4 q13 ngkf_capital_markets_report

4Q13

CAPITAL MARKETS REPORT FOR THE INTELLIGENT INVESTOR

4Q13 CAPITAL MARKETS REPORT 2

Capital Markets Report

Table of Contents

3 Market Summary

4 Overview

5 Cap Rates by Property Type: Manhattan

6 Significant Recently Completed Office Sales

7 Significant Pending Office Sales

8 Venture Capital Funding: United States Metro Areas

9 Venture Capital Funding: San Fran-New York

10 Transactions: New York

11 Yesterday and Tomorrow: 2013 vs. 2014

19 Leasing Analysis

20 Availability & Rent: Manhattan

21 Availability & Rent: MT / MTS / DT

22 Historical Asking Rents

23 Top-Tier Taking Rents

24 Rental Rates: Net Effective vs. Base Taking

25 Rental Rates: Net Effective

26 Commercial Development Pipeline

27 Capital Markets Intelligence

28 CMBS Issuance

29 Capital Distribution

30 Buyer Distribution

31 Sales Volume: Major Metropolitan Cities

32 Sales Volume: Manhattan

33 Half Billion Dollar Transactions

34 Historical Top-Tier Transactions: Price

35 Historical Top-Tier Transactions: Price / SF

36 Recession Flippers

37 Office Building Sales (P/PSF): United States

38 Historical Office Building Sales (P/PSF): Manhattan

39 Office Building Sales (Cap Rates): United States

40 Historical Office Building Sales (Cap Rates): Manhattan

41 Development Site Volume: Manhattan

42 Development Site Pricing: Manhattan

43 Residential Cap Rates: Manhattan

44 Residential Condominium Pricing: Manhattan

45 Luxury Condominium Pricing: Manhattan

12 Economic Indicators

13 Lending vs. Equity

14 Corporate Production

15 Unemployment Rates: International

16 Unemployment Rates: Domestic

17 Payroll Employment

18 Office-Using Employment

4Q13

MARKET SUMMARY


Overview

Domestic and international capital has generally flocked to primary markets, gateway cities and supply constrained

environments. However, demand from investors has saturated the prime markets and smart money is now looking

at the ICE markets (intellectual capital and energy) in the search for higher yields

While absorption totals have been healthy, the momentum in investment sales has outpaced rent growth

Interest rates remain low yet somewhat volatile, but are expected to rise within the next couple of years and put pressure

on highly leveraged investors who are financed with floating rate debt

With limited quality product on the market, land and lot sales have spiked as developers are competing to build new

properties in supply constrained markets such as New York, San Francisco, Boston, Washington, D.C. and Seattle

While San Francisco and New York remain national technology hubs, several large office transactions (Twitter, Facebook,

IBM Watson, Google and Spotify expansions) were completed that solidified Midtown South as the center of New York’s

technology universe

The New York investment sales market has matched pre-recession levels in four property types: residential, office, retail

and development sites

4Q13 Market Summary


4Q13 Capital Markets Intelligence

Cap Rates by Property Type

Manhattan

Source: Newmark Grubb Knight Frank; Real Capital Analytics

Despite declining yields,

substantial worldwide

demand for prime Manhattan

opportunities remains

At 4.2%, average cap rates for

residential and office property

are among the lowest in the

country along with Downtown

San Francisco

Strength continues to exist in

all property types with hotel

cap rates lagging slightly due

to increased supply

4.2% 4.2%

5.0%

6.0%

Residential Office Retail Hotel

0.0%

2.0%

4.0%

6.0%

8.0%


4Q13 Market Summary

N/A $330 P/PSF $364 P/PSF $475 P/PSF $513 P/PSF $712 P/PSF $750 P/PSF $1,166 P/PSF $1,181 P/PSF

1345 Sixth /

605 Third

One Chase

Manhattan Plaza

One North End

Avenue

195 Broadway 440 Ninth

Avenue

1440 Broadway 122-130 East 23rd

Street

200 Lafayette

Street

60 Columbus

Circle

Built in 1969 (1345

Sixth; 1963 (605

Third)

1345 renovated in

1988

1,900,000 SF

(1345); 1,100,000

SF (605)

50 floors (1345);

43 floors (605)

Rockpoint Group

jv Fisher Brothers

purchased

National Bulk

Carriers sold

Fisher Brothers

retains majority

interest

Built in 1963

2,200,000 SF

60 floors

Fosun Group

purchased

JPMorgan Chase

sold

$725,000,000

Marketed as

potential

residential

conversion, will

likely remain an

office building

Built in 1997

550,000 SF

16 floors

Brookfield Office

Properties

purchased

CME Group sold

$200,000,000

NYMEX will lease

449,000 SF for 24

months before

they consolidate

into 222,000 SF,

2nd - 8th floors

Built in 1913

(renovated in

1986)

1,100,000 SF

29 floors

J.P. Morgan Asset

Management

purchased

Beacon Capital &

L&L Holding sold

$498,450,000

Recapitalization

L&L Holding

retained minority

interest (5%)

Built in 1927

(renovated in

1999)

412,000 SF

18 floors

Jowa Holdings

purchased

Sherwood Equities

jv Paramount

Group sold

$211,500,000

B&H occupies

150,000 SF on

long-term lease

Built in 1925

740,000 SF

25 floors

American Realty

Capital NY

Recovery Reit

purchased

Rockpoint Group &

Monday Properties

sold

$528,000,000

95% leased at

time of sale

200,000 SF leased

to Macy’s

Built in 1952

75,000 SF

4 floors

Toll Brothers

purchased

United Cerebral

Palsy of New York

sold

$150,000,000

Can develop

200,000 SF

residential building

on existing site

Built in 1914

(renovated in

2012)

130,000 SF

7 floors

General Growth

purchased

Kushner

Companies sold

$274,000,000

JCPenny signed a

NNN lease with

options through

2029

Built in 2003

1,100,000 SF

80 floors

Related

Companies with

GIC and Abu

Dhabi purchased

Time Warner sold

$1,300,000,000

(approximate)

Time Warner will

relocate its

headquarters to

Hudson Yards

Significant Investment Sales Transactions Recently Completed


4Q13 Market Summary

$321 P/PSF $850 P/PSF $1,200 P/PSF TBD TBD TBD TBD TBD TBD

90 Broad Street 1350 Avenue of

the Americas

1334 York

Avenue

560 Seventh

Avenue

347 Madison

Avenue

One Park

Avenue

65 East 55th

Street

717 Fifth

Avenue

450 Park

Avenue

Built in 1930

(renovated in

2000)

393,000 SF

25 floors

On the market for

sale from Swig

Equities

Princeton

International

Properties Corp. to

purchase

Looking for

approximately

$125,000,000

Lower level

renovations

planned for

Superstorm Sandy

damage

Built in 1966

600,000 SF

35 floors

On the market for

sale from SL

Green Realty Corp.

Looking for an

equity partner, not

an outright sale of

the building

Major tenant,

Amazon (100,000

sf), is currently in

the market for

possible relocation,

but may renew and

expand

Built in 1921

(renovated in

1999)

500,000 SF

10 floors

On the market for

sale from

Sotheby’s

Looking for

approximately

$600,000,000

100% owned and

occupied by

Sotheby’s

Built in 1963

50,000 SF

6 floors

On the market for

sale from Parson

New School for

Design

Soho Properties &

Murray Hill

Properties to

purchase

Looking for

approximately

$60,000,000

Plans to demolish

and build a hotel

Built in 1917

200,000 SF

20 floors

On the market for

sale from

Metropolitan

Transit Authority

Close proximity to

Grand Central

Terminal

Likely teardown

and redevelopment

Built in 1926

(renovated in

2000)

1,000,000 SF

20 floors

On the market for

sale from Vornado

Realty Trust

Purchased 3 years

ago to avoid

default

Murray Hill

Properties owns

5% minority

interest

Built in 1986

615,000 SF

36 floors

On the market for

sale from

Shorenstein

Properties

Looking for

approximately

$775,000,000

Known as Park

Avenue Tower

255,000 SF lease

with Paul Hastings

expires in 2016

George Klein owns

5% minority

interest

Built in 1958

475,000 SF

26 floors

On the market for

sale from

Blackstone

Looking for

approximately

$375,000,000

Wharton Property

Advisors owns the

80,000 sf retail

condo in the base

Merrill Lynch is

major tenant with

over 100,000 SF

Built in 1972

(renovated in

2003)

320,000 SF

33 floors

Somerset Partners

& Michael Tabor

selling

Looking for

approximately

$600,000,000

Previously sold in

2007 for $1,585/psf

Significant Investment Sales Transactions Pending & Available


4Q13 Leasing Analysis

2013 Venture Capital Funding

United States Metro Areas

Source: Newmark Grubb Knight Frank, PricewaterhouseCoopers /National Venture Capital Association MoneyTree Report

2013 Top Technology Transactions – San Francisco / Silicon Valley

Tenant Address Square Feet

Google 100-222 Mayfield Avenue 527,679

Microsoft 1065 La Avenida Street 515,700

Intuit/Demand Force 22 4th Street 202,355

Nvidia 2880 Scott Boulevard 200,000

eBay 2515-2535 N1st Street 187,282

Samsung 601 McCarthy Boulevard 187,134

Western Digital 1710 Automation Parkway 183,303

Twitter 1355 Market Street 155,180

StubHub 199 Fremont Street 140,378

Neustar 505 Howard Street 138,574

Illumina, Inc. 499 Illinois Street 97,700

Eventbrite 155 5th Street 97,624

Uber Technologies 1455 Market Street 88,000

Square, Inc. 1455 Market Street 85,111

Zendesk 1019 Market Street 72,933

San Francisco/Silicon Valley

$12.1 Billion 1,247 deals

Boston

(New England)

$3.3 Billion 412 deals

New York

$3.2 Billion 441 deals

Chicago

$1.0 B 80 deals

San

Diego

$757 M 97 deals

Dallas-

Ft. Worth

$693 M 40 deals Austin

$406 M 79 deals

Washington,

D.C.

$1.5 B 171 deals

Philadelphia

$1.0 B 165 deals

Los Angeles

$1.7 B 248 deals



2013 Venture Capital Funding

San Francisco and New York – National Technology Anchors

Source: Newmark Grubb Knight Frank, PricewaterhouseCoopers /National Venture Capital Association MoneyTree Report

$11.4

$8.2 $9.3

$11.8 $11.2

$12.1

$0.0

$2.5

$5.0

$7.5

$10.0

$12.5

2008 2009 2010 2011 2012 2013

San Francisco Venture Capital Funding

Venture capital funding in San Francisco topped $12 billion in 2013 with 58%

dedicated to software, 8% to media/entertainment and 6% to IT services.

Strong demand for highly-skilled labor in technology is drawing workers to the city,

driving new housing development and investment in key San Francisco

neighborhoods such as Hayes Valley, Mission Bay, and Dogpatch.

Venture capital funding in the New York area has risen 88% since the down year of

2009, compared with a 48% gain for Silicon Valley.

In 2013, there were 441 VC deals for New York while New England had 412; Silicon

Valley led the nation with 1,247.

$2.1

$1.7 $1.9

$2.9

$2.3

$3.2

$0.0

$0.8

$1.5

$2.3

$3.0

$3.8

2008 2009 2010 2011 2012 2013

New York Venture Capital Funding



San Francisco and New York – National Technology Anchors

What began on the West Coast has ventured to Manhattan

Source: Newmark Grubb Knight Frank

2013 Top Technology Transactions - New York

Tenant Address Square Feet

AppNexus 28-40 West 23rd Street 219,105

Twitter 245-249 West 17th Street 140,000

WeWork 222 Broadway 120,537

SAP Hudson Yards - South Tower 115,000

Facebook 770 Broadway 98,570

Mediaocean 620 Avenue of the Americas 88,387

Shutterstock 350 Fifth Avenue 80,062

Droga5 120 Wall Street 75,144

BuzzFeed 200 Fifth Avenue 68,791

High 5 Games 770 Broadway 58,378

eMarketer 11 Times Square 53,573

Indeed.com 125 West 55th Street 49,536

Infor 641 Avenue of the Americas 49,246

LinkedIn Corporation 350 Fifth Avenue 40,781

Rocket Fuel 100 West 33rd Street 40,503


4Q13 Market Summary

2013 2014

BUILDING CONVERSIONS/RENOVATIONS 550 Madison Avenue

10 East 53rd Street

140 West Street

101 Murray Street

Brookfield Place

280 Park Avenue

St. John’s Center

180 Maiden Lane

One Soho Square

CONSTRUCTION DELIVERIES 4 WTC

250 West 55th Street

51 Astor Place

1 WTC

837 Washington Street

432 Park Avenue (formally The Drake Hotel)

INVESTMENT SALES Recession Flippers Foreign Investments

ACTIVE INVESTORS American Realty Capital Properties

Thor Equities

J.P. Morgan

RXR Realty

Blackstone

Equity Residential

International investors:

China

Canada

Australia

Middle East

Core Funds

LEASING Coach

L’Oreal

Time Warner

GroupM

Jones Day

AppNexus

Sony

Amazon.com

Sotheby’s

Reed Smith

Al Jazeera

DOMINANT LEASING INDUSTRY SECTOR Media/Technology Media/Technology

RETAIL Plaza District World Trade Center

Brookfield Place

TECHNOLOGY Facebook to 770 Broadway

IBM Watson to 51 Astor

WeWork Soho

Cornell Tech (Roosevelt Island groundbreaking )

Twitter to West 17th Street

WeWork Wall Street

HOT BOROUGH MARKET Williamsburg, Downtown Brooklyn Bushwick, Long Island City

Yesterday and Tomorrow

4Q13

ECONOMIC INDICATORS


4Q13 Economic Indicators

Lending vs. Equity

Dow Jones Industrial Average vs. 30-Year Fixed Mortgage Rate


Following a mid-year run on 30-

year fixed mortgages, rates pulled

back at the beginning of the fourth

quarter before increasing in

December to match late-summer

averages.

The 30-year rate is more than a full

percentage point higher since

hitting a low of 3.4% at the end of

2012, when rates were at the

lowest point on record dating back

to the 1970’s.

The Dow Jones Industrial Average

has historically been a leading

indicator and jumped 24% in 2013. 2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013

6,000

9,000

12,000

15,000

18,000

Dow Jones Industrial Average 30-Year Fixed Mortgage Rate



Corporate Profits

United States

Source: U.S. Department of Commerce: Bureau of Economic Analysis

Corporate profits are at an all-time

high with over $2 billion registered

in each of the last five quarters.

Profits have risen over 100% since

hitting a bottom in 2008 and are up

25% over the previous peak

established in late 2006.

Despite tax increases and

government spending cuts that

have affected the economy,

continued improvement in 2014 is

forecasted.

$500.0

$750.0

$1,000.0

$1,250.0

$1,500.0

$1,750.0

$2,000.0

$2,250.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Bil

lio

ns

Corporate Profits



Unemployment Rate

International

Source: Newmark Grubb Knight Frank; U.S. Bureau of Labor Statistics

At 6.7%, the United States

unemployment rate is significantly

lower than in early 2013, down

from 7.8% one year ago.

Uneven job recovery in the U.S.

continued in December with only

74,000 new jobs, despite averaging

182,000 new jobs a month in 2013.

While Japan kept unemployment

rates low during the recovery,

anticipation for this trend to

continue is not prevalent. Gains in

gross domestic product during

2014 will be hard pressed as new

tax laws beginning in April may

have an adverse effect on the

short-term growth of the economy.

27

.8%

25

.9%

15

.6%

12

.7%

12

.4%

10

.9%

7.5

%

7.2

%

7.1

%

6.7

%

5.8

%

5.2

%

4.0

%

3.5

%

3.2

%

Gre

ece

Sp

ain

Po

rtug

al

Italy

Ire

lan

d

Fra

nce

Sw

ed

en

Can

ad

a

Unite

d K

ing

do

m

Unite

d S

tate

s

Au

str

alia

Ge

rma

ny

Jap

an

Sw

itze

rlan

d

Hon

g K

on

g

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%



Unemployment Rate

Domestic


Manhattan’s unemployment rate,

just below the national average,

remains high as the financial

service sector has not begun to

hire at a pre-recession pace.

Despite solid job growth, the city is

looking to supplement strong gains

in professional services, healthcare

and hospitality.

Many of the cities near or below the

national average unemployment

rate have economies that produce

significant revenue from intellectual

capital (technology) and energy

industries.

6.8

%

6.7

%

6.3

%

6.2

%

6.2

%

6.1

%

5.8

%

5.7

%

5.6

%

4.7

%

4.7

%

Sa

n D

ieg

o

Unite

d S

tate

s

Sa

n J

ose

Po

rtla

nd

Pitts

burg

h

Rale

igh/D

urh

am

Den

ve

r

Se

att

le

Hou

sto

n

Au

stin

Okla

ho

ma

City

3.0%

6.0%

9.0% ICE Markets

(Intellectual Capital & Energy)

8.5

%

8.1

%

7.3

%

7.0

%

7.0

%

6.7

%

6.6

%

6.3

%

6.3

%

6.3

%

6.0

%

5.6

%

Los A

nge

les

Chic

ago

Wa

sh

ing

ton

D.C

.

Atlan

ta

Ph

ilad

elp

hia

Unite

d S

tate

s

Ma

nh

att

an

Ba

ltim

ore

Mia

mi

Bo

sto

n

Sa

n F

ran

cis

co

Dalla

s

3.0%

6.0%

9.0% Primary Markets

Primary Markets ICE Markets



Payroll Employment

United States vs. New York City


Despite employment growth in

several key sectors such as

professional/business services,

leisure/hospitality and education/

health services, New York City

remains below expectations adding

just 3.4% in 2013 as employment in

financial services continues

to lag.

The pace of New York’s

employment growth will be

somewhat restricted until financial

service jobs are added to

supplement the growing number of

technology positions in the

workforce. 3.0

3.2

3.4

3.6

3.8

4.0

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

100

105

110

115

120

125

130

135

140

Th

ou

sa

nd

s

Th

ou

sa

nd

s

United States New York



Office-Using Employment

New York City

Source: NYC Office of Management and Budget/NYC Office of the Comptroller; Seasonally Adjusted

Office employment (professional

and business services, financial

services, real estate and

information) is up 9,100 jobs over

the past year.

Since the recession officially ended

four years ago (June 2009), office

jobs have increased by 89,800

positions, or 7.7%.

1298.4

1244.4 1251.7

900

950

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Th

ou

sa

nd

s

4Q13

LEASING ANALYSIS



Overall Asking Rent and Availability Rate

Manhattan


Positive absorption via strong

leasing in technology, on the west

side of Lower Manhattan and along

the Sixth Avenue corridor over the

final two quarters of 2013 pushed

the overall availability rate to its

lowest point in five years.

At $55.47/PSF, average asking

rents have risen 4.8% since the

first quarter and closed at the

highest quarterly figure since third

quarter 2008.

7.0%

9.0%

11.0%

13.0%

15.0%

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

2Q

10

3Q

10

4Q

10

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

Rent (Price/SF) Availability (%)



Availability Rate and Average Asking Rent

MIDTOWN 12.2% $63.61

Eastside 9.0% $60.38

Grand Central 14.5% $58.12

Park Avenue 11.6% $69.91

Sixth Avenue / Rock Center 12.6% $81.77

Upper Fifth / Plaza 16.2% $63.63

Westside 8.1% $64.74

MIDTOWN SOUTH 10.3% $50.28

Times Square South 8.6% $43.05

Penn Station 12.5% $47.14

Park Avenue South 10.5% $49.08

Chelsea 6.5% $48.00

Lower Sixth Avenue 4.5% $55.72

Flatiron / Union Square 13.6% $61.85

Hudson Square 10.0% $56.09

SoHo / NoHo 6.9% $54.00

Village 14.0% $85.87

DOWNTOWN 14.7% $45.80

City Hall / Insurance 8.0% $37.23

WTC 25.9% $64.62

Financial 14.6% $39.63



Overall Asking Rents by Market

Manhattan


While average rental rates in

Manhattan are considerably higher

than the trough in 2010, Midtown

rents have been relatively flat for

the past eighteen months.

Midtown South asking rents have

increased at a faster pace than

Midtown and Downtown, up 48%

since the 2010 bottom and up 12%

in the past year.

$80.45

$63.61

$49.66 $50.28

$46.44 $45.80

$25.00

$35.00

$45.00

$55.00

$65.00

$75.00

$85.00

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Midtown Midtown South Downtown



Top-Tier Transactions – Taking Rents

Manhattan


There were nearly twice as many

deals completed with $100/PSF

base taking rents in 2013

than 2012.

The average base taking rent for

deals at or above $100/PSF in

2013 is $123.39/PSF compared

with $118.86/PSF in 2012.

25 buildings have completed deals

with base taking rents at or above

$100/PSF.

86 99 97

47 49

76

92 98

26

51 42

18 16

30

24

48 16

42

47

2 1

17

12

21

0

25

50

75

100

125

150

175

200

2006 2007 2008 2009 2010 2011 2012 2013

$75.00 - $99.99 $100.00 - $124.99 + $125



Rental Rates: Net Effective vs. Base Taking

Direct Deals, 5 Years (+)


Average Midtown taking rents are

28% higher than Midtown South and

nearly 60% more than Downtown.

The Plaza District has the highest

concentration of trophy assets and

command the highest taking and net

effective rents in Manhattan.

Downtown has the largest net

effective to base taking rent spread

of the three major markets as Lower

Manhattan landlords have been

giving significant concession

packages on new lease transactions.

$61.25

$45.10

$56.06

$71.13

$79.66

$50.39

$34.27

$47.19

$59.64

$67.03

Manhattan

Downtown

Midtown South

Midtown

Plaza District Class A

$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00

2013 Net Effective Rent 2013 Base Taking Rent



Rental Rates: Net Effective

Direct Deals, 5 Years (+)


At $59.64/PSF, Midtown net

effective rents rose 4.6% in the

past 12 months as Sixth Avenue

closed the year strongly,

absorbing a good amount of the

existing vacancy.

Average Midtown South net

effective rents have increased

three consecutive years and

are now 30% higher than

Downtown rents.

Lower Manhattan, the value play,

remains the least expensive of the

three major New York markets. $50.39

$34.27

$47.19

$59.64

$67.03

$50.05

$33.99

$45.99

$57.00

$68.40

Manhattan

Downtown

Midtown South

Midtown

Plaza District Class A

$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00

2012 Net Effective Rent 2013 Net Effective Rent


0

2

4

6

8

10

12

14

16

18

198

0

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8+

MS

F

2013: 4 WTC, 250 W. 55th Street, 51 Astor Place

2014: 1 WTC

2015: Hudson Yards South, Seven Bryant Park

2016+: 3 WTC, Hudson Yards North, 425 Park Avenue, 380

Madison Avenue, One Vanderbilt Avenue, Manhattan West


Commercial Development Pipeline

Manhattan


New Construction (1980-2013): 81.3 MSF

Expected Delivery (2014-2017): 9.9 MSF

Potential (2018-2023): 16.3 MSF

4Q13

CAPITAL MARKETS INTELLIGENCE



CMBS Issuance

United States

Source: Newmark Grubb Knight Frank, Commercial Mortgage Alert

While the volume of CMBS

issuances in 2013 eclipsed the total

of the two previous years

combined, 2014 is expected to be

equally as active.

The dramatic rise in issuances

during 2013 coincided with low

interest rate levels as well as more

liquidity and availability of capital in

the market.

$77.8

$92.6

$166.5

$198.4

$228.6

$12.1

$2.7

$11.6

$32.7

$48.4

$86.1

$0

$50

$100

$150

$200

$250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013



Capital Distribution – All Property Types

United States


Country Total

Properties

Total

Volume

Canada 796 $20,428.0

Germany 97 $4,966.7

Singapore 19 $4,466.6

Australia 41 $3,717.5

Israel 91 $3,540.4

Norway 75 $3,464.4

China 48 $3,444.3

Switzerland 48 $3,379.6

UK 75 $2,614.0

Other 586 $17,583.7

Total 1,876 $67,605.3

Origin of Capital

Top Markets For Investment

Market Total

Properties

Total

Volume

Manhattan 107 $17,256.2

Los Angeles 81 $6,677.3

San Francisco 47 $3,390.6

Chicago 72 $3,295.8

Houston 93 $3,139.5

Washington, D.C. 24 $2,344.8

Seattle 58 $2,006.1

Dallas 97 $2,049.6

Boston 31 $1,643.6

Other 1,266 $25,747.0

Total 1,876 $67,605.3



Buyer Distribution – All Property Types

United States


Private buyers have been the most

active type of purchasers in

Manhattan for the past several

years and account for more than

40% of the market.

Publically listed REIT’s continue to

be heavily invested in the United

States and have purchased at a

fairly consistent yearly rate.

While cross-border transactions in

the United States account for 10%

of all activity, foreign investments in

Manhattan represent 24% of year-

to-date deals, led by China,

Canada, Israel and Australia.

17.9% 18.2% 15.0%

18.9%

37.8% 34.1% 41.4%

41.5%

26.9% 31.8% 28.5%

24.2%

8.2% 9.9% 8.6% 10.1%

9.3% 6.0% 6.5% 5.3%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

2010 2011 2012 2013

Public Private Institutional Cross-Border User/Other



2013 Total Sales Volume – All Property Types

Major Metropolitan Cities


19 cities in the United States totaled

more than $5 billion in sales during

2013 with volume jumping nearly

40% in Dallas, Houston, Atlanta and

Inland Empire.

Activity in only 4 of the 19 cities

represented a decline from 2012 to

2013: San Francisco (-19%),

Seattle (-15%), San Jose (-6%), and

Phoenix (-1%).

The majority of sales in Manhattan

(77%) are derived from office and

residential building transactions.

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* Includes Brooklyn, Queens, Bronx, Staten Island and Long Island




2013 Sales Volume by Property Type

Manhattan


Property Type Volume ($ million) # of Properties

Office $20,941 171

Apartment $9,411 459

Retail $3,452 229

Development Sites $2,669 60

Hotel $2,235 17

Industrial $346 21

Totals $39,056 957

Office, 53.6% Apartment, 24.1%

Retail, 8.8%

Development Sites, 6.8%

Hotel, 5.7% Industrial, 1.0%



Office Building Sales

Manhattan Half Billion Dollar Transactions


Class A, trophy office building sales

have returned to the New York

market in large quantity with 14

completed transactions in excess

of $500 million during 2013 as well

as five more pending deals that are

expected to close in 2014.

2

1

3

11

20

7

1

2

11

3

14

5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0

4

8

12

16

20

Completed Pending



Office Building Sales – Price

Select Top-Tier Historical Manhattan Transactions


$1.0

$0.8

$1.7

$1.2

$1.5

$1.3

$1.8 $1.7

$2.8

$1.5

$1.8

$1.0 $1.0

$1.1

$1.3

$0.7

$1.3

$0.8

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

399 Park(3Q02)

111 Eighth(1Q04)

200 Park(2Q05)

1290 AoA(2Q06)

1211 AoA(3Q06)

5 Times Sq.(4Q06)

666 Fifth(1Q07)

825 Eighth(1Q07)

767 Fifth(2Q08)

1301 AoA(3Q08)

111 Eighth(4Q10)

1633Broadway

(2Q11)

601 West26th

(3Q11)

550Madison(1Q13)

650Madison(3Q13)

One CMP(4Q13)

60Columbus

(1Q14)

65 East55th

(Pending)

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Office Building Sales – Price Per SF

Select Top-Tier Historical Manhattan Transactions


$631 $679

$753

$1,000

$1,205

$1,525

$1,258

$1,507

$610

$790

$1,010

$685

$1,373

$1,285

$2,175

$1,166 $1,181

$0

$500

$1,000

$1,500

$2,000

$2,500

745 Seventh(4Q01)

399 Park(3Q02)

767 Fifth(3Q03)

111 Eighth(1Q04)

666 Fifth(1Q07)

450 Park(3Q07)

280 Park(4Q07)

767 Fifth(2Q08)

111 Eighth(4Q10)

450Lexington

(3Q12)

450 West15th

(1Q13)

140 West(3Q13)

499 Park(3Q13)

550 Madison(1Q13)

650 Madison(3Q13)

200Lafayette(4Q13)

60 Columbus(1Q14)



Office Building Sales – Recession Flippers:

Manhattan


Landlords who purchased buildings

between 2008–2010 when the

economy and real estate market

was depressed have seen values

in their properties rise significantly.

Savvy landlords such as Savanna

and Kushner have purchased

buildings, renovated, leased-up

and flipped for a substantial profit in

less than two years.

5.9% 8.1% 12.5%

30.4%

40.0%

48.4% 51.2% 55.0%

84.2%

91.8%

130.0%

145.0%

197.0%

0%

50%

100%

150%

200%

125 West55th

1330AoA

7 West51st

86 Trinity 509 Fifth 430 West14th

434 Bway 104 West 40th

15 East26th

256 Fifth 158 West27th

100 Fifth 200Lafayette

* All calculations are of sale price and does not take into account pre-existing mortgages or liens.



United States Office Building Sales

Price Per SF


Average office building prices on a

per-square-foot basis in Manhattan

are 34% higher than this time

last year.

While prices have been flat over

the past year in some major

markets such as Washington, D.C.

and Chicago, averages are up in

secondary markets like Seattle

and Denver.

$778

$535

$480 $454

$321 $296 $286

$248 $232

$212

$150 $147

$105

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$0

$100

$200

$300

$400

$500

$600

$700

$800

$900




Historical Office Building Sales

Manhattan Price Per SF


$849

$245

$778

2006 2007 2008 2009 2010 2011 2012 2013

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000



United States Office Building Sales

Cap Rates


Cap rates on office buildings in

Manhattan and San Francisco

have moved lower in the past

year as strong demand in those

cities continue.

Liquidity and projected rent

growth have pushed some

notable sales in the New York and

San Francisco markets towards

cap rates in the 3-4% range.

4.2% 4.2%

5.4% 5.5%

6.0% 6.0%

6.5% 6.5% 6.5%

6.9%

7.4% 7.6% 7.6%

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0.0%

2.0%

4.0%

6.0%

8.0%




Historical Office Building Sales

Manhattan Cap Rates


4.2%

6.9%

4.2%

2006 2007 2008 2009 2010 2011 2012 2013

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%



Development Site Volume

Manhattan


After very little activity during the

recession and early recovery,

volume of development site

sales have increased 67% in the

past year and approached 2006-

2007 levels.

As activity has trended higher,

pricing has significantly improved

and intensified competition

among local and foreign

developers with the intent to

develop high-end retail, residential

and hotel properties.

Toll Brothers, Extell Development,

Related Companies and McSam

Hotel Group were all active buyers

of development sites in 2013. $0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

$4,000,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013



Development Site Pricing (Price Per Buildable SF)

Manhattan


$321 $329 $330

$460

$555 $565 $575 $586

$635

$722 $747

$853

$905

$1,034

$0

$200

$400

$600

$800

$1,000

$1,200

517 W. 35th(Pending)

616 FirstAvenue

234 E. 23rdStreet

* 41 E. 22ndStreet

* 180 E. 88thStreet

356 TenthAvenue

101 MurrayStreet

225 W. 57thStreet

560 SeventhAvenue

118 E. 59thStreet

122 E. 23rdStreet

239 TenthAvenue

19 E.HoustonStreet

17 E. 12thStreet

* Prices reflects a blended rate with air rights



Residential Cap Rates

Manhattan


Averaging 4.2% as of the fourth

quarter 2013, cap rates on

residential buildings in Manhattan

declined dramatically in the past

three years.

Cap rates have matched second

quarter 2008 averages, which was

the lowest point recorded over the

past 10 years and are well below

the 6.8% average that was

registered in second quarter 2010.

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013



Residential Condominium Pricing

Manhattan

Source: Newmark Grubb Knight Frank; Miller Samuels

Prices of residential condominium

sales in Manhattan are up

considerably since hitting a post-

recession low in 2010 and have

increased 11% in the past year.

While the $1,412 per-square-foot

average achieved in the fourth

quarter eclipsed 2008 peak pricing

levels, demand is expected to drive

prices even higher in 2014.

$765

$873

$1,086

$1,142

$1,225

$1,374

$1,210

$1,167

$1,229

$1,275

$1,412

$500

$750

$1,000

$1,250

$1,500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Average Price/PSF



Luxury Condominium Pricing

Manhattan

Source: Newmark Grubb Knight Frank; CityRealty

Sales in twenty-two residential

condominium buildings in New

York have averaged at least $3,000

per square foot over the past

two years.

Not included in the sample are

future high-end projects such as

One West 57th Street, 432 Park

Avenue (Drake Hotel site) or

1107 Broadway.

$2,716 $2,738

$2,915 $2,957 $2,968 $3,046 $3,064

$3,128

$3,565 $3,574 $3,671

$3,960 $4,043

$4,642

$5,505

$1,500

$2,500

$3,500

$4,500

$5,500

The ParkImperial

OneCentral

Park West(Trump)

165CharlesStreet

521 ParkAvenue

173 PerryStreet

279Central

Park West

40 BondStreet

The Plaza 200EleventhAvenue

OneBeaconCourt

MilleniumTower

515 ParkAvenue

80Columbus

Circle

OneMadison

Park

15 CentralPark West

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