RESIDENTIAL MARKET REPORT

2009 Peak Rental Season (May – Auust)

Citi Habitats

2009 Peak Rental Season: Residential Market Report

We are pleased to present our irst ever

Peak Rental Season Residential Market Report,

a comprehensive analysis o the May–AugustManhattan rental market.It has been just over one year since the collapse o Lehman Brothers and the economic issues that ensued thereater. At that time, wereceived many inquiries regarding rumors that renters, primarily residing in the inancial district, were abandoning their apartmentsin large numbers and leaving the City. These rumors led to urther speculation regarding the health and vitality o the overall rentalmarket in Manhattan. We knew then, and can reairm now, that those rumors were unsubstantiated and inaccurate.As a result, we have published this report in an eort to provide a greater understanding o the Manhattan rental market, specifcally o the“peak season” o the rental market. Traditionally, this season (May-August) is a key indicator o interest in, and ultimately the vitality o theoverall perormance o the rental market. During this period, the market experiences increased activity due to several actors, includingstudents graduating rom schools and universities, new hires relocating to Manhattan and current renters reassessing their housing situation.Additionally, many landlords stagger leases, when possible, so as to have leases end during this period o higher demand.We are requently asked about the state o the rental market given the downturn in the economy, the lack o hiring and high unemploy-ment rates. Manhattan is a renter-centric city, with approximately 75% o its overall housing stock comprised o rental properties, and giventhis statistic, many wondered how the rental market would perorm this year.Recent rental reports rom other irms have reported that year-over-year rental transactions were down signiicantly this year, and thatthe summer peak season business ell short o expectations. However, our report inds exactly the opposite:

from January to August 2009, Citi Habitats increased the amount of total rental transactions over the same month of 2008

. It is important to note that the only wayto produce a comprehensive rental report is through the collection and analysis o a irm’s own substantial sample data; unlike the salesmarket where all sales are publicly registered and recorded.It is clear rom the results o our report, that there have been noteworthy adjustments to the rental market as compared to 2008, namely:1. Prices have decreased between 8-11% year-over–year (see charts). It is important to note, however, that rents increasedsignifcantly between 2004 and 2007, and started to decline in 2008 (see chart).2. Vacancy rates have increased over this period but remain under 2%, indicating a tight inventory o apartments. As many othercities operate on a much higher vacancy rate, it is clear that there is no glut o apartments currently on the market.3. Incentives, in the orm o ree rent and owner-paid commissions, played a larger role this season than in 2008.Whether discussing rentals or sales, we all know that the real estate market has cycles and that the market sets the market, not the buyers,sellers, brokers or the landlords. With the current economic crises, we have witnessed an incredible loss o wealth coupled with job lossesand record unemployment. However, even actoring in price adjustments, the increase in the amount o overall transactions and the rapidpace o absorption during the 2009 peak rental season indicate a healthy and vital rental market and Manhattan remaining as the primedestination or many seeking housing.Please note the ollowing with respect to this report:1. The statistics in this report were compiled using solely Citi Habitats closed transactions during the stated periods.2. Average rents cited in this report are, or the majority, gross rents, not net eective rents, and do not include landlord incentives, unlessthe ace rent reported on the lease was the net-eective amount.We hope you will fnd this study inormative and we welcome any questions you may have regarding it.Sincerely,Gary Malin, President

We fnd more New Yorkers homes than any other brokerage frm.

peak season average rents 2009/2008

Market-wide or Manhattan, the average 2009 peak season rental price or a studio was $1,763, representing a decrease o 11% rompeak season 2008; a one bedroom, $2,425 representing a decrease o 8% rom peak season 2008; a two bedroom, $3,421 representinga decrease o 11% rom peak season 2008; and three bedroom, $4,633 representing a decrease o 8% rom peak season 2008.

average rent: M - auu 2009

Chelsea 2030 2938 4321 5556East Village 1833 2367 3273 4513Gramercy/Flatiron 1985 3024 4120 5125Harlem 1206 1580 1905 2252Lower East Side 1720 2197 2957 3717Midtown East 1803 2440 3830 5295Midtown West 1914 2528 3569 4631Morningside Heights 1400 1988 2444 3003Wall Street/BPC 2044 2812 4107 5063Murray Hill 1923 2356 3275 4537SoHo/TriBeCa 2157 3265 5169 7286Upper East Side 1612 2152 3069 5196Upper West Side 1733 2345 3439 5679Washington Heights 1072 1400 1854 2121West Village 2015 2981 3987 5528

a 1763 2425 3421 4633LoCatIon stUDIo 1Br 2Br 3Br

average rent: M - auu 2008

Chelsea 2266 3038 4322 5454East Village 2067 2743 3570 4336Gramercy/Flatiron 2262 3078 4243 5811Harlem 1230 1495 1884 2267Lower East Side 1936 2268 3648 4449Midtown East 2165 2975 4845 6498Midtown West 2054 2832 3886 4935Morningside Heights 1581 2028 2830 3332Wall Street/BPC 2266 2961 4031 4996Murray Hill 2200 2877 4172 5569SoHo/TriBeCa 2489 3676 5869 7142Upper East Side 1893 2475 3774 5757Upper West Side 2061 2623 3861 6050Washington Heights 1104 1394 1934 2324West Village 2195 3001 4542 6431

a 1985 2631 3827 5023LoCatIon stUDIo 1Br 2Br 3Br

2009 Peak Rental Season Residential Market Report

AvERAgE RENTS (2004-2008)

STU1BR2BR3BR$1,000$2,000$3,000$4,000$5,000$6,000

2004 2005 2006 2007 2008

$1,693 $1,822 $1,995 $2,129 $2,080$2,380 $2,508 $2,737 $2,871 $2,895$3,331 $3,569 $3,893 $4,269 $4,151$4,577 $4,896 $5,534 $5,627 $5,589 $2,995 $3,199 $3,540 $3,724 $3,679