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United States Skyline Review
2013: The year the recovery takes hold across all Skyline markets
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Jones Lang LaSalle is pleased to present our Spring 2013 U.S. Skyline Review. Our
Skyline Review is a building-by-building view of the market-making segments of
urbanized office markets. Skyline buildings comprise approximately 38.0 percent of the
CBD marketplace and 65.0 percent of the CBDs Class A market across the U.S. While
the methodology across our Skyline markets differs slightly, the common thread tying
all of these buildings together is that these assets are the true drivers of leasing supply,
demand and rents, development patterns and investment interest and activity.
This year, we present our most comprehensive look across the Skyline, incorporating 34
major city centers across 851 urban office buildings. In the report, we not only provide
the micro level detail of thefloor-by-floor leasing picture, but we also examine the
macro-level detail related to economic, demographic, leasing andinvestment performance.
From New York to Minneapolis to Bellevue, Jones Lang LaSalles research and market
experts define these segments of the office sector for you.
Our cover image depicts an artistic illustration of the U.S. Skyline. In total, 34 landmark buildings
around the U.S. are represented, one building for each local Skyline we cover in this report.
United States Skyline Review contents 3
Supply 4Demand 5Rents 6Investment 7Demographics 8
Primary Skyline markets 11Boston 12Chicago 14Los Angeles 16New York 18San Francisco 20Seattle 22
Bellevue 23Washington, DC 24
Secondary Skyline markets 22
Atlanta 28Baltimore 30Charlotte 31Cincinnati 32Cleveland 33
Columbus Dallas Denver Detroit Fort Lauderdale Houston Indianapolis Miami Minneapolis NJ Hudson Waterfront Orlando Philadelphia Phoenix Pittsburgh Portland
Raleigh Richmond Sacramento San Diego Stamford Tampa
Skyline appendix
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Supply
12.2%
2012 2013 mid-2014
13.4%U.S. Skyline historical equilibrium direct vacancy: U.S. Skyline direct vacancy as of YE 2012:
Number of Skyline marketswith direct vacancy levelsbelow historical equilibrium
level at the end of 2012:
10
(29.4% of markets)
Estimated number of markets withdirect vacancy levels that will bebelow historical equilibrium level at
the end of 2013:
18
(52.9% of markets)
Expected timing of equilibriumacross U.S. Skyline:
mid-2014
Number of Skyline markets with s
digit vacancy levels as of YE 201
10
Number of Skyline markets with direct
vacancy levels in excess of 20.0%:
7
Percent of markets that
have buildings under
construction currently:
24.2%
Of the eight Skyline markets tha
construction, number that have sp
construction underway:
3Of the Skyline total s.f. of space under construction, percent that is currently preleased:
65.6%, the highest rate of preleasing in the past decade by 16.1
(topping the next highest year2011)
Markets that have the highest percentage of under-construction inventory to existing
inventory (and preleasing in those markets):
New York (54.2%) ; Boston (100.0%) ; Cleveland (57.9%) ;
Washington, DC (79.4%) ; New Jersey Hudson Waterfront (40.4%)
Cincinnati, Dallas, Atlanta, Phoenix,Miami, Fort Lauderdale, Stamford
Pittsburgh, Richmond, Bellevue,
Houston, Portland, New Jersey Waterfront, Raleigh, San FrancisPhiladelphia, Boston
An increasingly short supply of space options due to an extremely thinconstruction pipeline will present tenants increased challenges across most
primary and secondary Skyline markets over the next 12 to 18 months.Already, vacancy levels are within 120 basis points of reaching equilibriumand, with the recovery now expanding beyond a handful of markets,vacancy will likely hit equilibrium by the middle of 2014 at the latest.
In the tightest Skyline markets, such as Pittsburgh, Bellevue, Houston,Portland, Raleigh, San Francisco and Boston, not only large blocks but now
mid-sized blocks are running low, likely causing rents to jump higher overthe short term. In nearly all markets besides a handful, large tenants willhave few existing options to consider and thus will be forced to look at
proposed development options if they desire to explore relocation options,with those options likely not to deliver until 2015-2016at the earliest.
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Rents
Percent of Skyline markets that
demonstrated rent growth in:
Percent premium for high watermark
rent to overall Skyline average rent across markets:
Regional 2
Skyline rent
Percent currently awayfrom prior market peak
(asking rent):
4.4%
Percent currently awayfrom prior market peak
(net effective rent):
8.7%
Number of markets that posted a
decline of more than 10.0 percentin both free rent and tenant
improvement allowances in 2012:
32.3%of overall markets
Number of Skyline markets that have
exceeded prior cycles peak asking rent:
4(San Francisco; New Jersey
Hudson Waterfront;
Washington, DC; Cincinnati)
Number of market
levels remain at leasbelow prior marke
5(New York Midto
Phoenix, San Dieg
2.8%
2012 U.S. Skyline
asking rent growth
1.6%
37.5%
2011 U.S. Skyline
net effective rent growth
0.6%
2011 U.S. Skyline
asking rent growth
4.5%
2012 U.S. Skyline
net effective rent growth
2010: 32.4%
2011: 41.2%
2012: 67.6%
2013: 85.3%(forecasted)
West
Southwest
0.9% 1.8%
2.1%
4.0%
4.2%
Midwe
st
Southea
st
North ea
st
Skyline rents and pricing have remained a tale of two markets over the pastfew years with rents near or even surpassing previous peak levels acrossthe majority of the super seven markets, whereas in the secondary Skylinemarkets, pricing, on average, remains approximately 18 months from hitting
prior peak levels. Nonetheless, overall pricing across most markets hasindeed turned and will continue to run away from tenants over the next yearand a half with concession packages continuing to decline (already havedecreased by nearly 20.0 percent in the past two years) and face ratescontinuing their upward trajectory (increasing 9.0 percent in the primarymarkets over the past three years) after finally hitting bottom across thesecondary markets in 2012.
Markets where tenants will have the least leverage remain those dominatedby technology (Boston, Portland, San Francisco, Seattle, Seattle-Bellevue)and energy (Denver, Houston and Pittsburgh), but we are forecasting morethan 85.0 percent of Skyline markets we track to see face rent increases in2013 and more than 90.0 percent of markets to also display a compressionin tenant incentives, demonstrating to tenants that a window exists forleverage across higher-quality buildings, but that window is slowly closing.
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$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20
Transactionvolume($Millions)
Cap rate in Greater Boston has returned to pre-recession peakFinancial and Legal Services turning the corner Financial District low-rise vacancy showing great improvement
4.5%
2.2%
-5%-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Dec2000
Dec2001
Dec2002
Dec2003
Dec2004
Dec2005
Dec2006
Dec2007
Dec2008
Dec2009
Dec2010
Dec2011
Dec2012
Year-over-yearemploymentgrowth
Legal services Financial services
20.3%
14.1%
11.4% 11.3%
Spring 2012 Spring 2013
Low rise
High rise
SEAPORT DISTRICTBACK BAY
50 MilkStreet
One PostOffice Square Rowes Wharf
28 StateStreet
53 StateStreet
60 StateStreet
75 StateStreet
200 StateStreet
99 SummerStreet
100SummerStreet
125SummerStreet
200 BerkeleyStreet
222BerkeleyStreet
500BoylstonStreet
800BoylstonStreet
200Clarendon
Street
101HuntingtonAvenue
111 HuntingtonAvenue
10 St. JamesAvenue
One MarinaPark Drive Seaport East Seapo
283,360 836,025 345,815 569,711 1,167,903 819,452 772,558 303,314 265,580 1,042,317 459,804 695,547 516,420 638,878 1,338,166 1,808,855 526,222 891,000 535,840 493,000 457,113 57
100.0% 91.0% 97.7% 76.6% 80.8% 85.8% 68.5% 87.4% 91.2% 77.2% 75.5% 100.0% 97.6% 60.2% 94.1% 97.6% 100.0% 94.6% 100.0% 75.5% 92.7% 92
$43.91 $60.21 $52.07 $51.23 $46.78 $53.45 $46.62 $45.42 $35.86 $48.27 $45.87 $42.00 $72.58 $70.22 $62.71 $58.83 N/A $46.27 N/A $54.88 $50.00 $4
1981 1981 1987 1997 1984 1977 1988 1985 1987 1974 1989 1947 1991 1988 1965 1974 1970 2001 2001 2010 2000 2
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12.8%
10.0% 9.8%
14.4% 14.1% 14.0% 14
$31.76
$34.50
$35.30
$32.08$32.30
$31.25
$3
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
21.0%
23.0%
25.0%
2006 2007 2008 2009 2010 2011 2
Total vacancy
Average asking rent ($ p.s.f.)
Rental rates starting to recover as vacancy remains elevated nearecessionary high
East Loop River North North Michigan Avenue
Citadel Center Insurance ExchangeBuilding190 S
LaSalle 440 S LaSalleThree FirstNationalPlaza
181 WMadison
55 WMonroe
LeoBurnettBuilding
TheUnitedBuilding
MichiganPlaza -205 N
Michigan
MichiganPlaza -225 N
Michigan
TwoIllinoisCenter
OnePrudential
Plaza
TwoPrudential
Plaza
AonCenter
Blue Crossand BlueShield
OneIlinoisCenter
303 EWacker 321 N Clark
MesirowFinancialBuilding
300 NLaSalle
401 NMichigan
The AMABuilding
330 NWabash NBC Tower
HancockTower
1,504,364 1,449,067 798,782 1,019,325 1,439,369 936,683 806,000 1,118,042 959,258 975,895 969,053 980,362 1,228,000 976,137 2,687,814 1,845,460 1,009,940 859,187 896,502 1,173,643 1,302,901 737,308 622,487 1,141,760 850,000 1,000,100
94.6% 84.3% 87.4% 74.1% 88.9% 83.1% 79.2% 100.0% 81.8% 85.1% 84.4% 68.0% 63.3% 87.1% 84.0% 98.3% 79.8% 54.5% 80.6% 90.1% 98.9% 74.4% 94.5% 55.7% 71.0% 86.8%
$27.48 $32.07 $24.06 $19.45 $22.98 $23.00 $19.29 N/A $25.14 $20.00 $20.00 $16.75 $23.25 $23.00 $19.35 $15.00 $16.75 $17.99 $20.38 $26.81 $30.45 $22.70 $19.59 $25.35 $17.00 $19.20
2003 1912/2002 1985 1984 1980 1990 1980/2002 1989 1992 1981/2002
1982/2002
1972/1998
1955/1990 1990 1972 1997/2009
1969/1997 1979 1987 2009 2009
1965/1993 1990
1971/2010 1989
1970/1995
Leasing activity of the Skyline buildings has increased since mid-2010,alongside the economic recovery
Skyline net absorption has been more volatile over the course of theeconomic recovery
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Q22007
Q32007
Q42007
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
s.f. leased
743,343
342,153
50,401
697,890
27,158
-666,001
-31,090
-523
,186
319,890
25,378
-254,638
257,237
109,036
148,995
35,051 2
03,534
-62,893
372,215
33,952
-215,376
-132,281
137,913
-1,000,000
-800,000
-600,000
-400,000
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
Q32007
Q42007
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Net absorption (s.f.)
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Top three owners control over half of the Downtown SkylineDowntown Skyline rents remainflat, yet Century City Skyline rentsstarting to push up
JPMorgan Chase controls 27 percent of the Century City Skyline
29%
16%
12%
43%
MPG Office Trust, Inc. Brookfield Office Properties, Inc.
Thomas Properties Group, L.P. Other
$46.21 $46.56 $46.73
$49.46 $49.00$50.90 $51.11 $50.75
$37.87 $37.92 $38.17 $38.15 $38.23 $38.61 $38.17 $38.23
$20
$25
$30
$35
$40
$45
$50
$55
$60
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
Century City Downtown
27%
8%
7%
7%
51%
JPMorgan Chase & Co Watt Properties, Inc. JMB Re
The Irvine Company Other
60
50
10
20
40
30
Floor
70
Paul Hastings Tower City National Tower 550 South Hope Aon Center The WedbushCenter Tower BuildingSunAmerica
Center Fox Plaza 2000 Avenue of the Stars North Tower South TowerConstellation
PlaceEighteen Eighty
EightWatt PlazaNorth Tower
Watt PlazaSouth Tower
1800 CenturyPark E
1840 CenturyPark E
1,373,245 1,170,416 590,207 1,104,578 476,491 567,861 780,063 710,692 775,541 1,124,719 1,124,719 775,037 483,896 450,000 450,000 225,525 331,500
90.3% 88.1% 72.5% 69.2% 64.2% 94.2% 77.3% 82.4% 100.0% 77.8% 93.0% 77.1% 93.2% 80.6% 88.0% 85.0% 86.2%
$24.00 $24.00 $22.00 $22.00 $21.00 $20.00 $65.16 $52.32 N/A $45.00 $45.00 $55.20 $42.00 $36.60 $36.60 $38.40 $36.12
1971 1971 1990 1974 1987 1963 1990 1986 2007 1975/20081974/2008 2003 1970 1980 1980 1970/1989 1971
Downtown (Rents NNN) Century City (Rents FSG)
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$44
$84
$66
$120
$74
$90
741
1,469
880
1,468
903
1,4
$30
$50
$70
$90
$110
$130
$150
$170
$190
$210
$230
19961997199819992000200120022003200420052006200720082009201020112
Midtown Trophy
S&P
Stock market has historically been a leading indicator of Trophy Midtown Trophy vacancy rises after initial recovery Financial and legal services dominate Trophy leasing activity in 2012
8.8%
2.2%1.7%
7.3%
1.9%
9.8%
13.1%
9.3%
12.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Jan-13
7%
8%
20%
20%
45%
Insurance Business Services Other
Legal Services Financial Services
Floor
60
70
80
90
100
50
10
20
40
30
745 FifthAvenue
767 FifthAvenue
OneBryantPark
1095Avenue
of theAmericas
1114Avenue
of theAmericas
1177Avenue
of theAmericas
1221Avenue
of theAmericas
1251Avenue
of theAmericas
1285Avenue
of theAmericas
51 West52nd Street
1301Avenue ofthe Americas
1330Avenue
of theAmericas
1345Avenue
of theAmericas
7 TimesSquare
152 West57th Street
787SeventhAvenue
11 TimesSquare
140Broadway
85 BroadStreet
32 OldSlip
17 StateStreet
180MaidenLane
1 WorldFinancialCenter
2 WorldFinancialCenter
3 WorldFinancialCenter
4 WorldFinancialCenter
1 LibertyPlaza
1 WorldTradeCenter
150Greenwi
Street
565,064 2,000,000 2,118,441 1,200,000 1,577,112 921,637 2,550,000 2,291,317 1,710,000 872,593 1,800,000 534,000 1,896,140 1,238,797 547,000 1,743,413 1,109,028 1,170,000 1,190,000 1,132,340 531,521 1,090,000 1,655,000 2,591,244 2,263,855 1,903,800 2,300,000 3,020,630 2,845,00
85.9% 97.5% 98.1% 94.8% 92.9% 79.3% 98.1% 97.9% 100.0% 100.0% 87.7% 82.3% 100.0% 99.1% 97.4% 100.0% 61.5% 90.7% 42.0% 79.8% 82.8% 100.0% 90.1% 99.3% 98.1% 99.8% 99.5% 57.0% 59.9%
1929/1989 1968 2009
1972/2008
1971/2001 1991 1972 1970 1960 1963
1963/1989
1965/2007
1969/1988 2004 1990 1985 2010 1967 1983 1987 1987
1984/2000 1986 1987 1986 1986
1973/2007 2014 2013
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$80.63
$59.04$63.25
$51.56$52.17
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Trophy Skyline asking rent Class A Skyline askin
High tier Mid tier Low tier
Average asking rates in most tiers higher than market average ofsome as high as $100 p.s.f.
Skyline losing out on tech absorption, capturing smaller share of totalabsorption this cycle
Skyline assets consistently achieve highest asking rates in the city,offering unrivaled views and amenities
-1,500,000
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
Q199
Q499
Q300
Q201
Q102
Q402
Q303
Q204
Q105
Q405
Q306
Q207
Q108
Q408
Q309
Q210
Q111
Q411
Q312
Net absorption (s.f.)
$43.63$45.69 $45.99
$47.32$48.28
$51.27
$53.72$55.89 56.34
$35.99$37.69
$40.06$41.57
$43.39
$46.59$48.71
$50.36$51.56
$20
$25
$30
$35
$40
$45
$50
$55
$60
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
Skyline City-wide
Average asking rent ($ p.s.f.)
50California
Street
100California
Street
150California
Street
Pine StreetCenter
One FrontStreet
EmbarcaderoCenter West
345 CaliforniaStreet
1 BushStreet
OneSansome
Street
44Montgomery
Street
333 BushStreet
OneMontgomery
Tower
OneElevenSutter
1 PostStreet
88 KearnyStreet
FourEmbarcadero
Center
ThreeEmbarcadero
Center
TwoEmbarcadero
Center
OneEmbarcadero
Center
555 CaliforniaStreet
601California
Street
580California
Street
TheHartfordBuilding
505Montgomery
Street
OneMaritimePlaza
T
690,333 259,156 208,786 399,298 615,933 474,858 598,997 289,748 652,463 610,308 540,020 693,933 275,307 418,729 228,935 861,690 723,888 712,094 889,746 1,436,719 246,281 312,451 467,677 316,384 531,07398.2% 72.4% 100.0% 90.1% 99.1% 86.8% 95.0% 94.3% 82.6% 95.9% 88.0% 89.9% 100.0% 89.8% 85.5% 90.8% 96.4% 98.7% 96.1% 94.9% 97.3% 89.2% 95.4% 94.4% 99.4%
$60.00 $50.00 $52.00 $54.00 $50.00 $46.50 $42.00 $55.00 $55.00 $49.50 $59.00 N/A $43.00 $45.00 $45.00 $76.50 $67.00 $55.00 $57.00 N/A $45.00 $49.00 N/A N/A $63.50
1972/1997
1959/1999 2000 1972 1981 1988 1986
1959/1988 1984
1966/1996 1986 1982
1926/2001 1969 1986 1979 1976 1974 1971
1969/1971
1962/1994 1984
1963/2007 1988
1967/1990
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$578
$709 $715
$834
$702
$831$862
$300
$400
$500
$600
$700
$800
$900
$1,000
2005 2006 2007 2008 2009 2010 2011
Average sales price (p.s.f.) Average cap rate
Cap rates remain near record lows as investors scoop up core-plTrophy tenant base driven by lawfirms and lobbyists Despite rents stagnating, large blocks of space are slowly dwindling
55.1%
17.5%
12.1%
10.5%
4.8%
Law firms Government affairs/Lobbying Consulting/PR/Media Banking/Finance/Real estateNon-profit/Government/Other
-
2
4
6
8
10
12
14
2005
2006
2007
2008
2009
2010
2011
2012
Avai lab le Trophy bl ock s of spac e greater than 50,000 s .f.
Under Construction
Existing
Under constructWest to East
InvestmentBuilding
600 13thStreet, NW Homer Building Columbia Square Warner Building
1101 New YorkAvenue, NW
1155 F Street,NW Thurman Arnold Building
1050 KStreet, NW
1099New YorkAvenue,
NW
Lincoln Square 733 10thStreet, NW901 K Street,
NWGallup
Building 505 9th Street, NWMarket Square
WestMarket Square
East Liberty Place1700 New YorkAvenue, NW
CityCenter -850 10th
Street, NW
381,068 256,702 441,187 601,003 644,000 393,568 250,000 781,963 136,574 174,705 368,880 165,133 218,582 113,000 321,943 346,855 357,142 174,200 121,987 249,200
98.4% 15.6% 69.7% 100.0% 67.2% 94.4% 98.5% 91.5% 93.8% 100.0% 96.6% 96.4% 77.1% 100.0% 100.0% 90.9% 99.0% 100.0% 77.7% 100.0%
$43.50 $50.00 $52.00 N/A $50.00 $50.00 N/A $45.00 $45.00 N/A N/A $42.00 $45.00 $45.00 N/A $57.00 $50.00 N/A $55.00 $57.00
2001 1997 1990 1987 1992 2006 2009 1995 2008 2008 2001 2011 2009 2000 2007 1990 1990 1991 2014 2013
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43.8%
30.4%
18.4%
5.7%1.7%
Institutional
REIT
Private
Receivers
Foreign
Secondary Skyline market direct vacancy moving at the same speed of the overall U.S. CBD in its recovery
11.6% 11.5% 11.4%
13.6%
15.2%
14.9% 14.2%
8%
9%
10%
11%
12%
13%14%
15%
16%
2006 2007 2008 2009 2010 2011 2012
Domestic institutional and REIT buyers account for the vast majority of sales activity in secondary Skyline markets in 2012
$191$212 $221
$175 $173
$192$206
0.0%
2.0%
4.0%
6.0%
8.0%
10.0
$0
$100
$200
$300
2006 2007 2008 2009 2010 2011 2012
Average $ p.s.f. pricing sold Average cap rate
Rentsfinally bounced off of the bottom in secondary Skyline markets in 2012, while free rent has declined by 15.0 percent over the past 24 months
$26.19
$28.46$29.34
$28.57 $27.99 $27.77$28.27
0.0
2.0
4.0
6.0
8.0
10.0
$24.00
$25.00
$26.00
$27.00
$28.00
$29.00
$30.00
$31.00$32.00
2006 2007 2008 2009 2010 2011 2012
Average asking direct rent Average free rent (months)
Cap rates for secondary Skyline cities have compressed, but remain about 200 basis point above the averages of the super seven primary Skyline markets
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6.0 6.0
7.0
8.0
7.06.0
6
$35.0
0
$35.0
0
$40.0
0$45.0
0$45.0
0
$40.0
0
$ 3 0 0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2006 2007 2008 2009 2010 2011 20
Average rent abatement (months)
Average tenant improvement allowance
Tenant concessions decreasing as landlords gain leverageMore anomaly than marketwide trend net absorption negative due to1801 California and CenturyLink
Leasing activity dynamic; however, less than previous years
-1.8%
2.1%
0.6%
-0.5%
5.2%
2.1%
-1.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2006 2007 2008 2009 2010 2011 2012
Net absorption as percent of inventory
1,424,239
1,369,748
1,759,583
1,004,923
2,170,156
2,532,982
1,458,314
0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000
2006
2007
2008
2009
2010
2011
2012
U.S. BankTower
GraniteTower 1001 17th Street Independence Plaza
1125Seventeenth
StreetPark Central
GuarantyBank
BuildingAlamo Plaza 16 MarketSquare
1755 BlakeStreet SugarCube
1899Wynkoop 1515 Wynkoop
1401Wynkoop
Street
1400 WewattaStreet 16M
One UnionStation
Union StationNorth Wing
499,471 561,691 655,565 567,287 499,975 557,064 218,906 191,151 207,243 112,928 68,000 165,727 306,791 107,677 210,185 145,158 105,974 112,000
92.2% 95.8% 95.7% 93.9% 87.3% 96.6% 85.1% 81.0% 89.1% 88.5% 79.5% 97.7% 96.0% 89.8% 94.4% - - -
$29.50 $30.50 $31.00 $28.50 $30.00 $32.00 $31.00 $29.25 $36.50 $35.00 $39.50 $33.00 $35.00 $37.00 $37.00 $42.50 N/A N/A
1974 1984 1980/20071972/1995 1980
1973/2006
1983/1997 2004 2001 2008 2008 2000 2009 2008 2008
Delivers5/2014
Delivers8/2013
Delivers5/2013
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48%
22%
15%
9%
3%3%
REIT PrivateEqu
Other Institutional Off-Shore/F
Other Tenants in
Despite recent acquisitions, REITs persist as dominant ownersPositive net absorption driving market tightening Stabilized Trophy product to spur Class A gains
531,432
174,988 5
43,688
775,470
396,425
945,462
-716,54
0 -247,554
515,895
335,0057
29,897
1,253,876
154,352
862,692
-1,500,000
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Net absorption New deliveries
Square feet
8.6%9.0%
9.3% 9.1%8.7%
6.9%
5.6% 5.5%6.0% 6.1%
12.6% 12.6% 12.4%
11.4%11.1% 11.1%
11.5% 11.2% 11.4%11.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
Trophy Class A
Total vacancy
Market Street East
Ten Penn 1818 MarketStreet Six Penn1760
MarketStreet
1700MarketStreet
UnitedPlaza
ThreeFranklinPlaza
ThreeParkway
1650 ArchStreet
OnePenn
FourPenn
SevenPenn
1601MarketStreet
PNC BankBldg
TwoPenn
1515MarketStreet
CentreSquareWest
CentreSquareEast
GrahamBldg
1525LocustStreet
TheBellevue
1 SBroadStreet
WanamakerBuilding
AramarkTower
190 NIndependence
Mall W
100 SIndependence
Mall WPublic Ledger Curtis Center
667,825 981,743 305,170 128,128 841,172 617,476 226,890 561,351 564,125 645,057 522,600 296,000 658,852 826,731 502,531 514,000 1,000,000 801,389 240,634 101,479 272,793 464,800 13,767,838 636,146 270,210 404,118 533,945 885,786
65.2% 80.8% 98.3% 85.9% 88.4% 96.5% 100.0% 94.8% 80.5% 91.0% 92.3% 84.0% 91.1% 93.4% 89.4% 80.9% 60.7% 85.5% 85.5% 91.6% 95.9% 92.9% 98.4% 95.9% 100.0% 93.5% 93.8% 89.6%
$25.50 FS $25.50 + E $23.00+ E$27.00
FS $26.50 + E $29.00 + E $24.50 + E $25.50 + E$22.00
FS$24.75
+ E$23.50
+ E$26.50
+ E $26.00 + E$22.50
+ E$25.25
+ E $25.00 FS$25.00
FS$20.00
+ E$23.50
+ E $24.00 FS$23.00
FS $25.50 + E$25.00
+ E $26.00 + E $24.00 + E $26.50 + E
1981 1971 /19911957 /1998 1980
1968 /1989
1975 /2005 1989
1970 /1997
1974 /2001
1929 /1987
1964 /2001
1964 /1989
1968 /1988
1980 /1997
1958 /1988
1960 /1991
1974 /1991
1974 /1991 1985 1983
1904 /1988 1932
1902 /1991 1984
1998 /2002 1965
1927 /2007
1909 /2007
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Direct vacancy rates Average asking direct rent ($ p.s.f.)Total net absorption as percent of inventory (2012) Annual percent change in average asking direct rent
0% 5% 10% 15% 20% 25%
Dallas
Atlanta
Phoenix
Miami
Fort Lauderdale
Cincinnati
Stamford
Cleveland
Detroit
Los Angeles
San Diego
Indianapolis
Orlando
Baltimore
Chicago
Columbus
Sacramento
Seattle
Denver
Washington, DC
Tampa
New York
Minneapolis
Charlotte
Boston
Philadelphia
San Francisco
Raleigh
NJ Hudson Waterfront
Portland
Houston
Seattle-Bellevue
Richmond
Pittsburgh
-6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0%
Seattle
Charlotte
Seattle-Bellevue
Boston
Houston
Miami
Orlando
Baltimore
Stamford
Atlanta
Sacramento
San Francisco
Fort Lauderdale
San Diego
Columbus
Washington, DC
Cleveland
Philadelphia
Pittsburgh
Minneapolis
Portland
Dallas
Indianapolis
Tampa
Chicago
Detroit
Richmond
Phoenix
Denver
Raleigh
NJ Hudson Waterfront
Los Angeles
Cincinnati
New York
$0.00 $20.00 $40.00 $60.00 $80.00 $100.00
Indianapolis
Columbus
Cleveland
Detroit
Phoenix
Dallas
Tampa
Cincinnati
Raleigh
Orlando
Baltimore
Atlanta
Charlotte
Richmond
Pittsburgh
Philadelphia
San DiegoMinneapolis
Portland
Denver
Fort Lauderdale
Sacramento
Chicago
Seattle
NJ Hudson WaterfrontSeattle-Bellevue
Los Angeles
Miami
Houston
Boston
Stamford
San Francisco
New York Downtown
Washington, DC
New York Midtown
-5.0% 0.0% 5.0% 10.0% 15.0%
Detroit
Miami
Phoenix
Dallas
Orlando
Stamford
Sacramento
Cleveland
San Diego
Fort Lauderdale
Richmond
Columbus
Indianapolis
Atlanta
Seattle
Cincinnati
Los AngelesPhiladelphia
Minneapolis
Washington, DC
Chicago
Boston
New York Midtown
Portland
TampaCharlotte
NJ Hudson Waterfront
Baltimore
Pittsburgh
Denver
Seattle-Bellevue
Raleigh
Houston
San Francisco
New York Downtown
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Tom GriffinPresident, Client Services
+1 202 719 6120
Jay KosterPresident, Capital Markets
+1 212 418 2685
www.jll.com/Skyline
2013 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof. Licensed Real Estate Broker.
For more information, please contact:
Jones Lang LaSalle
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dan.pufunt@a
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