For Immediate Release (3 pages) Thursday, April 4, 2013

Contact: Christa Segalini (201) 465-8021 or (908) 448-8591 cell email: csegalini@beckermanpr.com

Numerous trophy property offerings may signal cautionary note for NYC office sales despite insatiable demand for class A assets and residential development sites
Decreasing cap rates and persistently low interest rates create perfect storm for sellers, according to Avison Young New York City, NY A recent increase in the number of large, class A office buildings that have come to market since the beginning of the year may signal that the New York City investment sales market is on track to becoming overheated, according to recently released research from Avison Young. Total dollar volume of first-quarter New York City commercial real estate sales on a year-to-year basis was up 46%, increasing to $8.6 billion from $5.8 billion in the first quarter of 2012, and producing the best first-quarter results in several years. Avison Young notes that the increase is attributed to the sales of four substantial properties since the start of 2013 550 Madison Avenue, 30 Rockefeller Plaza, 237 Park Avenue and 75 Rockefeller Plaza which, when combined, account for $3.8 billion of the quarters dollar volume. Additionally, several other large, class A properties have been put on the market since the beginning of the year, including 125 West 55th Street, 425 Lexington Avenue, 499 Park Avenue and 650 Madison Avenue. Over the past 60 days we have started to see a notable uptick in the number of large, class A buildings being put on the market. The persistently low interest-rate environment, coupled with cap rates moving downward and improving rental rates have created a veritable perfect storm for sellers, comments Neil C. Helman, Avison Young Principal and a member of the firms New York City-based capital markets group. Many funds and REITs are now looking to sell as they feel the current environment is such that the returns they were seeking have or could be met with a disposition today. Adds Avison Young Principal Jon Epstein, who is also a member of the firms capital markets group in New York: In anticipation that current market conditions will continue to bode favorably for sellers of trophy properties, some large owners that are putting their buildings on the market now may be hedging risk by doing so, as we are still in the very early stages of this trend. Page 1 of 3

According to Avison Young, the recent phenomenon of trophy, class A buildings being put on the market is reflected by first-quarter results that show supply is still weighted toward value-add and opportunistic investments, particularly in Midtown South and the West Side of Midtown, which attracted close to 50% of all investment sales activity since the beginning of 2013. The trends infancy is also reflected in the significant decrease in international investment in Manhattan office properties during the first quarter, which fell below its three-year average of 33%. Ultimately, Avison Young predicts that the direction of international investment will begin to reverse itself as more large owners, seeking to capitalize on current market conditions to chase yield, place trophy properties on the market. Avison Youngs research indicates that private equity firms are still the leading acquirer of office properties in New York City, while institutional investors and user-owners trailed in terms of acquisition activity during the first quarter. Recent activity shows that institutions are now net sellers of office properties and net buyers of residential. In the New York City residential market, rental buildings remain the star performer, with overall prices increasing by more than 6% last year and on track to match that success in 2013. According to Avison Young, REITs continued to be big players in the rental segment, accounting for 77% of the investment sales activity in the first quarter, compared with 26% to 32% during the last three years. Notes Helman: There seems to be insatiable demand for well-located residential development sites, which is pushing land prices continually higher. Market Forecast Avison Young predicts 2013 will remain strong for investment sales activity as improvements in the economy and employment continue to benefit New York City as a whole. Although the improvement in the leasing market has been slow, it has also been steady, with sustained momentum likely during the second part of the year, notes Greg Kraut, Avison Young Principal and Managing Director of the companys New York City office. Aggressive sales pricing by property owners indicates that there continues to be strong demand for, and a comparatively limited supply of high-quality assets on the market, although that is changing as sellers increasingly begin to see the current market as an opportune time to achieve desired returns. This is also an indication that buyers believe leasing fundamentals are gaining strength. According to Avison Young, the problems that persistently low interest rates present for the market have yet to deter investment activity. While the low interest-rate environment has contributed to skyrocketing pricing, the problems that will be created by their inevitable increase still seem far off for most investors, Epstein states. Ultimately, Manhattan will continue to be the darling of the domestic real estate front.

Founded in 1978, Avison Young is Canada's largest independently-owned commercial real estate services company. Headquartered in Toronto, Ontario, Avison Young is also the largest Canadianowned, principal-managed commercial real estate brokerage firm in North America. Comprising more than 1,200 real estate professionals in 44 offices across Canada and the U.S., the full-service commercial real estate company provides value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-residential properties. Page 2 of 3

For further information/comment/photos: Christa Segalini, Vice-President, Beckerman PR: (201) 465-8021 Sherry Quan, National Director of Communications & Media Relations, Avison Young: (604) 647-5098; cell: (604) 726-0959

www.avisonyoung.com Avison Young was a winner of Canadas Best Managed Companies program in 2011 and requalified in 2012 to maintain its status as a Best Managed company. Follow Avison Young on Twitter: For industry news, press releases and market reports: www.twitter.com/avisonyoung For Avison Young listings and deals: www.twitter.com/AYListingsDeals Follow Avison Young Bloggers: http://blog.avisonyoung.com

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