152008$60.17$40.32$46.542009$59.00$40.95$47.162010
MANHATTAN LEASING MARKET
ADDENDUM
89NEW YORK CAPITAL MARKETS GROUP
$10
$20
$30
$40
$50
$60
$70
$80
$90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Midtown Overall Downtown Manhattan Midtown South
Manhattan - Overall Asking Rent(1995-2010)
$58.80$79.12$80.58$59.48$59.14Midtown ManhattanDowntown
Midtown SouthYear
$52.21$38.97$42.832006$68.87$47.72$53.362007$70.19$47.37$55.192008$53.64$37.89$43.182009$52.18$38.22$43.012010
MANHATTAN LEASING MARKET
ADDENDUM
90NEW YORK CAPITAL MARKETS GROUP
Midtown - Overall Vacancy Rate vs. Asking Rent(1995-2010)
$31.7
3
$32.0
2
$32.7
3 $41.2
9
$47.6
1
$60.0
0
$54.4
6
$49.2
4
$47.5
7
$49.5
8
$51.4
5 $61.3
8
$79.1
2
$80.5
8
$59.4
8
$59.1
4
11.3%
4.8%
12.2%
3.6%
9.6%
14.3%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0%
2%
4%
6%
8%
10%
12%
14%
16%
Midtown Asking Rent Midtown Vacancy Rate
MANHATTAN LEASING MARKET
ADDENDUM
91NEW YORK CAPITAL MARKETS GROUP
Midtown - Class A Vacancy Rate vs. Asking Rent(1995-2010)
$38.0
1
$38.2
5
$40.6
8 $50.3
8
$54.6
5
$67.9
4
$65.2
5
$57.9
2
$53.7
4
$57.5
8
$59.7
1 $70.2
8
$90.5
7
$90.0
4
$65.1
9
$65.8
110.3%
3.3%
5.6%
9.5%
14.7%
12.3%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0%
2%
4%
6%
8%
10%
12%
14%
16%
Midtown Class A Asking Rent Midtown Class A Vacancy Rate
MANHATTAN LEASING MARKET
ADDENDUM
92NEW YORK CAPITAL MARKETS GROUP
Downtown - Overall Vacancy Rate vs. Asking Rent(1995-2010)
$25.6
4
$25.6
5
$27.7
7
$31.7
3
$34.9
7
$43.4
2
$41.2
3
$36.5
1
$33.5
3
$31.8
0
$31.8
1
$44.1
2
$47.7
2
$47.3
7
$37.8
4
$38.2
2
16.6%
7.5%
3.9%
15.0%
12.8%
$0
$10
$20
$30
$40
$50
$60
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Downtown Asking Rent Downtown Vacancy Rate
MANHATTAN LEASING MARKET
ADDENDUM
93NEW YORK CAPITAL MARKETS GROUP
Downtown - Class A Vacancy Rate vs. Asking Rent(1995-2010)
$29.5
4
$29.6
7
$32.8
6
$34.7
7
$37.7
9
$46.6
6
$44.2
0
$39.3
2
$35.3
6
$33.0
9
$32.6
7
$49.1
4
$51.2
1
$52.9
4
$40.1
7
$40.9
5
13.2%
5.7%
13.2%
10.9%
2.7%
$0
$10
$20
$30
$40
$50
$60
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0%
2%
4%
6%
8%
10%
12%
14%
Downtown Class A Asking Rent Downtown Class A Vacancy Rate
MANHATTAN LEASING MARKET
ADDENDUM
94NEW YORK CAPITAL MARKETS GROUP
Manhattan - Leasing Activity New and Renewal Transactions Greater than 10,000 SF (2010)
MANHATTAN LEASING MARKET
ADDENDUM
Advertising/Public Relations, 7%
Apparel/Textile, 6%
Business Srvs, Consulting, 5%
Government/Public
Administration, 5%
Health Services, 4%
Real Estate, 3%
Computer & Data Processing,
3%
Membership Organization, 3%
Manufacturing, 3%
Retail, 2%
Educational Services, 2%
Architects/Engineers, 1%
Other, 1%
Legal Services, 15%
Financial Services, 24%
Comm./Media/Publishing, 14%
Insurance, 2%
95NEW YORK CAPITAL MARKETS GROUP
Manhattan - Leasing Statistics (4Q10)
MANHATTAN LEASING MARKET
ADDENDUM
YTD
complet ion (sf) Inventory (sf)
Direct net
absorption (sf)
YTD
direct net
absorption (sf)
Total net
absorption
(sf)
YTD total net
absorption
(sf)
YTD total net
absorption
(% of stock)
Direct
vacancy (sf)
Direct
vacancy (%)
Total vacancy
(sf)
Total vacancy
(%)
Average asking
rent ($ psf)
Under
construction /
renovation (sf)
Downtown
Class A 0 61,281,669 -101,674 -1,745,706 -33,047 -1,188,191 -1.9% 5,195,560 8.5% 6,661,950 10.9% $40.95 4,400,000
Class B 0 35,069,104 -171,155 -553,379 -133,157 -443,591 -1.3% 5,094,967 14.5% 5,713,520 16.3% $34.91 0
Totals 0 96,350,773 -272,829 -2,299,085 -166,204 -1,631,782 -1.7% 10,290,527 10.7% 12,375,470 12.8% $38.22 4,400,000
Midtown
Class A 0 163,406,817 -325,333 862,654 436,793 3,373,277 2.1% 14,346,529 8.8% 20,160,613 12.3% $65.81 0
Class B 0 106,647,194 186,209 27,992 577,986 1,196,049 1.1% 10,945,633 10.3% 12,702,368 11.9% $47.32 0
Totals 0 270,054,011 -139,124 890,646 1,014,779 4,569,326 1.7% 25,292,162 9.4% 32,862,981 12.2% $59.14 0
Midtown South
Class A 135,200 14,764,836 -60,302 228,341 55,703 352,042 2.4% 949,340 6.4% 1,288,130 8.7% $47.16 0
Class B 0 46,489,144 52,755 458,262 132,382 854,841 1.8% 3,262,549 7.0% 4,263,976 9.2% $41.63 0
Totals 135,200 61,253,980 -7,547 686,603 188,085 1,206,883 2.0% 4,211,889 6.9% 5,552,106 9.1% $43.01 0
Market Totals
Class A 135,200 239,453,322 -487,309 -654,711 459,449 2,537,128 1.1% 20,491,429 8.6% 28,110,693 11.7% $59.00 4,400,000
Class B 0 188,205,442 67,809 -67,125 577,211 1,607,299 0.9% 19,303,149 10.3% 22,679,864 12.1% $42.94 0
Totals 135,200 427,658,764 -419,500 -721,836 1,036,660 4,144,427 1.0% 39,794,578 9.3% 50,790,557 11.9% $52.18 4,400,000
96NEW YORK CAPITAL MARKETS GROUP
Downtown - Leasing Statistics (4Q10)
MANHATTAN LEASING MARKET
ADDENDUM
YTD
complet ion (sf) Inventory (sf)
Direct net
absorption (sf)
YTD
direct net
absorption (sf)
Total net
absorption
(sf)
YTD total net
absorption
(sf)
YTD total net
absorption
(% of stock)
Direct
vacancy (sf)
Direct
vacancy (%)
Total vacancy
(sf)
Total vacancy
(%)
Average asking
rent ($ psf)
Under
construction /
renovation (sf)
City Hall/Insurance
Class A 0 7,653,938 17,623 8,554 57,516 128,276 1.7% 352,536 4.6% 497,498 6.5% $34.70 0
Class B 0 10,807,683 4,750 59,256 18,858 85,810 0.8% 1,105,427 10.2% 1,156,714 10.7% $33.22 0
Totals 0 18,461,621 22,373 67,810 76,374 214,086 1.2% 1,457,963 7.9% 1,654,212 9.0% $33.70 0
Financial District
Class A 0 32,938,904 -45,159 -1,523,437 -3,617 -1,242,465 -3.8% 3,983,544 12.1% 4,887,564 14.8% $39.90 0
Class B 0 9,676,488 -43,562 -644,649 -76,945 -756,398 -7.8% 1,514,221 15.6% 1,956,553 20.2% $33.23 0
Totals 0 42,615,392 -88,721 -2,168,086 -80,562 -1,998,863 -4.7% 5,497,765 12.9% 6,844,117 16.1% $38.04 0
World Trade Center
Class A 0 20,688,827 -74,138 -230,823 -86,946 -74,002 -0.4% 859,480 4.2% 1,276,888 6.2% $47.33 4,400,000
Class B 0 14,584,933 -132,343 32,014 -75,070 226,997 1.6% 2,475,319 17.0% 2,600,253 17.8% $36.82 0
Totals 0 35,273,760 -206,481 -198,809 -162,016 152,995 0.4% 3,334,799 9.5% 3,877,141 11.0% $40.32 4,400,000
Market Totals
Class A 0 61,281,669 -101,674 -1,745,706 -33,047 -1,188,191 -1.9% 5,195,560 8.5% 6,661,950 10.9% $40.95 4,400,000
Class B 0 35,069,104 -171,155 -553,379 -133,157 -443,591 -1.3% 5,094,967 14.5% 5,713,520 16.3% $34.91 0
Totals 0 96,350,773 -272,829 -2,299,085 -166,204 -1,631,782 -1.7% 10,290,527 10.7% 12,375,470 12.8% $38.22 4,400,000
97NEW YORK CAPITAL MARKETS GROUP
Midtown - Leasing Statistics (4Q10)
MANHATTAN LEASING MARKET
ADDENDUM
YTD
complet ion (sf) Inventory (sf)
Direct net
absorption (sf)
YTD
direct net
absorption (sf)
Total net
absorption
(sf)
YTD total net
absorption
(sf)
YTD total net
absorption
(% of stock)
Direct
vacancy (sf)
Direct
vacancy (%)
Total vacancy
(sf)
Total vacancy
(%)
Average asking
rent ($ psf)
Under
construction /
renovation (sf)
Columbus Circle
Class A 0 15,443,053 -183,936 -21,608 -386,168 58,457 0.4% 1,868,512 12.1% 2,779,023 18.0% $57.31 0
Class B 0 8,590,070 -28,127 41,831 -42,302 35,191 0.4% 702,367 8.2% 816,472 9.5% $52.67 0
Totals 0 24,033,123 -212,063 20,223 -428,470 93,648 0.4% 2,570,879 10.7% 3,595,495 15.0% $56.56 0
Grand Central
Class A 0 33,592,558 -129,925 -8,343 47,819 860,463 2.6% 3,233,973 9.6% 4,489,606 13.4% $58.12 0
Class B 0 34,392,306 55,427 -401,492 108,051 -182,695 -0.5% 3,595,563 10.5% 4,147,702 12.1% $46.06 0
Totals 0 67,984,864 -74,498 -409,835 155,870 677,768 1.0% 6,829,536 10.0% 8,637,308 12.7% $52.47 0
Penn Plaza/Garment
Class A 0 8,445,574 -254,599 6,625 -211,527 20,349 0.2% 602,844 7.1% 851,133 10.1% $58.03 0
Class B 0 34,111,006 132,701 -40,234 319,358 490,592 1.4% 3,749,972 11.0% 4,479,061 13.1% $44.48 0
Totals 0 42,556,580 -121,898 -33,609 107,831 510,941 1.2% 4,352,816 10.2% 5,330,194 12.5% $46.85 0
Plaza District
Class A 0 78,737,923 143,273 373,844 976,599 1,654,734 2.1% 6,811,618 8.7% 9,574,735 12.2% $71.77 0
Class B 0 19,215,897 70,371 145,605 221,939 461,113 2.4% 1,601,744 8.3% 1,802,195 9.4% $54.42 0
Totals 0 97,953,820 213,644 519,449 1,198,538 2,115,847 2.2% 8,413,362 8.6% 11,376,930 11.6% $69.53 0
Times Square
Class A 0 27,187,709 99,854 512,136 10,070 779,274 2.9% 1,829,582 6.7% 2,466,116 9.1% $69.43 0
Class B 0 10,337,915 -44,163 282,282 -29,060 391,848 3.8% 1,295,987 12.5% 1,456,938 14.1% $49.98 0
Totals 0 37,525,624 55,691 794,418 -18,990 1,171,122 3.1% 3,125,569 8.3% 3,923,054 10.5% $62.40 0
Market Totals
Class A 0 163,406,817 -325,333 862,654 436,793 3,373,277 2.1% 14,346,529 8.8% 20,160,613 12.3% $65.81 0
Class B 0 106,647,194 186,209 27,992 577,986 1,196,049 1.1% 10,945,633 10.3% 12,702,368 11.9% $47.32 0
Totals 0 270,054,011 -139,124 890,646 1,014,779 4,569,326 1.7% 25,292,162 9.4% 32,862,981 12.2% $59.14 0
98NEW YORK CAPITAL MARKETS GROUP
Midtown South - Leasing Statistics (4Q10)
MANHATTAN LEASING MARKET
ADDENDUM
YTD
complet ion (sf) Inventory (sf)
Direct net
absorption (sf)
YTD
direct net
absorption (sf)
Total net
absorption
(sf)
YTD total net
absorption
(sf)
YTD total net
absorption
(% of stock)
Direct
vacancy (sf)
Direct
vacancy (%)
Total vacancy
(sf)
Total vacancy
(%)
Average asking
rent ($ psf)
Under
construction /
renovation (sf)
Chelsea
Class A 0 5,003,734 1,421 238,263 1,421 270,613 5.4% 513,920 10.3% 669,364 13.4% $43.26 0
Class B 0 15,958,385 -15,351 257,862 70,549 509,346 3.2% 1,124,567 7.0% 1,482,134 9.3% $41.95 0
Totals 0 20,962,119 -13,930 496,125 71,970 779,959 3.7% 1,638,487 7.8% 2,151,498 10.3% $42.38 0
Gramercy Park
Class A 0 6,519,374 16,997 68,798 57,701 160,149 2.5% 12,947 0.2% 181,028 2.8% $36.73 0
Class B 0 16,142,641 95,406 67,923 115,370 147,632 0.9% 969,027 6.0% 1,310,452 8.1% $42.58 0
Totals 0 22,662,015 112,403 136,721 173,071 307,781 1.4% 981,974 4.3% 1,491,480 6.6% $41.85 0
Greenwich Village
Class A 135,200 1,382,200 -78,720 -78,720 -3,419 -78,720 -6.3% 129,979 9.4% 130,979 9.5% $68.21 0
Class B 0 3,623,302 -6,216 -55,025 -2,911 -4,870 -0.1% 360,532 10.0% 392,737 10.8% $40.63 0
Totals 135,200 5,005,502 -84,936 -133,745 -6,330 -83,590 -1.7% 490,511 9.8% 523,716 10.5% $48.10 0
Hudson Square
Class A 0 1,715,528 0 0 0 0 0.0% 292,494 17.0% 306,759 17.9% $52.16 0
Class B 0 6,268,082 31,345 130,133 19,845 128,212 2.0% 477,285 7.6% 580,725 9.3% $37.50 0
Totals 0 7,983,610 31,345 130,133 19,845 128,212 1.6% 769,779 9.6% 887,484 11.1% $42.58 0
SoHo
Class A 0 144,000 0 0 0 0 0.0% 0 0.0% 0 0.0% $0.00 0
Class B 0 4,496,734 -52,429 57,369 -70,471 74,521 1.7% 331,138 7.4% 497,928 11.1% $45.11 0
Totals 0 4,640,734 -52,429 57,369 -70,471 74,521 1.6% 331,138 7.1% 497,928 10.7% $45.11 0
Market Totals
Class A 135,200 14,764,836 -60,302 228,341 55,703 352,042 2.4% 949,340 6.4% 1,288,130 8.7% $47.16 0
Class B 0 46,489,144 52,755 458,262 132,382 854,841 1.8% 3,262,549 7.0% 4,263,976 9.2% $41.63 0
Totals 135,200 61,253,980 -7,547 686,603 188,085 1,206,883 2.0% 4,211,889 6.9% 5,552,106 9.1% $43.01 0
99NEW YORK CAPITAL MARKETS GROUP
Penn Plz / Garment DistrictInventory 42,556,580 s.f.Vacancy Rate 12.5%Asking Rent $46.85/s.f.
Plaza DistrictInventory 97,953,820 s.f.Vacancy Rate 11.6%Asking Rent $69.53/s.f.
Times SquareInventory 37,525,624 s.f.Vacancy Rate 10.5%Asking Rent $62.40/s.f.
Grand CentralInventory 67,984,864 s.f.Vacancy Rate 12.7%Asking Rent $52.47/s.f.
Columbus CircleInventory 24,033,123 s.f. Vacancy Rate 15.0%Asking Rent $56.56/s.f.
Midtown Manhattan - Overall MarketStatistics by Submarket (Year-End 2010)
MANHATTAN LEASING MARKET
ADDENDUM
100NEW YORK CAPITAL MARKETS GROUP
Penn Plz / Garment DistrictInventory 8,445,574 s.f.Vacancy Rate 10.1%Asking Rent $58.03/s.f.
Plaza DistrictInventory 78,737,923 s.f.Vacancy Rate 12.2%Asking Rent $71.77/s.f.
Times SquareInventory 27,187,709 s.f.Vacancy Rate 9.1%Asking Rent $69.43/s.f.
Grand CentralInventory 33,592,558 s.f.Vacancy Rate 13.4%Asking Rent $58.12/s.f.
Columbus CircleInventory 15,443,053 s.f. Vacancy Rate 18.0%Asking Rent $57.31/s.f.
Midtown Manhattan Class A Market Statistics by Submarket (Year-End 2010)
MANHATTAN LEASING MARKET
ADDENDUM
101NEW YORK CAPITAL MARKETS GROUP
World TradeInventory 20,688,827 s.f.Vacancy Rate 6.2%Asking Rent $47.33/s.f.
Downtown Class A Manhattan MarketStatistics by Submarket (Year-End 2010)
City Hall / InsuranceInventory 7,653,938 s.f.Vacancy Rate 6.5%Asking Rent $34.70/s.f.
Financial DistrictInventory 32,938,904 s.f.Vacancy Rate 14.8% Asking Rent $39.90/s.f.
MANHATTAN LEASING MARKET
ADDENDUM
102NEW YORK CAPITAL MARKETS GROUP
SoHoInventory 4,640,734 s.f.Vacancy Rate 10.7%Asking Rent $45.11/s.f.
Gramercy ParkInventory 22,662,015 s.f.Vacancy Rate 6.6%Asking Rent $41.85/s.f.
Hudson SquareInventory 7,983,610 s.f.Vacancy Rate 11.1%Asking Rent $42.58/s.f.
Greenwich VillageInventory 5,005,502 s.f.Vacancy Rate 10.5%Asking Rent $48.10/s.f
ChelseaInventory 20,962,119 s.f. Vacancy Rate 10.3%Asking Rent $42.38/s.f.
Midtown South Manhattan Overall Market Statistics by Submarket (Year-End 2010)
MANHATTAN LEASING MARKET
ADDENDUM
103NEW YORK CAPITAL MARKETS GROUP
ManhattanSublease as Percentage of Available Space & Overall Asking Rent
8.2%
6.1%6.8%
10.0%9.1%
15.3%
33.8%
31.5%
23.0% 22.5%
16.2% 15.6%
22.1%
27.8%
29.6%
21.6%
$52.18
$70.19
$41.61
$53.76
$28.16
0%
5%
10%
15%
20%
25%
30%
35%
40%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$20
$30
$40
$50
$60
$70
$80
% Sublease Asking Rent
MANHATTAN LEASING MARKET
ADDENDUM
2010 witnessed a significant drop in sublet space
104NEW YORK CAPITAL MARKETS GROUP
Midtown ManhattanSublease as Percentage of Available Space & Overall Asking Rent
10.9%
7.9%9.0%
14.8%
10.5%
16.7%
32.1%
35.7%
24.7%26.4%
17.0%
18.9%
24.1%
27.7%
30.2%
23.0%
$32.02
$59.14$60.00
$80.58
$47.57
0%
5%
10%
15%
20%
25%
30%
35%
40%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$20
$30
$40
$50
$60
$70
$80
$90
% Sublease Asking Rent
MANHATTAN LEASING MARKET
ADDENDUM
105NEW YORK CAPITAL MARKETS GROUP
Midtown Class ASublease as Percentage of Available Space & Class A Rent
15.2%
10.9%
13.3%
23.9%
15.1%
18.5%
32.9%
45.0%
28.0%
30.6%
19.7%
26.5%
29.0%
32.0%
35.1%
28.8%
$38.01
$53.74
$65.81
$90.57
$67.94
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$20
$30
$40
$50
$60
$70
$80
$90
$100
% Sublease Class A Rent
MANHATTAN LEASING MARKET
ADDENDUM
106NEW YORK CAPITAL MARKETS GROUP
Midtown OverallPrice Difference Between Direct & Sublease
$3
.52
$3
.43
$3
.09
$9
.70
$5
.66 $6
.54
$3
.80
$8
.01
$8
.41
$8
.96
$8
.81
$8
.01
$8
.05
$7
.55
$7
.38
$7
.77
$8
.06
$7
.91
$8
.20
$8
.01
$7
.69
$8
.01
$1
1.2
9
$0
$2
$4
$6
$8
$10
$12
2000 2001 2002 2003 2004 2005 2006 2007 2008 Sep-
09
Oct-
09
Nov-
09
Dec-
09
Jan-
10
Feb-
10
Mar-
10
Apr-
10
May-
10
Jun-
10
Sep-
10
Oct-
10
Nov-
10
Dec-
10
0%
5%
10%
15%
20%
25%
30%
Dollar Difference % Difference (Discount)
MANHATTAN LEASING MARKET
ADDENDUM
107NEW YORK CAPITAL MARKETS GROUP
Midtown Class APrice Difference Between Direct & Sublease
$2
.70
$2
.40
$7
.13
$4
.44
$3
.26
$5
.78
$6
.58
$9
.74
$1
0.7
7
$9
.80
$6
.86
$1
8.4
7
$1
9.0
8
$1
4.5
9
$1
4.9
8
$1
4.9
5
$1
4.0
9
$1
4.0
6
$1
3.7
8
$1
3.0
0
$1
3.8
7
$1
4.7
2
$1
4.6
8
$1
5.0
0
$1
4.9
9
$1
5.3
4
$1
5.7
7
$1
4.3
9
$0
$5
$10
$15
$20
$25
199519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
08Se
p-09
Oct-0
9No
v-09
Dec-0
9Ja
n-10
Feb-
10Ma
r-10
Apr-1
0Ma
y-10
Jun-
10Se
p-10
Oct-1
0No
v-10
Dec-1
0
0%
5%
10%
15%
20%
25%
30%
Dollar Difference Percentage Difference
MANHATTAN LEASING MARKET
ADDENDUM
108NEW YORK CAPITAL MARKETS GROUP
280,000200 Park AvenueWinston & Strawn*
444,000245 Park AvenueSociete Generale, SA
281,896555 West 57th StreetCBS Broadcasting Company
323,0001285 Ave of the AmericasBBDO*
140,00090 Park AvenueCapital One*
173,885345 Park AvenueNational Football League (NFL)
213,0001633 BroadwayAllianz/PIMCO
380,0001411 BroadwayJones Apparel Group
406,00011 Times SquareProskauer Rose, LLP
246,500777 Third AvenueAvon
352,000787 Seventh AvenueWillkie Farr & Gallagher*
189,000125 West 55th StreetKatz Communications/Clear Channel*
S.F.ADDRESSTENANT
Midtown Manhattan Market 2010 Top Leasing Transactions (Year-End)
MANHATTAN LEASING MARKET
ADDENDUM
* Renewal or Renewal/Expansion
109NEW YORK CAPITAL MARKETS GROUP
112,741601 West 26th StreetMcGarry Bowen*
276,000620 Avenue of the Americas32BJ SEIU
71,302111 Eighth AvenueXO Communications*
260,994200 Fifth AvenueTiffany & Company
97,00010 Hudson SquareKrishenbaum Bond Senecal & Partners*
72,000115 Fifth AvenueMultiplan, Inc.*
104,500127 West 25th StreetBowery Residents Committee
114,605One Hudson SquareHorizon Media
S.F.ADDRESSTENANT
62,658111 Eighth AvenueGoogle
Midtown South Manhattan Market2010 Top Leasing Transactions (Year-End)
MANHATTAN LEASING MARKET
ADDENDUM
* Renewal or Renewal/Expansion
110NEW YORK CAPITAL MARKETS GROUP
70,000199 Water StreetChapdelaine & Company*
154,595One Battery Park PlazaSeward & Kissell*
172,000100 Church StreetHealthfirst
100,0004 New York PlazaThe New York Daily News
199,240One BroadwayKenyon & Kenyon*
66,684One Whitehall StreetTopps Company
116,540110 William StreetNew York Liquidation Bureau
79,810250 BroadwayNew York City Government*
74,3802 World Financial CenterNomura Securities Holding America
81,7423 World Financial CenterRoyal Bank of Canada
106,43126 BroadwayNew York City School Construction Authority
S.F.ADDRESSTENANT
Downtown Manhattan Market2010 Top Leasing Transactions (Year-End)
MANHATTAN LEASING MARKET
ADDENDUM
* Renewal or Renewal/Expansion
111NEW YORK CAPITAL MARKETS GROUP
$20
$30
$40
$50
$60
$70
$80
$90
$100
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
200
400
600
800
1000
1200
1400
1600
1800
Midtown Class A Rents S&P 500 Close
Asking Rents vs. The Stock Market
Asking rents appear to lag the stock market by approximately one year.
MANHATTAN LEASING MARKET
ADDENDUM
Source: S&P Data – Yahoo/JLL
112NEW YORK CAPITAL MARKETS GROUP
$31.73
$32.02
$32.73 $41.29 $47.61
$60.00
$54.46
$49.24
$47.57
$49.58
$51.45
$61.38
$79.12
$80.58
$59.48
$59.14
$25.64
$25.65
$27.77
$31.73
$34.97 $43.42
$41.23
$36.51
$33.53
$31.80
$31.81
$44.12
$47.72
$47.37
$37.84
$38.22
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Midtown Overall Asking Rents Downtown Overall Asking Rents
Midtown vs. Downtown Overall Asking Rents
MANHATTAN LEASING MARKET
ADDENDUM
113NEW YORK CAPITAL MARKETS GROUP
6.4%
23.8%
8.5%
24.3%
-4.0%
-11.2%
-7.2%
7.1%3.7%
17.7%
28.9%
-0.6%
0.1%
-27.6%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Rate of Growth - Midtown Class A Asking Rents
5.4% Average
MANHATTAN LEASING MARKET
ADDENDUM
114NEW YORK CAPITAL MARKETS GROUP
2.2%
26.2%
15.3%
26.0%
-9.2% -9.6%
-3.4%
4.2% 3.8%
19.3%
28.9%
1.8%-0.1%
-26.2%-30%
-20%
-10%
0%
10%
20%
30%
40%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Rate of Growth - Midtown Overall Asking Rents
6.1% Average
MANHATTAN LEASING MARKET
ADDENDUM
115NEW YORK CAPITAL MARKETS GROUP
• Executive Summary
– Economic Overview• Global Capital Markets
• U.S. Economic Snapshot
• U.S. Capital Markets—Investment Market
• U.S. Capital Markets—Debt Market
– Manhattan Capital Markets
– Manhattan Leasing Market
– New York City Residential Market - Addendum
• Addendum
NEW YORK CITY RESIDENTIAL MARKET
ADDENDUM
116NEW YORK CAPITAL MARKETS GROUP
116116
Percentage of Ownership to Rental Inventory
Manhattan Housing Inventory
Source: US Census BureauUpdated information to be made available 2010 New York City Housing and Vacancy Survey.
Manhattan Housing Inventory
Only 24% home ownership in Manhattan.
800,000
810,000
820,000
830,000
840,000
850,000
2004 2005 2006 2007 2008 2009
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2004 2005 2006 2007 2008
NEW YORK CITY RESIDENTIAL MARKET
ADDENDUM
NYC Census Bureau Survey updated every 3 years - next update year-end 2011.
117NEW YORK CAPITAL MARKETS GROUP
Residential Housing By Type
Source: US Census BureauUpdated information to be made available in 2010 New York City Housing and Vacancy Survey.
2008
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Conventional
Ownership
Condominium Cooperat ive M itchell-Lama Rental
.68% 5.31%
16.89%
1.19%
76.02%
Rental Residential Housing(Total # of Renter Units 579,657)
Residential Housing Breakdown*(Total # of Occupied Units 762,381)
* Excludes vacant units not available for sale or rent
Rental/Owned ratio inverse of US. Free market 32% of rental inventory; 52% stabilized.
0
0
0
0
0
1
1
Rent Controlled Stabilized M itchell-Lama Public-Housing Non-Regulated
3.6%
51.66%
2.52%
10.53%
31.7%
NEW YORK CITY RESIDENTIAL MARKET
ADDENDUM
NYC Census Bureau Survey updated every 3 years - next update year-end 2011.
118NEW YORK CAPITAL MARKETS GROUP
118118
Residential Rental Vacancy Rate1996 – 3Q10
3.47%
2.57%
3.86%
0.89%
0.55%
1.10%
1.42%
1.93%
1.16%
0%
1%
2%
3%
4%
5%
1996 1999 2002 2005 2006 2007 2008 2009 2010
Source: Citi Habitats
NEW YORK CITY RESIDENTIAL MARKET
ADDENDUM
119NEW YORK CAPITAL MARKETS GROUP
119119
Mean Rental Prices
Source: The Real Estate Group New York
December 2010
$2,481
$3,465
$5,318
$2,093
$2,794
$3,732
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Studio One-Bedroom Two-Bedroom
Doorman Non-Doorman
$ Per Unit
NEW YORK CITY RESIDENTIAL MARKET
ADDENDUM
120NEW YORK CAPITAL MARKETS GROUP
$2 ,2 4 7
$3 ,2 6 2
$5,0 8 6
$1,9 2 1
$2 ,6 3 6
$3 ,6 72
$2 ,0 9 3
$2 ,79 4
$3 ,73 2
$2 ,4 8 1
$3 ,4 6 5
$5,3 18
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Studio One-Bedroom Two-Bedroom Studio One-Bedroom Two-Bedroom
December-09 December-10
120120
Mean Manhattan Rental Prices
Source: The Real Estate Group New York
Year-Over-Year Change
Manhattan Doorman Rents Manhattan Non-Doorman Rents
8.95%
5.99%
1.63%
10.41%
6.22%
4.56%
NEW YORK CITY RESIDENTIAL MARKET
ADDENDUM
121NEW YORK CAPITAL MARKETS GROUP
121121
Unit Permits Issued By Borough
Source: U.S. Department of Housing and Urban Development
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Manhattan Total Units Brooklyn Total Units Queens Total Units Bronx Total Units Staten Island Total Units
Permits issuance near historic low of past 20 years (early 1990’s).
NEW YORK CITY RESIDENTIAL MARKET
ADDENDUM
122NEW YORK CAPITAL MARKETS GROUP
Jones Lang LaSalle
601 Lexington Avenue
New York, NY 10022
(212) 812-5700
JLL’s New York Capital Markets Group
Richard BaxterVice Chairman+1 212 812 [email protected]
Jonathan Caplan Vice Chairman +1 212 812 [email protected]
Yoron CohenVice Chairman+1 212 812 [email protected]
Scott LathamVice Chairman+1 212 812 [email protected]
No warranty or representation, express or implied, is made as to the accuracy of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions, imposed by our principal. No commission, finder’s fee or compensation will be due from, or payable by the Owner or Jones Lang LaSalle to a broker in connection with the negotiation of any agreement or any transaction in connection with this agency agreement. Broker must look solely to its principal for commissions, fees or compensation in connection therewith. The depiction in the above photograph of any person, entity, sign, logo or property (other than Jones Lang LaSalle's client and the property offered by Jones Lang LaSalle) is incidental only, and is not intended to connote any affiliation, connection, association, sponsorship or approval by or between that which is incidentally depicted and Jones Lang LaSalle or its client.
CONTACT INFORMATION January 25, 2011