This asset class ranked third in dollar volume across Queens, trailing only multifamily and industrial/warehouse/storage properties. It also recorded the second-highest transaction volume, surpassed only by multifamily. Notably, this represents the third-highest dollar volume for this asset class in Queens over the past decade. Pricing saw a significant year-over-year increase, rising by nearly $100 per square foot — the highest level since 2018. A standout transaction illustrating the rising value of retail properties in Queens is the sale of 61-15 Metropolitan Avenue & Fresh Pond Road, a CVS Pharmacy. The property sold for $15.5 million ($1,148 per square foot) to Ryan Tedder, the Grammywinning singer, songwriter, and producer best known as the lead vocalist of OneRepublic. Flushing emerged as a particularly strong performer in the retail sector. In 2024, the neighborhood posted an average price of $1,396 per square foot, the highest in the borough. Additionally, Flushing saw nearly $400 million in retail transactions across 10 deals, leading Queens in both metrics. There has also been a surge in retail leasing in the area as evidenced by the California-based Asian supermarket chain, 99 Ranch Market, signing a 44,000-square-foot lease at Mehran Realty Group's 37-11 Main Street in Flushing, marking its first store in Queens. 2H'24 Featured Transaction Maspeth 61-15 Metropolitan Avenue & Fresh Pond Road Amount: $15,478,060 $/SF: $1,148 Buyer: MRK Metro LLC Seller: R H Properties Inc (Rosenthal & Rosenthal Inc) Sale Date: 11/21/2024

The industrial sector saw notable activity with Terreno Realty Corporation's $246 million acquisition of The Blackstone Group's Queens Industrial Portfolio, part of a larger $346.5 million national portfolio. The Queens portfolio includes 28 buildings totaling 1.2 million square feet, 91.6% leased to 70 tenants. The in-place cap rate is 4.3%, with a stabilized cap rate of 5.0%, rising to 5.8% at market rents, according to Terreno. This deal represented one-third of industrial sales in Queens and highlights confidence in the JFK Airport area, where a $19 billion public/private redevelopment is transforming the airport into a world-class hub, driving economic growth and supporting 149,000 jobs. Carlyle Group also made notable moves in the sector, acquiring two self-storage buildings at 74-16 Grand Avenue and 87-16 121st Street for a combined $101.3 million in 2024. These purchases add to Carlyle's expanding portfolio, which includes additional self-storage acquisitions in Brooklyn and Manhattan over the past year. Despite these significant deals, the total dollar volume for industrial transactions in Queens was approximately 5% below the annual average of the past decade. Furthermore, the 73 transactions recorded in 2024 marked the second-lowest annual count since 2012. 2H'24 Featured Transaction Elmhurst 74-16 Grand Avenue Amount: $51,000,000 $/SF: $364 Buyer: The Carlyle Group Seller: Storage Deluxe Sale Date: 11/22/2024

Development sales in 2024 experienced a 32% decline in dollar volume, marking the lowest level since 2012. However, transaction volume remained consistent with the average seen over the past five years. This discrepancy is largely attributed to a reduction in the average price per buildable square foot and more transactions in neighborhoods that trade at a lower basis. For example, Astoria which has had 10 sales annually over the previous 3 years had just 2 development transactions in 2024. The top five sales within the borough occurred during the first half of the year, with the largest transaction in the latter half being the $16.6 million purchase of 34-49 Steinway Street by Z.D. Jasper Realty at $233 per buildable square foot. Long Island City led the borough in both dollar volume and transaction count, recording $190 million across 10 transactions. Looking ahead, the introduction of the 485-x tax exemption in April, followed by the City of Yes initiative in December, is expected to significantly boost development activity citywide. The Universal Affordability Preference program, in combination with the 485-x exemption, is poised to serve as a catalyst for rental and affordable housing development across the borough in the coming years. 2H'24 Featured Transaction Long Island City Sale 34-49 Steinway Street Amount: $16,600,000 $/SF: $233 Buyer: Z.D. Jasper Realty Inc Seller: Metropolitan Lumber & Hardware Sale Date: 12/4/2024

Bank Lenders Banks maintained a strategic focus on depository relationships to strengthen and optimize deposit, reserve, and liquidity ratios. There has been a noticeable shift in leadership as incumbent banks addressed or resolved legacy multifamily loan portfolios. Efforts have intensified in commercial, industrial, and bridge lending, with a reduced emphasis on multifamily term loans, particularly within the RS subasset class. Agency Lenders Agency lenders remained active in 2024, providing financing for market-rate, workforce, and affordable housing nationwide. However, recent market distress has prompted revised underwriting standards, emphasizing the physical condition of collateral and enhanced due diligence, particularly for older properties (pre-1970s multifamily) and assets in tertiary markets. Rate buy-downs enabled borrowers to secure financing below market rates, effectively increasing loan proceeds. CMBS Lenders The commercial mortgage-backed securities (CMBS) market sustained robust growth through the end of the year, driven by full-term interest-only payments and more flexible underwriting standards compared to FNMA and Freddie Mac. For multifamily assets, leverage reached up to 70% LTV at a 1.20x DSCR on interest-only payments, with a minimum 8.5% debt yield. Spreads have narrowed significantly. The 5-year product remains a preferred option for investors seeking shorter defeasance periods to minimize prepayment penalties. Debt Fund & Bridge Lenders Activity in the debt fund and bridge lending space increased significantly, bolstered by multiple Federal Reserve rate cuts and heightened scrutiny on regulated lenders. The narrowing rate gap between bridge and permanent financing, driven by falling short-term indexes (e.g., Prime, SOFR), has enhanced the appeal of bridge loans due to their higher proceeds, simplified underwriting processes, and prepayment flexibility. Preferred Equity & Mezzanine Debt Banks have adopted a highly selective approach to construction lending, prioritizing markets and sponsors with strong track records and established relationships. Bank construction loans are still available, with spreads starting at SOFR + 300 and underwriting increasingly focused on rental fallback scenarios. Many lenders view the current environment as an opportune time to support construction lending, particularly in supply-constrained markets where the development pipeline has significantly contracted. Non-bank debt funds have gained market share in the institutional $50M+ loan segment, as regulatory constraints limit depository institutions' exposure to HVCRE loans. Preferred Equity/Mezzanine Lenders Subordinate capital providers have exploded in relevance since the banking crisis and run-up in interest rates allowing for preferred equity and mezzanine debt investors to fill in the shortfall in the capital stack. Subordinate capital is available for both new acquisitions and recapitalizations for distressed opportunities. Senior lenders can often view a Preferred Equity or Mezzanine Lender as a "credit enhancement". furthering the likelihood that they consent to subordinate financing.

A number of macro-economic indicators affect the bottom line of commercial real estate investments in New York City and, in turn, the pricing and demand for these assets during any given period. Ariel Property Advisors' Research Division tracks national and local metrics to identify key market drivers influencing the real estate industry. A number of macro-economic indicators affect the bottom line of commercial real estate investments in New York City and, in turn, the pricing and demand for these assets during any given period. Ariel Property Advisors' Research Division tracks national and local metrics to identify key market drivers influencing the real estate industry.

Ariel Property Advisors has been a regular contributor for Forbes. Here is the list of the five latest articles. 12/17/2024: 'Yes' In My Backyard: NYC's Rezoning Ushers In New Era Of Housing Development Local lawmakers took a major step toward solving New York City's housing crisis by approving a rezoning initiative called the City of Yes for Housing Opportunity. 11/25/2024: One Million Reasons Rents Are High In New York City Rent regulations reduce the housing supply and push rents to new heights as newcomers, young people and others compete for NYC's 1.1 million free market apartments. 10/22/2024: New York City Office-To-Residential Conversions: Here's What We Know The sale of NYC office buildings suitable for conversion to housing accounted for approximately 25% of the $2.2 billion in development sales citywide in 1H 2024. 9/13/2024: New York City Transaction Volume Poised To Rise: Here's The Opportunity With mortgage maturities forcing sales, real estate prices falling and fresh capital entering the market, NYC is expecting a surge of trades at attractive prices. 8/7/2024: 3 Drivers Behind The Surge In New York City Investment Sales Three drivers contributed to a pickup in New York City investment sales in 1H 2024 resulting in $11.79 billion in trades, up 26% from 2H 2023.