jll hedge fund report 12.2015.pdf

8/20/2019 JLL Hedge Fund Report 12.2015.pdf

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n today’s changing market August 2014December 201

activityHedge fund

n today’s changing market

ar-End Summary - Record Highs Achieved

ur 2015 year-end report examines the trophy market performance over the past year, including:

• Changes in the vacancy rate and asking rents

• Deal volume with starting rents above $100 per sq. ft.• Top tier buildings that outperformed the market

year-end 2015, the vacancy rate for Midtown’s trophy building submarket decreased slightly to 7.7% from 8.0% at th

nd of last year. By comparison, Midtown’s general Class A vacancy rate also dropped slightly to 10.4% and is now at its lowe

vel since 2008.

he average asking rent for direct space in Midtown trophy buildings increased 4% year-over-year from $99.58 per sq. ft.

03.61 per sq. ft. Among the “super trophy” buildings, the average asking rent for direct space is $125.95 per sq. ft., whic

presents a 56% premium over Midtown’s Class A average asking rent of $80.24 per sq. ft. (“Super trophy” buildings comprisearrower category of 19 buildings that are the highest-end properties in New York City and typically garner the highest rents.)

ents in the high-end sector of the market gained strength throughout the year, as predicted. Tenants may want to prepare f

milar growth in 2016, particularly on preferred floors in the best buildings. Tenants can expect the most desirable sector of th

arket – trophy tower floors – to continue to tighten.

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$105

Midtown Trophy Asking Rent (Direct) Midtown Trophy Vacancy Rate

Midtown Trophy MarketDirect Rents and Overall Vacancy by Quarter


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eal Trends - $100 per sq. ft. Transactions

With the exception of 2011, hedge funds have consistently trailed the S&P 500 since 2008. In 2015, the S&P 500 returned 1.4%ompared to an approximate 3% average loss industry-wide among hedge funds. Despite the overall flat market and hedge funolatility, tenants paying top rents set an unprecedented record. This year, 138 transactions were completed at starting rents o

100 per sq. ft. or higher, representing a 42% increase from the 97 deals in 2014. The number of these $100+ deals hacreased consistently since 2009. Despite the ever-increasing number of these high-end deals, it should be noted that thepresent only 10% of the total leasing volume in Midtown Manhattan in 2015 – approximately 2 million sq. ft. of the 20 million sqleased in Midtown buildings.

s reported earlier in 2015, a rumored hedge fund transaction at 425 Park Avenue, which has not yet closed, would be the firsthis Norman Foster-designed trophy property, currently under construction. This transaction of approximately 200,000 r

ould be significant for not only its size, but also notable as the penthouse floors will garner the highest rent per sq. ft. ever pair commercial office space in NYC. Other highlights include:

There were 50 buildings in the $100 club in 2015, showing a huge increase from the 33 buildings on last year’s lisindicating a wider concentration of properties. New entrants include several buildings that were able to achieve signaturents for the first time due to recent renovations and repositioning: namely 437 Madison Avenue, 400 Park Avenue and 1East 53rd Street.

The majority of these deals were completed by financial services tenants (81%):

Although 9 West 57th Street had achieved the highest starting rent in Midtown for the past several years, in 2015, 767 Fift

Avenue (GM Building) signed three deals with starting rents in excess of $200 per sq. ft. and recorded the highest startinrent at $220 per sq. ft.

Since 2010, 375 Park Avenue (The Seagram Building) has attained the highest number of transactions with rents over $10per sq. ft. – 12 transactions were completed in 2015, for a total of 137,640 sq. ft.

Landlords with the largest number of $100+ deals are Vornado (28 deals – 500,236 sq. ft.), Boston Properties (20 deals 362,104 sq. ft.), RFR (13 deals – 148,366 sq. ft.), and Oxford Properties (13 deals – 124,616 sq. ft.).

Of the 138 deals, 78 were new transactions, and 60 deals were renewals or expansions with existing building tenants.

The average size of transactions that achieved starting rents of at least $100 stayed consistent with the historical 15,000 sqft. average at 15,077 sq. ft. The tenants who signed the largest leases of the year were of a wide range of industries anwere all incumbent tenants that either renewed or expanded. These tenants included a hedge fund that renewed for 119,91sq. ft. at 601 Lexington Avenue, a private equity firm that renewed at 888 Seventh Avenue for 99,943 sq. ft., a tech firm thaexpanded at 770 Broadway for an additional 79,998 sq. ft., a private equity firm that renewed at 787 Seventh Avenue fo51,032 sq. ft., and a financial firm that expanded by 44,000 sq. ft. at 1345 Avenue of the Americas.

2014 was the first year that deals in Midtown South signed north of $100 per sq. ft. This trend continued in 2015 with fobuildings: 51 Astor Place, 860 Washington, 11 Madison Avenue and 770 Broadway. 51 Astor Place returned to the top deroster in 2015 with one tenant of 13,017 sq. ft. The building is now fully leased. 860 Washington, while still unde

construction, signed a two-floor lease for 22,000 sq. ft. Subsequently purchased by SL Green, 11 Madison achieved $10rents with an expanding tenant. Vornado’s 770 Broadway was added to the $100 club with a major tech firm’s expansion.

• 42 hedge funds• 28 private equity firms

• 42 other financial (investmentbanks, wealth management)

• 26 non-financial (legal,consulting, software, tech)


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N u m b e r o f D e a l s

Top-Tier Transactions – $100+ Starting Rents

Record Levels Achieved

$100+ per sq. ft. TransactionsCompleted in 2015 - By Building

1210

87

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$100+ per sq. ft. TransactionsNew Deals vs. Expansions/Renewals

$100+ per sq. ft. TransactionsDeal Size

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f D e a l s

15,077 sq. ftaverage siz

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< 5,000 sf 5,000-14,999 sf 15,000 - 50,000 sf >50,000 sf


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BuildingPhoto

Building 540 Madison Avenue 717 Fifth Avenue 1633 Broadway

Address Southwest corner of East 55thStreet

Southeast corner of East 56thStreet

Between 50th & 51st Streets

Ownership Boston Properties, Inc. Equity Office Properties Paramount Group, Inc.

Floor / sq. ft. Partial 16th Floor – 2,324 rsf Partial 14th Floor – 8,451 rsf Partial 46th Floor – 21,452 rsf

Asking Rent $59.00 psf $95.00 psf $89.00 psf

Term Through June 2022 Through January 2020 5-15 years

Sublandlord Heraeus Metals New York LLC Chubb Group of Insurance Co Allianz

Comments High end space with 1 largeoffice, 2 small offices, openspace for 3 cubicles, storage, ITroom and a pantry.

Recently built high-end spacefacing 5th Avenue and 56th Street. Unit contains 11 offices, 1conference room, open space for10 workstations, copy, storage,IT and a pantry.

Excess space built out andnever occupied by Allianz with23 external offices, 10 internaloffices, open space for 44workstations, 2 conferencerooms, pantry, IT and a storageroom.

Floorplan

December 201


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Building 850 Third Avenue 1095 Avenue of the Americas 747 Third Avenue

Address Between 51st & 52nd Streets Between 41st & 42nd Streets Between 46th & 47th Streets

Ownership Shorenstein Properties Ivanhoe Cambridge, Inc. William Kauffman Organization

Floor / sq. ft. Partial 16th Floor – 3,845 rsf Partial 14th Floor – 10,506 rsf Partial 26th Floor – 1,837 rsf


Term Through February 2017 Through September 2020 Through August 2018

Sublandlord Slate Property Group Russell Investments OTCex

Comments Second generation pre-built with4 offices, 1 conference room,open area for 25 people, pantry,and IT room. Direct presenceoff elevators.

Built with above standardfinishes, the space includes 2small conference rooms, openseating for 42 people and apantry. Space has views ofBryant Park.

Recently built space with 1conference room, open seatingfor 15 traders, IT closet and apantry.

Floorplan

December 201


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BuildingPhoto

Building 1095 Avenue of the Americas 60 E 42nd Street 675 Third Avenue

Address Between 41st & 42nd Streets Between Park & Madison Avenues

Between 42nd & 43rd Streets

Ownership Ivanhoe Cambridge, Inc. Empire State Realty Trust The Durst Organization

Floor / sq. ft. Entire 5th Floor – 33,188 rsf Partial 11th Floor – 2,209 rsf Partial 8th Floor – 2,994 rsf


Term Through August 30, 2020 Through December 2017 Through October 2018

Sublandlord Instinet Incorporated ABV Management National Life Insurance

Comments High end space built with 34offices, 5 conference rooms, 123workstations, a pantry, and an ITroom. Space has a 15’ ceilingheight and incredible views ofBryant Park.

2nd generation space built with 3offices, 1 conference room, openarea for 6, and a pantry.

Pre-built with reception, 6offices, 1 conference room, anda pantry. Space is directly offthe elevators.

Floorplan

December 201


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Type Tenant Address Square Fee

Recently Completed Transactions – Financial Service Firms

or further information, please contact:

ynthia Wasserberger at 212.812.5816 or [email protected]

Renewal Silvercrest Asset Management Group 1330 Avenue of the Americas 41,600

New Sachem Head Capital Management 250 W 55th Street 14,542

New Rafferty Holdings LLC 1301 Avenue of the Americas 8,828

New GMF Capital 650 Madison Avenue 7,770

New The Valence Group 90 Park Avenue 7,706

New Hollis Park 579 Fifth Avenue 7,620New SLR Acquisitions 110 E 42nd Street 6,596

New IPG Management 1370 Avenue of the Americas 4,676

New Exiger 600 Third Avenue 3,744

August 2014

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n today’s changing market December 201


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Hayley Shoener is an associate in JLL’s New York office and specializes in tenant representation.Ms. Shoener focuses on business development, market research, transactional support andfinancial analysis. She also worked as an intern at JLL in both the Research and Brokeragedepartments in 2012. Ms. Shoener graduated cum laude from Boston College in 2013 with abachelor of arts degree in History and a minor in French. She is a member of the Real Estate Boardof New York.

Hayley Shoener

Associate(212) [email protected]

Jonathan Schifrin is a senior vice president in JLL’s New York Office and is a tenant representationspecialist. Mr. Schifrin has more than eight years of experience in the commercial real estate

industry. Mr. Schifrin holds a master of science degree in real estate from New York University anda bachelor of arts degree from Emory University. He is actively involved with Israel Bonds andserves as a vice chairman of the New Leadership Cabinet.

Jonathan SchifrinSenior Vice President(212) [email protected]

Cynthia has been actively involved in providing real estate services to financial service clients overthe past 18 years. She assists key prime brokerage groups and focuses on transaction work fornumerous boutique hedge funds and investment management firms. She has completed over 100deals in this arena. Cynthia holds a business administration degree from University of Florida, anda Master of Science in Real Estate Finance from New York University. She is an active member ofThe Real Estate Board of New York and the New York University Real Estate Alumni Association.She is also involved with The Doe Fund organization in New York, and was recognized in 2009 asa Woman of Valor by the Capuchin Food Pantry / St. Francis of Assisi.

Cynthia WasserbergerManaging Director(212) 812-5816

[email protected]

jll hedge fund report 12.2015.pdf

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