TenantWise.com Research - WTC Tenants Relocate: 1/3 Backfill, 1/3 Lease New Space, and 1/3 Reoccupy
 
Effects: Higher Availability Rates, Decentralization and Dispersion

NEW YORK--(BUSINESS WIRE)--Nov. 28, 2001--TenantWise.com continues to provide comprehensive information regarding the effects of the September 11th attacks upon Manhattan's real estate and economy.

TenantWise.com is an online office broker offering complete listings of all office availabilities in Manhattan, tenant representation services with a below-market fee schedule, and extensive information on the market and the lease transaction process. Full reports are available at www.tenantwise.com.

Situation Overview

The properties of the World Trade Center (``WTC'') that were destroyed or damaged account for 13.4 MM sq. ft. of office space. The 15 surrounding properties that were damaged account for 18.5 MM sq. ft. of office space. (For further details, see Special Report: Damaged Areas at www.tenantwise.com/reports/wtc_damage.asp.) In total, over 31.9 MM sq. ft. was destroyed or damaged, a loss affecting 60% of Downtown Manhattan's Class A office space.

TenantWise.com research indicates that there were 179 non-governmental tenants over 10,000 sq. ft. in size in the WTC buildings (``destroyed properties'') and the 15 damaged buildings surrounding the WTC (``damaged properties.'') Out of 31.9 MM sq. ft. in destroyed and damaged properties, the larger tenants occupied approximately 21 MM sq. ft. TenantWise.com estimates that governmental tenants accounted for 1.8 MM sq. ft., and the remainder was occupied by smaller tenants. Approximately 450 tenants were in the WTC properties and approximately 158 tenants were in the surrounding properties. Eight of the 15 damaged buildings have now been restored to service. Restoration and repair schedules of the remaining damaged properties range from two weeks to five years.

At this time, 89% of the 179 larger tenants, representing 18.7 MM sq. ft., have made decisions concerning their long-term relocation destinations. The dispersion of the affected larger tenants from both WTC and surrounding properties falls into three approximately equal categories at this time. The categories are as follows: backfilling space within a company's existing real estate portfolio, leasing new space, or reoccupying space when it is returned to service.

Backfilled: 6.3 MM sq. ft. has been backfilled into other unaffected space that was unoccupied or made
available within a tenant's existing real estate portfolio.

2.9 MM sq. ft. backfilled in Midtown

2.5 MM sq. ft. backfilled in New Jersey

0.9 MM sq. ft. backfilled Downtown.

Newly Leased: 6.0 MM sq. ft. of new space was leased on a long-term basis.

3.6 MM sq. ft. was leased in Midtown

1.2 MM sq. ft. was leased in New Jersey

1.0 MM sq. ft. was leased elsewhere (Upstate NY, Connecticut, other states, abroad)

0.2 MM sq. ft. of space was leased Downtown.

Reoccupied: 6.4 MM sq. ft. of space will be reoccupied as tenants return to damaged properties.

Conclusions

Availability Rates Now Exceed September 11th Levels: Availability rates have moved upward since September 11th, and TenantWise.com data indicates that they will not decrease for some time, despite future lease commitments to be made by displaced tenants. Availability rates for all of Manhattan for 2Q 2001, 3Q 2001 and as of 11/20/01 were 8.7%, 11%, and 12%, respectively. The expected beneficial effect on the overall real estate market was tempered by the fact that only one-third of those tenants who potentially could have leased new space did. Also, tenants leased less square footage than originally held, and many decentralized operations into a few or several locations, both in and outside of New York. Thus, the TenantWise.com predictions of October 22nd for a decrease in Lower Manhattan availability of less than 1% and in Downtown of under 2.5% in Manhattan, although bold at the time, may actually have overestimated the strength of the market. Given new layoffs and proprietary tracking of over 18 MM sq. ft. that has been added as available since September 11th, availability rates now exceed rates on the 11th and the dislocation only slightly slowed the rapid disposition of space now underway.

Decentralization Of Operations: From TenantWise.com's analysis of the largest tenants, 22 tenants representing a total of 13.2 MM sq. ft. from the destroyed and damaged properties have strategically planned to decentralize operations. Many have secured space both in Manhattan and outside of the city. These tenants include American Express, Morgan Stanley, Lehman Brothers, Cantor Fitzgerald Securities, Dow Jones & Co., Empire Blue Cross, Royal Bank of Canada and Salomon Smith Barney, among others.

Envelope Reduction And Lost Jobs: Of 179 total tenants over 10,000 sq. ft. from destroyed and damaged properties, 160 tenants that have announced relocation destinations represent leases for smaller square footage commitments than previously occupied. The total occupied envelope for tenants over 10,000 sq. ft. has been reduced by 2.5 MM sq. ft. This represents equivalent space for 9,910 jobs and represents a reduction in square footage commensurate with those whose lives were lost, as well as the reduction in work force due to recent layoffs. Recent estimates count approximately 4,000 lives lost in the attack; the remainder of 5,910 jobs could reflect recent cutbacks in the New York workforce.

Move Back Not On Schedule: While 82 of 110 tenants from damaged properties that have the option to return Downtown have said that they are returning to their spaces once buildings reopen, many are not moving quickly to do so. For example, One Liberty Plaza reopened on October 24th for tenants to return. 23 of 35 larger tenants from One Liberty, or 65%, report that they expect to return to the building. These 23 tenants represent 1.4 MM sq. ft., or 67%, of the 2.1 MM sq. ft. building. Through conversations with tenants, TenantWise.com learned that only four tenants (Ogaki Kyoritsu Bank, Maria Fiorini Ramirez, Inc., Hyperion Capital Management, and Flemming Zulack & Williamson) are currently operating at 100% within their space at One Liberty, representing a total of 60,500 sq. ft. So while 65% are acknowledged as coming back, only 3% are currently occupying the building today.

Job Count Totals: Of the 179 tenants surveyed that represent approximately 21 MM sq. ft, an approximate total of 84,057 jobs have been dispersed as follows:


- 19,085 jobs have moved to New Jersey or elsewhere;
- 25,978 jobs have moved to Midtown;
- 29,877 jobs are staying Downtown; and
- 9,117 jobs are with undecided companies.

For a full report, see www.tenantwise.com and look under the home page heading ``Special Report: Overview of Current Situation''.

About TenantWise.com

Launched in April 2000, TenantWise.com is an on-line lease transaction platform. The site offers free, searchable listings of office availabilities in Manhattan (currently over 4,000), tenant representation services with a below-market fee schedule, extensive information and resources on the lease transaction process, and current market information and research. TenantWise.com does not charge landlords or brokers to list space on the site and, as a result, has one of the most complete listings services available in Manhattan. These listings are free and can be accessed by tenants, brokers and landlords. (For more details, view http://www.tenantwise.com)

For further information contact:
M. Myers Mermel Chief Executive Officer (212) 943-7777	Caroline McLain Chief Financial Officer (212) 943-1902

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