Retail ranked as Manhattan's third most transacted asset class in 2024, capturing 15% of the market with 57 deals and $2.22 billion in total value—a jump of 54% and 46%, respectively, versus 2023. Compared to 2022, which had 11 more transactions, dollar volume surged by 64%—from $1.35 billion to $2.22 billion—marking the highest growth rate among all asset classes. A notable transaction was the sale of 102 Greene Street in SoHo to a Japanese conglomerate for $46 million ($4,020 per square foot). The seller realized a $14 million profit over the $32 million paid by RFR Realty in 2022 by delivering the property fully occupied with Cartier as the tenant. The first half of 2024 signaled a strong recovery in retail, driven by luxury brands like Kering and Prada acquiring prime retail locations. Activity was concentrated along main corridors, such as Fifth Avenue, which is undergoing a proposed $350 million redesign to prioritize pedestrians. Plans include expanding sidewalks, narrowing driving lanes, adding seating, and planting trees along the stretch from Central Park to Bryant Park. Retail leasing also showed significant improvement, with the availability rate dropping to a record low of 14.7% in Q3 2024, a notable turnaround from the 21% average availability rate in 2019 (pre-pandemic). While pricing per square foot in 2024 was 13% lower than in 2023, it remained 42% higher than the 2022 average, reflecting a strong rebound in the retail market. 2H'24 Featured Transaction SoHo 102 Greene Street Sale Amount: $46,000,000 $/SF: $4,020 Buyer: ARKRAY USA, Inc. Seller: RFR Realty Sale Date: 11/8/2024

The office asset class led Manhattan in dollar volume, trading $5.11 billion in 2024 and representing 32% of all transactions. This marked a 74% increase compared to the previous year. Transaction volume also saw significant growth, ending at 55 transactions—a 77% increase from 31 transactions in 2023 and a 12% rise from 49 in 2022. Among these transactions, five involved Class A properties, while the remainder were Class B and C assets. The standout transaction was the sale of 2 Park Avenue in Midtown, where Morgan Stanley sold its 28-story building to Haddad Brands as an owner-user for approximately $357 million ($361 per sf). Despite the overall increase in market activity, the 30% discount from the building's original purchase price of $519 million in 2007 highlights the sector's devaluation due to the slow pace of employees returning to the office. In fact, the average price per square foot in 2024 was $708, a significant drop of 16% to 35% compared to the 2019 average of $1,045 per square foot. Aside from more transactions by owner-users, developers have also actively explored opportunities to convert older commercial properties into residential assets due to evolving building regulations, such as those introduced under the City of Yes initiative and potential Midtown South rezoning. Notably, approximately $2.3 billion worth of office assets were sold for residential use, either through conversions or by demolition and ground-up redevelopment. These sales are included within the development asset class. 2H'24 Featured Transaction Midtown 2 Park Avenue Sale Amount: $357,000,000 $/SF: $361 Buyer: Haddad Brands Seller: Morgan Stanley Sale Date: 12/27/2024

The Manhattan development asset class experienced a significant surge in 2024, with total dollar volume reaching $3.22 billion, a remarkable 121% increase year-over-year. Transaction volume also rose sharply, climbing 82% from 33 trades in 2023 to 60 in 2024. This growth was largely driven by the rise of office conversions, which accounted for 44% of the dollar volume traded. Offices being sold as land also played a major role, totaling $849 million or 26% of development dollar volume. Altogether, 70% of development dollar volume stemmed from office buildings being removed from office stock for residential use. The most notable transaction was the $160 million acquisition of 655 Madison Avenue, a 24-story Midtown office tower slated for demolition. Extell Development purchased the site from Williams Equities, with plans to develop a luxury condominium project potentially incorporating retail and hotel components. At approximately $970 per buildable square foot, this pricing is considered an outlier, attributed to the site's prime location on Madison Avenue and East 60th Street, one block from Central Park. Average pricing for development sites rose to $418 per buildable square foot, marking a 7% year-over-year increase but remaining slightly below pre-2023 levels. Looking ahead, the anticipated "Midtown South" rezoning plan is expected to progress through the rezoning process in 2025, paving the way for additional residential development opportunities and increasing the number of housing units in Manhattan. 2H'24 Featured Transaction Upper East Side 655 Madison Avenue Sale Amount: $159,433,333 $/SF: $971 Buyer: Extell Development Company Seller: Williams Equities Sale Date: 10/10/2024

Tourism in New York City grew to 65 million visitors in 2024, the secondhighest figure on record and a 3.5% increase from the prior year, generating $79 billion in economic impact. Despite this growth, hotel transaction activity remained stable with 14 deals, matching 2023's total. However, dollar volume declined by 18%, falling from $1.76 billion to $1.47 billion. Notably, 72% of transactions were concentrated in Midtown. Hotel pricing per square foot has rebounded significantly, improving by 40% from the lows of 2020 and 2021, which were heavily impacted by the COVID-19 pandemic. The largest transaction of the year was the sale of the Thompson Central Park Hotel at 111 West 56th Street. Miami-based Gencom acquired the 587 room property, which will continue to operate under Hyatt's Thompson brand. Citywide, approximately 6,000 hotel rooms have been lost due to conversions into 16,000 migrant housing units. However, with lease expirations approaching, shelters are beginning to empty, and the City is exploring alternative housing solutions for migrants. Even as migrant housing units return to the hotel stock, supply constraints remain. New York City adopted Local Law No. 18 in January 2022, requiring short-term rental hosts to register with the Mayor's Office of Special Enforcement. More recently, in November 2024, the City enacted the "Safe Hotels Act", mandating that all new and existing hotels obtain a license to operate. 2H'24 Featured Transaction Midtown 11 West 56th Street Sale Amount: $288,519,430 $/SF: $646 Buyer: Gencom Seller: GFI Capital Resources Group Inc Sale Date: 9/16/2024

Bank Lenders Banks maintained a strategic focus on depository relationships to strengthen and optimize deposit, reserve, and liquidity ratios. There has been a noticeable shift in leadership as incumbent banks addressed or resolved legacy multifamily loan portfolios. Efforts have intensified in commercial, industrial, and bridge lending, with a reduced emphasis on multifamily term loans, particularly within the RS subasset class. Agency Lenders Agency lenders remained active in 2024, providing financing for market-rate, workforce, and affordable housing nationwide. However, recent market distress has prompted revised underwriting standards, emphasizing the physical condition of collateral and enhanced due diligence, particularly for older properties (pre-1970s multifamily) and assets in tertiary markets. Rate buy-downs enabled borrowers to secure financing below market rates, effectively increasing loan proceeds. CMBS Lenders The commercial mortgage-backed securities (CMBS) market sustained robust growth through the end of the year, driven by full-term interest-only payments and more flexible underwriting standards compared to FNMA and Freddie Mac. For multifamily assets, leverage reached up to 70% LTV at a 1.20x DSCR on interest-only payments, with a minimum 8.5% debt yield. Spreads have narrowed significantly. The 5-year product remains a preferred option for investors seeking shorter defeasance periods to minimize prepayment penalties. Debt Fund & Bridge Lenders Activity in the debt fund and bridge lending space increased significantly, bolstered by multiple Federal Reserve rate cuts and heightened scrutiny on regulated lenders. The narrowing rate gap between bridge and permanent financing, driven by falling short-term indexes (e.g., Prime, SOFR), has enhanced the appeal of bridge loans due to their higher proceeds, simplified underwriting processes, and prepayment flexibility. Preferred Equity & Mezzanine Debt Banks have adopted a highly selective approach to construction lending, prioritizing markets and sponsors with strong track records and established relationships. Bank construction loans are still available, with spreads starting at SOFR + 300 and underwriting increasingly focused on rental fallback scenarios. Many lenders view the current environment as an opportune time to support construction lending, particularly in supply-constrained markets where the development pipeline has significantly contracted. Non-bank debt funds have gained market share in the institutional $50M+ loan segment, as regulatory constraints limit depository institutions' exposure to HVCRE loans. Preferred Equity/Mezzanine Lenders Subordinate capital providers have exploded in relevance since the banking crisis and run-up in interest rates allowing for preferred equity and mezzanine debt investors to fill in the shortfall in the capital stack. Subordinate capital is available for both new acquisitions and recapitalizations for distressed opportunities. Senior lenders can often view a Preferred Equity or Mezzanine Lender as a "credit enhancement". furthering the likelihood that they consent to subordinate financing.

A number of macro-economic indicators affect the bottom line of commercial real estate investments in New York City and, in turn, the pricing and demand for these assets during any given period. Ariel Property Advisors' Research Division tracks national and local metrics to identify key market drivers influencing the real estate industry. A number of macro-economic indicators affect the bottom line of commercial real estate investments in New York City and, in turn, the pricing and demand for these assets during any given period. Ariel Property Advisors' Research Division tracks national and local metrics to identify key market drivers influencing the real estate industry.

Ariel Property Advisors has been a regular contributor for Forbes. Here is the list of the five latest articles. 12/17/2024: 'Yes' In My Backyard: NYC's Rezoning Ushers In New Era Of Housing Development Local lawmakers took a major step toward solving New York City's housing crisis by approving a rezoning initiative called the City of Yes for Housing Opportunity. 11/25/2024: One Million Reasons Rents Are High In New York City Rent regulations reduce the housing supply and push rents to new heights as newcomers, young people and others compete for NYC's 1.1 million free market apartments. 10/22/2024: New York City Office-To-Residential Conversions: Here's What We Know The sale of NYC office buildings suitable for conversion to housing accounted for approximately 25% of the $2.2 billion in development sales citywide in 1H 2024. 9/13/2024: New York City Transaction Volume Poised To Rise: Here's The Opportunity With mortgage maturities forcing sales, real estate prices falling and fresh capital entering the market, NYC is expecting a surge of trades at attractive prices. 8/7/2024: 3 Drivers Behind The Surge In New York City Investment Sales Three drivers contributed to a pickup in New York City investment sales in 1H 2024 resulting in $11.79 billion in trades, up 26% from 2H 2023.

Geographic Coverage System Ariel's unique company structure, with separate groups for Investment Sales, Capital Services and Research, ensures outstanding service for our clients. Whether it's implementing a strategic marketing process, compiling a comprehensive Asset Evaluation, securing financing or providing timely market information, every assignment is served by a team of specialized professionals. Partners Shimon Shkury, President & Founder Michael A. Tortorici, Founding Partner Paul McCormick, Partner / Sales Management Victor Sozio, Founding Partner Ivan Petrovic, Founding Partner / Operations Sean R. Kelly, Esq., Partner