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C&W ECONOMIC UPDATE

NEW YORK CITY EMPLOYMENT

A Cushman & Wakeeld Research Report  JANUARY 30, 2014

RECORD SETTING EMPLOYMENTIN NEW YORK CITY

The latest employment report on New York

City showed the city at an all-time high in total

number of jobs and recording the strongest single

year of employment growth in its history.

In December 2013, New York City had a total of 4.002 million

people on payrolls as the number of jobs passed the 4.0 million

mark for the rst time in history. To put this in perspective, there

are only nine states (excluding New York State) that have more

payroll jobs than New York City.

To reach this milestone, the City experienced the strongest

employment growth in its history during 2013. On a seasonally

adjusted basis, payroll employment in New York City increased by

93,700 jobs between December 2012 and December 2013. The

previous record job growth was in 1999 when the City added

93,400 jobs.

Since December 2010, employment in New York City has

increased more than 262,000 jobs, the best three year period

since 1996 to 1999. Continued on Page 2

4,002,000Number of workers in New York City, the rst

time in history employment exceeded four million

SOURCE: U.S. Bureau of Labor Statistics

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NEW YORK CITY PAYROLL EMPLOYMENT

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A Cushman & Wakefeld Research Report

C&W ECONOMIC

UPDATE

The key drivers of this growth have been three sectors:

• Education and health employment is up over 100,000 jobs sinceNovember 2009 accounting for nearly one third of the job growth.

In 2013 employment in these industries rose 46,300 jobs.

• Tourism is booming. In 2013 slightly more than 54 million visitors

came to New York City, a record. Not surprisingly, employment in

leisure and hospitality as well as retail have grown strongly. In 2013,

these two sectors added 27,000 jobs.

• However, despite creative industries such as Technology, Advertising,

Media and Information (TAMI) growing strongly, employment in the

three key ofce-using sectors was not as healthy as the city’s overall

performance in 2013.

• Ofce-using sectors (the sum of nancial services, professional &

business services and information (i.e. media)) increased only 8,700

 jobs. These three sectors account for approximately one-third ofall the jobs in New York City, but they accounted for only 9.3% of

employment growth in 2013.

All three of the ofce-using sectors were weak in 2013. The nancial

services sector added only 3,700 jobs; professional & business services

3,900 jobs and information only 1,200 jobs.

This slow growth in the key ofce-using sectors goes a long way to

explain the performance of the Manhattan ofce market in 2013 where

we saw substantial leasing but more space came on the market than

was taken off. Overall absorption in 2013 was -3.65 million square feet,

the weakest by far since 2009 and the Manhattan vacancy rate

increased to 11.0% from 9.5% at the end of 2012. Another contributor

to the negative absorption was a signicant increase in the supply ofofce space in Manhattan as several projects were completed. In all

approximately 3.6 million square feet of new ofce space was added to

the inventory last year.

EMPLOYMENT OUTLOOK

New York City is expected to continue experiencing healthy

employment growth in 2014. Accelerating national economic growth,

continuing strong trends in the education and health, tourism and

TAMI sectors and a better performing nancial services sector will

lead to further solid gains in New York City employment. Historically

an important contributor to the local economy, as of December 2013

nancial services employment was only 900 jobs higher than inAugust 2011.

Financial services companies have faced an uncertain environment over

the past two and a half years. First, the eurozone debt crisis has

constrained European nancial institutions, many of which are large

employers in New York City. Additionally, many of the key regulations

required by the Dodd-Frank law (such as the Volcker Rule), which was

passed in July 2011, were not nalized until December 2013. With the

eurozone economies on the mend and the Dodd-Frank regulations in

place, the environment for nancial institution in New York has

improved. Add to this a stronger national economy, which should boost

demand for nancial services, and we anticipate employment in thissector to grow in 2014.

CONCLUSION

Healthy global, national and local economic conditions and the

resulting stronger growth in ofce-using employment should lead to

more absorption of ofce space in Manhattan in 2014. The anticipated

growth in demand caused by faster employment growth will be

partially offset by the completion of one more major ofce building,

the three million square foot One World Trade Center. Nevertheless,

we anticipate stronger job growth will lead to a declining vacancy rate

in Manhattan. We expect the vacancy rate at the end of 2014 to be

lower than that at the end of 2013 across most submarkets. Thisshould lead to upward pressure on rents. Overall, 2014 is expected to

be a year of healthy improvement in the Manhattan ofce market.

For more information, contact:Ken McCarthy, Chief Economist(212) 698 2502ken.mccarthy@cushwake.com

The market terms and denitions in this report are based on NAIOP standards. No warranty or representation, express

or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to

errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions

imposed by our principals.

SOURCE: U.S. Bureau of Labor Statistics

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NEW YORK CITY FINANCIAL SERVICES EMPLOYMENT