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ManhattanMultifamily Data BookQ4 2014

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Manhattan Multifamily Data Book

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Table of Contents

Headlines ................................................................ 2

Economic Overview

Employment ................................................................ 4

Unemployment ................................................................ 5

Consumer Price Index ................................................................ 6

Sales Market

Volume and Price ................................................................ 9

Cap Rate ................................................................ 10

Top Buyers and Sellers ................................................................ 11

Investor Composition ................................................................ 12

Cross‐Border Capital Flows ................................................................ 13

Rental Market

Average Asking Rent and Vacancy ................................................................ 15

Net Absorption ................................................................ 17

New York City Submarkets ................................................................ 18

New Development

Manhattan Completions ................................................................ 20

New York City Submarkets ................................................................ 21



Headlines

New York City employment increased by 107,000 jobs during 2014, a 2.6% increase.

The unemployment rate for reached 6.2%, down from 7.8% one year ago and the lowest rate since October 2008.

Sales volume for Manhattan multifamily properties totaled $9.8 billion during 2014, the highest annual total since 2006.

The average sale price during 2014 was $444,667/Unit, a 19% increase compared to 2013.

The average cap rate during 2014 was 4.1%, down from 4.4% during 2013 and the historical low on records going back 15 years.

The average asking rent for multifamily properties in Manhattan reached $4,162/Unit at the end of 2014, a 3.4% increase over the 2013 average of $4,025/Unit and the highest year‐end average on record.

The vacancy rate finished the year at 2.9%, higher than the 2013 rate of 2.3% and the most recent low of 2.0% measured during 2006.

Net absorption remained positive during 2014, at 2,769 units, and was slightly higher than the 2013 total of 2,721.

A total of 28,816 new units are expected to be completed in New York City overall from 2015 through 2019, representing 15.9% of the existing inventory and making it one of the most active markets in the U.S., trailing only Charlotte’s 16.4% development rate.

There were 1,845 units added to the Manhattan market during 2014, up from 1,520 during 2013 and representing 1.6% of the existing inventory. Over the next four years, 15,465 units are expected to be completed, representing 11.9% of the existing inventory.

Q4 2014

Economic OverviewManhattan Multifamily Data Book




Source: Arbor, U.S. Bureau of Labor Statistics, New York State Department of Labor

Employment Growth

New York City employment increased by 107,000 jobs during 2014, a 2.6% increase, although slightly lower than the 121,000 jobs that were added during 2013. Employment in the U.S. overall increased by 2.3% for the 12 months ending in December 2014.

Current Employment Statistics, Total Nonfarm, 12‐Month Percent Change

‐6.0%

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

Dec‐04 Dec‐05 Dec‐06 Dec‐07 Dec‐08 Dec‐09 Dec‐10 Dec‐11 Dec‐12 Dec‐13 Dec‐14

U.S. Recession United States New York City



Source: Arbor, New York State Department of Labor

Employment By IndustryNew York City, Thousands, December 2014

Goods Producing193,100

5% Trade, Transportation, and Utilities617,50015%

Information186,800

5%

Financial Activities451,90011%

Professional and

Business Services678,00016%

Education and Health Services

872,00021%

Leisure and Hospitality403,80010%

Other Services181,300

4%

Government543,30013%

Employment Growth By IndustryNew York City, 12‐Month Percent Change, December 2014

‐1.0% 1.0% 3.0% 5.0%

Goods Producing

Trade, Transportation,and Utilities

Information

Financial Activities

Professional andBusiness Services

Education andHealth Services

Leisure and Hospitality

Other Services

Government

Total Nonfarm




The unemployment rate for New York City reached 6.2% in December 2014, down from 7.8% one year ago and the lowest rate since October 2008. The unemployment rate for the U.S. overall fell to 5.6%, down from 6.7% year‐over‐year.

0.0%

2.4%

4.8%

7.2%

9.6%

12.0%


U.S. Recession United States New York City

Unemployment RateCurrent Population Survey, Labor Force Statistics




The U.S. Consumer Price Index (CPI) for the New York metropolitan area increased 0.3% during the 12 months ended in December 2014. The CPI for the U.S. overall increased 0.7% during the same time period, well below the Federal Reserve’s target rate of 2.0%.

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

6.0%


U.S. Recession United States New York‐Jersey City‐White Plains, NY‐NJ

Consumer Price IndexAll Urban Consumers (CPI‐U), All Items, 12‐Month Percent Change, Seasonally Adjusted, 1982‐84=100

Sales MarketManhattan Multifamily Data Book




Sales volume for Manhattan multifamily properties totaled $9.8 billion during 2014, the highest annual total since $10.6 billion in sales were recorded during 2006. The average sale price during 2014 was $444,667/Unit, a 19% increase compared to 2013, although remained lower than the 15‐year high of $453,392/Unit average during 2011.

Source: Arbor, Real Capital Analytics

Sales Volume and PriceManhattan, Multifamily, $2.5 Million and Larger

$0

$120,000

$240,000

$360,000

$480,000

$600,000

$0.0

$1.4

$2.8

$4.2

$5.6

$7.0

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

Sales Volume ($, Billions) 10‐Year Quarterly Average Sale Price ($/Unit, 12‐Month Weighted Average)



The average cap rate for Manhattan multifamily sales during 2014 was 4.1%, down from 4.4% during 2013 and the historical low on records going back 15 years. The U.S. overall average cap rate was 6.1% ruing 2014, compared to 6.3% during 2013.

Average Cap RateManhattan, Multifamily, $2.5 Million and Larger, Excluding Portfolio Transactions, 12‐Month Weighted Average

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

United States Manhattan




Top Buyers

Manhattan, Multifamily, 24‐Month Total As Of December 2014

Properties Volume($ Millions)

Thor Equities 38 $1,352.8

HFZ Capital Group 5 $1,113.4

Brookfield Asset Mgmt 5 $917.3

SL Green 24 $773.9

Rainbow Estates Group 73 $599.9

Clipper Equity 2 $591.6

Cammeby's Int'l Group 12 $579.7

Stellar Management 8 $558.3

Fortress 4 $538.4

L&M Development Partners 22 $492.6

Top Buyers and Sellers

Top Sellers

Properties Volume($ Millions)

Extell 3 $976.0

Urban American Management 7 $961.9

Fannie Mae 5 $917.3

City Investment Fund 5 $917.3

Stonehenge Partners 25 $831.9

Bettina Equities 27 $800.0

CalPERS 3 $649.0

Westbrook Partners 5 $577.4

Sapir Organization 1 $518.0

Schneider & Schneider 2 $485.0




Investor Composition

0%

20%

40%

60%

80%

100%

2012 2013 2014

User/Other Private Public Listed/REITsCross‐Border Institutional

Manhattan, Multifamily, $2.5 Million and Larger

Cross‐Border Buyer Type

12‐Months Ended December 2014Cross‐Border Capital Flows

16%

10%

74%

Institutional

Private

Public Listed/REITs

Cross‐Border Origin

75%

9%

16% Americas

AsiaPac

EMEA




Top Countries of Origin

Manhattan, Multifamily, $2.5 Million and Larger

2012 2013 2014 Total

Properties Volume($ Millions) Properties Volume

($ Millions) Properties Volume($ Millions) Properties Volume

($ Millions)

Canada 2 $49.6 2 $23.5 9 $987.0 13 $1,060.2

Kuwait 1 $143.1 1 $143.1

Japan 1 $6.7 1 $107.0 2 $113.7

United Kingdom 2 $112.3 2 $112.3

China 1 $10.8 1 $99.8 2 $110.5

Turkey 1 $52.5 1 $52.5

Brazil 1 $32.0 1 $32.0

Israel 1 $3.7 3 $23.4 4 $27.1

Switzerland 1 $22.5 1 $22.5

Cayman Islands 1 $15.4 1 $15.4

All Others 1 $3.7 2 $17.6 3 $21.2

Cross‐Border Capital Flows


Rental MarketManhattan Multifamily Data Book




The average asking rent for multifamily properties in Manhattan reached $4,162/Unit at the end of 2014, a 3.4% increase over the 2013 average of $4,025/Unit and the highest year‐end average on record. The vacancy rate finished the year at 2.9%, higher than the 2013 rate of 2.3% and the most recent low of 2.0% measured during 2006.

Source: Arbor, REIS

Average Asking Rent and VacancyManhattan, Multifamily

0.0%

1.2%

2.4%

3.6%

4.8%

6.0%

$2,000

$2,700

$3,400

$4,100

$4,800

$5,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Asking Rent ($/Unit) Asking Rent Forecast ($/Unit) Vacancy (%) Vacancy Rate Forecast (%)



Asking Rent vs. Effective Rent RatioManhattan, Multifamily

90.0%

92.0%

94.0%

96.0%

98.0%

100.0%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Asking Rent vs. Gross Revenue RatioManhattan, Multifamily

90.0%

92.0%

94.0%

96.0%

98.0%

100.0%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: Arbor, REIS

The asking rent vs. effective rent ratio for Manhattan multifamily properties was 98.3% during 2014, essentially unchanged compared to 2013, although higher than the 15‐year low of 95.3% reported during 2003.

The highest ratio during the last 15‐years was 98.8% during 2000.

Manhattan’s asking rent to gross revenue ratio fell to 97.0% during 2014, from 97.6% during 2013.

The highest rent to revenue ratio over the last 15‐years was 98.9% reported during 2000.

The recent lowest ratio was 5.4% during both 2002 and 2003.

0

1,200

2,400

3,600

4,800

6,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Aborption (Units) Aborption Forecast (Units)



Net absorption in Manhattan remained positive during 2014, at 2,769 units, and was slightly higher than the 2013 total of 2,721. The high on record was during 2012, at 5,715 units. Forecasts expect the absorption rate to increase in the next five years.

Net AbsorptionManhattan, Multifamily

Source: Arbor, REIS



New York City Multifamily Rental SubmarketsKey Indicators

TotalInventory(Units)

Completions(12‐Mo

Total Units)

Net Absorption(12‐Mo

Total Units)

Vacancy Rate (%) Average Asking Rent ($/Unit)

4Q14 3Q14 4Q13 4Q14 3Q14 4Q13 %Chg(Q) %Chg(Y)

Bronx County 12,257 0 ‐12 1.1% 0.9% 1.0% $1,164 $1,181 $1,172 ‐1.4% ‐0.7%

Kings County 27,750 2,377 1,525 6.3% 3.8% 3.5% $1,962 $1,937 $1,882 1.3% 4.3%

Manhattan 114,965 1,845 2,769 2.9% 2.6% 2.3% $4,162 $4,157 $4,025 0.1% 3.4%

Midtown West 26,983 883 635 4.5% 3.2% 3.7% $4,245 $4,269 $4,160 ‐0.6% 2.0%

Morningside/Washington Hts 8,519 42 75 1.7% 1.9% 2.1% $2,431 $2,402 $2,404 1.2% 1.1%

Stuyvesant/Turtle Bay 22,845 0 ‐182 3.0% 3.2% 2.2% $4,457 $4,442 $4,060 0.3% 9.8%

Upper East Side 16,446 209 126 1.0% 0.6% 0.5% $3,925 $3,906 $3,915 0.5% 0.3%

Upper West Side 16,458 414 125 3.9% 3.9% 2.2% $4,663 $4,647 $4,506 0.3% 3.5%

West Village/Downtown 23,714 297 349 2.1% 2.0% 2.3% $4,221 $4,218 $4,174 0.1% 1.1%

Queens County 26,726 1,077 1,686 3.0% 2.9% 5.5% $1,833 $1,843 $1,750 ‐0.5% 4.7%

New York City 181,698 5,299 4,327 3.3% 2.7% 2.9% $3,281 $3,283 $3,188 ‐0.1% 2.9%

Source: Arbor, REIS

New DevelopmentManhattan Multifamily Data Book




0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Completions (Units) Forecasted Completions (Units)

There were 1,845 units added to the Manhattan multifamily market during 2014, up from 1,520 during 2013 and representing 1.6% of the existing inventory. There are 3,844 units expected to be completed by the end of 2015 and more than 15,000 over the next four years.

New DevelopmentManhattan, Multifamily

Source: Arbor, REIS



New Development by SubmarketNew York City, Multifamily, Projected Completions 2015‐2019

Total Inventory(Units)

New Development(Units)

Development(%)

Bronx County 12,257 1,342 10.9%

Kings County 27,750 8,388 30.2%

Manhattan 114,965 15,465 13.5%

Midtown West 26,983 6,269 23.2%

Morningside/Washington Hts 8,519 625 7.3%

Stuyvesant/Turtle Bay 22,845 1,758 7.7%

Upper East Side 16,446 1,282 7.8%

Upper West Side 16,458 2,340 14.2%

West Village/Downtown 23,714 3,191 13.5%

Queens County 26,726 3,621 13.5%

New York City 181,698 28,816 15.9%

Source: Arbor, REIS

A total of 28,816 new multifamily units are expected to be completed in the New York City market from 2015 through 2019, representing 15.9% of the existing inventory.

New York City remains one of the most active markets in the U.S., trailing only Charlotte’s 16.4% development rate.

In Manhattan, 15,465 units are expected to be completed, representing 13.5% of the existing inventory.

Kings County, comprising Brooklyn, is expected to have a 30.2% development rate, the highest concentration of development among New York City submarkets.

The Morningside Heights/Washington Heights submarket has the lowest concentration of development, at 7.3%.


About Us

Founded by Chairman and CEO Ivan Kaufman, Arbor Commercial Mortgage, LLC and Arbor Commercial Funding, LLC are national direct lenders specializing in loan origination and servicing for multifamily, seniors housing, healthcare and otherdiverse commercial real estate assets. Arbor is a 2013 Top 10 Fannie Mae DUS® Multifamily Lender by volume, a Freddie Mac Program Plus® Seller/Servicer and Small Balance Loan lender, an FHA Multifamily Accelerated Processing (MAP)/LEAN Lender, a HUD‐approved LIHTC Lender as well as a CMBS, Bridge and Mezzanine lender, consistently building on its reputation for service, quality and flexibility. With a current servicing portfolio of more than $11 billion,Arbor is a primary commercial loan servicer and special servicer rated by Standard & Poor’s and holds an Above Average rating from Standard & Poor’s. Arbor is also on the Standard & Poor’s Select Servicer List and is a primary commercial loan servicer and loan level special servicer rated by Fitch Ratings.

Arbor Commercial Mortgage, LLC also manages Arbor Realty Trust, Inc., a real estate investment trust, (REIT), formed to invest in mortgage‐related securities, real estate‐related bridge, junior participating interests in first mortgages, mezzanine loans, preferred and direct equity investments and in limited cases, discounted mortgage notes and other real estate related assets. Arbor is headquartered in Uniondale, NY, with full‐service lending offices throughout the United States. For more information about Arbor, visit www.arbor.com.

For Further Information Contact:

Matt MaisonDirector, Research and AnalysisArbor Commercial Mortgage, LLC375 Park Avenue, Suite 3401New York, NY 10152T: 646.963.6352 [email protected]

The research contained in this report should not be construed as a solicitation to and/or trade. All opinions, news, research, analyses, prices or other information is provided as general market commentary and not as investment advice; all information is subject to change. Arbor, its members, shareholders, employees, agents and representatives do not warrant the completeness, accuracy or timeliness of the information supplied, and shall not be liable for any loss or damages, consequential or otherwise, which may arise from the use or reliance on the content contained herein. Past performance is not indicative of future performance.