Proposal_Brokerage_Advisory_Services_CW

MARKET OVERVIEW

Please provide your views regarding the direction the market is moving and how that could impact the success of the Company’s objectives.

The length of the current expansion cycle is approaching the longest on record, making the likelihood of a slowdown a high probability. The U.S. economy has reached an inflection point; the likelihood is high that the expansion will continue through 2019, according to NABE. However, some economists are calling for a slowdown to occur in 2020 or 2021. Several reasons for a potential slowdown are trade tensions, tax cut stimulus fading in 2020, and the yield curve. The main question is not when the next recession will occur, but what it will look like. Given that the financial system is sound, the next recession is not likely to be as severe as the 2008/2009 financial crisis. Unemployment remains around 4.0% in both the U.S. and New York City. Low unemployment coupled with rising wages will eventually cause job growth to slow. Given the current market conditions and 26.8 msf of new construction expected to deliver between 2019 and 2023, asking rents for existing properties will remain relatively flat between now and 2021.

Midtown Class A Direct Forecast

16.0%

$100.00

$90.00

14.0%

$80.00

12.0%

$89.28

$88.10

$88.26

$87.94

$87.14

$86.53

$85.25

$70.00

$81.59

10.0%

Vacancy

$75.57

$75.07

$73.27

$60.00

$70.53

8.0%

$50.00

Avg. Asking Rent ($/sf)

6.0%

$40.00

4.0%

$30.00

2.0%

$20.00

Asking Rents

Vacancy Rate

K HLT NY HILTON LLC | CUSHMAN & WAKEFIELD | 44