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Occupancy DIscussion

NOVEMBER 2019

A new headquarters for Accordion presents a rare and exciting opportunity to make a statement about who you are, and what you aspire to be, as a company. The eventual commitment will affect your financial performance; your ability to attract, engage, and retain talent; your brand; and operating efficiencies; among other factors. This Cushman & Wakefield partnership will leverage its long-term understanding of Accordion, New York City leadership, and experience guiding companies through this process to inform our approach and ensure a successful project.

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A Dynamic Team

PROJECT LEADERS

DAVID DUSEK EXECUTIVE VICE CHAIRMAN

ETHAN SILVERSTEIN VICE CHAIRMAN

STRATEGIC ADVISORY GROUP

WORKPLACE INNOVATION

PROJECT & DEVELOPMENT SERVICES

MARKET RESEARCH

ASHLEY CHASE DIRECTOR

RACHEL CASANOVA SENIOR MANAGING DIRECTOR

RICHARD PERSICHETTI VICE PRESIDENT

RICHARD JANTZ EXECUTIVE MANAGING DIRECTOR

OUR FULL-SERVICE PLATFORM

ASSET SERVICES | CAPITAL MARKETS VALUATION & ADVISORY | GLOBAL OCCUPIER SERVICES INVESTMENT & ASSET MANAGEMENT | FACILITIES SERVICES | AGENCY LEASING

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The Proof is in the...

SELECT EXPERIENCE

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First Things First

Understand the landscape, your current situation, your space, your operations, and your vision for the future of Accordion

Before we talk real estate, let’s dig into your business and the culture behind it in order to develop a strategy. Our job is to understand how you operate, who you employee/serve and how they interact with the physical workplace environment. Drivers

Talent: How does your physical environment drive recruitment? Location: Ease of access and proximity to clients and visitors Flexibility: Future proof Event Space: In-house and/or in building event space – how will it limit the world of options? Financial: Spending smart and realizing the return Building/Neighborhood Amenities: Quality of life in and outside of the office

We help companies prioritize the criteria they will use in deciding what’s most important in a location and space. We have tools to collect information and organize/quantify to assist in the decision-making process

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the most crucial part of this process: getting to know you.

Industries are becoming location agnostic ... how critical is location to Accordion? Where do you want to be? where do you NEED to be?

How much funding do you have to commit to your headquarters growth?

What is Accordion’s vision for the future – how does the real estate reflect the brand?

How will Accordion optimally occupy space? How does this look today versus 1, 3, and 5 years from now with agile working?

How does Accordian plan for future growth?

How can C&W assist with structuring a long- term deal that allows for a path to sustainable

growth within the chosen building?

Which service lines will you be growing? How will this affect

How do you plan for future expansion options without making forward inflexible commitments?

your real estate requirements?

Can Accordion live through the current lease expiration in the current premises considering projected headcounts in New York City?

How long will it take to plan and execute on each scenario under consideration?

Will this future occupancy be the signature of your brand

How are you competing for talent with the technology industry?

Are there ways to structure a transaction to mitigate upfront capital?

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Current Occupancy – 31 W 52nd Street

31 West 52nd Street Cross Streets: Fifth & Sixth Avenues

Pillsbury Winthrop Shaw Pittman 2030

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16,314

Pillsbury Winthrop Shaw Pittman 2030

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22,344

Pillsbury Winthrop Shaw Pittman 2030

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24,762

Pillsbury Winthrop Shaw Pittman 2030

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24,925

Available

Available

Pillsbury 2030

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27,343

Providence Equity Partners 2030

Available

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27,343

Providence Equities Partners 2030

23

27,343

Centerview Partners 2030

22

27,343

Centerview Partners 2030

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27,343

TD Bank 2021

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27,343

TD Bank 2021

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27,343

TD Bank 2021

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27,343

Stone Harbor Investment 2029

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27,343

Accordion Partners 2021 (Subtenant)

Stone Harbor Investment 2029

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27,343

TD Bank 2021

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27,343

Holland & Knight LLP 2024

Clifford Chance 2024

14

27,343

Holland & Knight LLP 2024

13

27,343

Holland & Knight LLP 2024

12

27,343

Holland & Knight LLP 2024

11

27,343

Holland & Knight LLP 2024

10

27,343

TD Bank 2024

9

27,343

Clifford Chance 2024

8

27,343

Clifford Chance 2024

7

27,343

Clifford Chance 2024

6

27,343

Clifford Chance 2024

5

27,343

Clifford Chance 2024

4

28,100

Clifford Chance 2024

3

28,100

TD Bank 2021

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28,100

1

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Will the relocation of TD Bank provide any opportunities? Leverage?

Is new space worth the disruption of a relocation?

Can the space be reconfigured to meet future requirements?

How does this location impact recruitment and retention?

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Keys to a Great Deal

it’s not just about the rent

Downtown Incentive Program

Climate Mobilization Act

Operating Escalation

Financial Engineering

After-Hours HVAC

Loss Factor

Freight Elevator Charges

Common Area Electric Escalation

Landlord Vendor Approval

Labor Harmony Issues

Construction Surrogacy

Electric Charges

Business Improvement Districts

Cost Segregation

Good Guy Guarantee

Commercial Rent Tax

Real Estate Taxes NOPV

Tenant Chargebacks

Be nimble: strategies for securing flexibility Direct lease with growth/ contraction options LL with a portfolio Warehouse space (sublease excess until needed) Short-term sublease

long-term view of tenancy

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Occupancy Trends

Debt Structure

Landlord

Local Markets

Understand landlord motivation and break even points Negotiate from a position of strength with walkaway leverage Best market information know where a deal can/should be done

Building

Job Growth

Evaluate the full universe of alternatives and scenarios know your options and trade-offs Negotiating flexibility can be more valuable than rent (i.e., contraction/expansion/termination/ renewal options/sublease rights)

Alternatives

Client

Economy

Fully leverage tenancy in the market know that your requirement has value

Industry Trends

Portfolio Rollover

Comparable/Historical Pricing

Tenacity is advocacy .

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Process & Timing

UNDERSTAND

PLAN

EXECUTE

Year 1

Mo. 1

Mo. 2

Mo. 3

Mo. 4

Mo. 5

Mo. 6

Mo. 7

Mo. 8

Mo. 9

Mo

Collect Data

RFPs

Project Kick-off

Negotiate Business Terms/Site Tours

Engage Third-Party Consultants

Select Target Properties

Lease Negotiation 8 Weeks

Workplace Strategy

Define Preliminary Occupancy

Develop Pricing & Timing

Short-list

Relocate to New Buildout

Collect Data

RFPs

Project Kick-off

Negotiate Business Terms/Site Tours

Engage Third-Party Consultants

Select Target Properties

Lease Negotiation 8 Weeks

Workplace Strategy

Define Preliminary Occupancy

Develop Pricing & Timing

Short-list

Relocate to Built Space

DECISION POINT

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BUILD & RELOCATE

Year 2

o. 9

Mo. 10 Mo. 11

Mo. 12

Mo. 13

Mo. 14

Mo. 15

Mo. 16

Mo. 17

Mo. 18

Pre-Design

Design Management

Bid Negotiation | 8 Weeks

egotiation s

Construction | 16 Weeks

Relocation planning & project close-out | 2Weeks

egotiation s

FLEXIBLE TIMING FOR WORK COMMENCEMENT; CONTINUE TO MONITOR MARKET FOR NEW OPPORTUNITIES

TARGET LEASE EXECUTION

CURRENT LEASE EXPIRATION

Proactivity creates opportunity.

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No Good Broker Goes it Alone

STRATEGIC ADVISORY SERVICES

PROJECT MANAGEMENT

WORKPLACE INNOVATION

Effective collaboration with tenants on workplace strategy, tenant improvements, move management and sustainability practices.

Strategic planning, underwriting and financial analysis, breakeven analysis,

Creating a vision for a future workspace by aligning workplace strategy and trends with our clients’ goals.

transaction structuring, reporting and consensus building.

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PROPERTY MANAGEMENT

CAPITAL MARKETS

TECHNOLOGY

Review building infrastructure for each candidate property and benchmark against the properties C&W manages.

Assessing and utilizing multiple innovative programs to equip our tenants with cutting- edge resources to maximize real estate efforts.

Deep dive into the financing of potential relocation options.

A critical partner, providing proprietary market due diligence and occupancy solutions that align needs with business strategy, financial goals, and operational objectives.

BROKERAGE SERVICES

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Why Partner with Cushman & Wakefield?

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Successful history with Accordion, instant accountability

Our most powerful tools: Forward thinking, relationships, creativity, intelligence & insight Proven track record advising and outperforming the market Seamless delivery through integrated and vast resources David and Ethan will be personally engaged throughout this process, and lead negotiations with tenacity on behalf of Accordion

We are your true partner , your advocate and will go above and beyond to ensure the optimal occupancy solution for Accordion’s future

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The Landscape

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NYC Office-Using Employment Keeps Growing

Nearly 304,000 Office Jobs Added Over Last Ten Years; Dipped Four Consecutive Months from 1.469M

NYC Office-Using Employment Keeps Growing

Nearly 304,000 Office Jobs Added Over Last Ten Years; Dipped Four Consecutive Months from 1.469M

Aug. 2019 Employment: 1.454 million

1,500

1,450

1,400

Professional Services 613,800 jobs +163,200

1,350

Q1 2001 Employment: 1.290 million

1,300

Financial Services 472,700 jobs +48,300

1,250

1,200

1,150

Thousands of Persons

TAMI 370,800 jobs +95,400

1,100

1,050

1,000

Source: U.S. Bureau of Labor Statistics, Moody’s Analytics

Cushman & Wakefield | Copyright © 2019

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Densification Office-Using Tenants Doing More with Less

Densification

Office-Using Tenants Doing More with Less

2019 359 msf occupied

2001 376 msf occupied 1.29 million employees 291 sf per employee

1.45 million employees 247 sf per employee

163,300 more employees occupy 17.0 msf less space

Cushman & Wakefield | Copyright © 2019

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Manhattan Office Market MIDTOWN Total Size:

243.3 msf

Q3 19 Q3 18

Vacancy 11.1% 9.2% Leasing Activity 14.0 msf 17.2 msf Asking Rents Class A $82.22 $82.81 Class B $63.51 $61.59

MANHATTAN Total Size:

MIDTOWN SOUTH Total Size:

401.2 msf

68.1 msf

Q3 19 Q3 18

Q3 19 Q3 18 8.1% 7.4%

Vacancy 10.6% 9.5% Leasing Activity 25.6 msf 25.7 msf Asking Rents Class A $79.80 $78.67 Class B $64.91 $61.48

Vacancy

Leasing Activity 5.6 msf

5.1 msf

Asking Rents Class A

$99.02 $93.43 $76.47 $68.15

Class B

DOWNTOWN Total Size:

89.8 msf

Q3 19 Q3 18

Vacancy 11.1% 12.0% Leasing Activity 6.0 msf 3.4 msf Asking Rents Class A $66.70 $67.23 Class B $59.03 $55.38

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243.3 msf

Q3 19 Q3 18 11.1% 9.2% ity 14.0 msf 17.2 msf

$82.22 $82.81 $63.51 $61.59

UTH

68.1 msf

Q3 19 Q3 18 8.1% 7.4%

ity 5.6 msf

5.1 msf

$99.02 $93.43 $76.47 $68.15

89.8 msf

Q3 19 Q3 18 11.1% 12.0% ity 6.0 msf 3.4 msf

$66.70 $67.23 $59.03 $55.38

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Midtown Office Market

Vacancy Rate vs. Asking Rents

Midtown Office Market Vacancy Rate vs. Asking Rents

$100.00

14.0%

12.6%

12.0%

11.1%

$90.00

$82.22

10.0%

Average Asking Rents $/sf

$80.00

8.0%

$70.00

6.0%

$63.51

Vacancy

$60.00

4.0%

$50.00

2.0%

$40.00

0.0%

Vacancy

Class A Asking Rent

Class B Asking Rent

Cushman & Wakefield | Copyright © 2019

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Midtown Submarket Snapshot

idtown Submarket Snapshot

man & Wakefield | Copyright © 2019

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Impact of Hudson Yards & New Development Far West Side Migration: Hudson Yards and Manhattan West Impact of s & Ne Development Far West Side Migration: Hudson Yards and Manhattan West

Address

Size (sf)

Occupancy Completion

5 Manhattan West 10 Hudson Yards 55 Hudson Boulevard

1,800,000 1,745,000 1,418,770 2,600,000 2,077,557 2,800,000 1,945,245 17,277,766 2,891,194

100.0% 2016 100.0% 2016 93.4% 2018 100.0% 2019 87.9% 2019 32.3% 2022 32.4% 2022 24.7% 2022

30 Hudson Yards

One Manhattan West

50 Hudson Yards

66 Hudson Boulevard 2 Manhattan West

TOTALS

67.2%

47 TENANTS committed to

11.0 MSF, moving from 10.3 MSF

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*Expansions within New York City

ttan West

Completion 2016 2016 2018 2019 2019 2022 2022 2022

Map highlights migrations greater than 50,000 sf

*Expansions within New York City

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With the Rise of Fintech Expanding in

Concentration of Financial Services

SIXTH AVENUE/ROCK CENTER

With the rise of fintech, financial firms are

expanding into Midtown South

WEST SIDE/TIMES SQUARE

PENN STATION/HUDSON YARDS

DOWNTOWN

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o Midtown South

MADISON/FIFTH

TAMI Demand Focused in Eight Submarkets

PARK AVENUE

GRAND CENTRAL

MIDTOWN SOUTH

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TAMI Demand Focused in Six

TAMI Demand Focused in Eight Submarkets

Heat Map Based on 2014-2019 Leasing Acti

PENN STATION/HUDSON YARDS 33 Tenants | 3.4 msf

Heat Map Based on 2014-2019 Leasing Activity

CHELSEA 32 Tenants | 1.6 msf

34 Tenants | 3.0 msf HUDSON SQUARE

WORLD TRADE 40 Tenants | 3.4 msf

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Submarkets

ity

22 Tenants | 1.5 msf SIXTH AVENUE/ROCK CENTER

MURRAY HILL 30 Tenants | 1.3 msf

104 Tenants | 4.0 msf MADISON/FLATIRON

18 Tenants | 1.2 msf SOHO / NOHO

601 TAMI TENANTS

27.6 MSF LEASED

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Midtown Concessions

STARTING RENT & NET EFFECTIVE RENT

TENANT IM

$/sf

$/sf

Starting NER

$95.00

$10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110

-18.8% -19.1%

-17.6%

$85.00

-14.4% -15.7%

$75.00

$86.77

$85.90

$65.00

$81.90

$75.74

$74.61

$55.00

$70.22

$69.77

$67.50

$64.83

$45.00

$62.86

$65.65

$35.00

$25.00

2015

2016

2017

2018 2019 YTD

201

New Leases Only

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TENANT IMPROVEMENT ALLOWANCES & FREE RENT

$/sf

Months Free

TI

Free Rent

$10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110

16

9.1%

14

12

10

$101.34

$94.79

$87.42

8

$70.22

$67.11

6

$65.65

4

2

19 YTD

2015

2016

2017

2018 2019 YTD

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Sixth Avenue Availabilities

AVAILABILITIES 20,000–40,000 RSF

101 88 73 45

Sixth Avenue availabilities in Class A Buildings

Direct Availability

Entire Single Floor

Under $90/RSF

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Buildings with potential options

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Cushman & Wakefield

at the center of WHAT’S NEXT

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