JLL’s annual Skyline Review highlights core trends impacting top office markets, and digs into rental rates, absorption, vacancies, investment and more at the premier office buildings across North America. Click through this presentation for the broad strokes overview, and then check out an interactive analysis of individual markets at http://bit.ly/1A2MelE

1. Skyline review
2015

2. 5 key themes shaping the U.S. Skyline
Source: JLL Research
1
Not everyone
gets a
Trophy…
Average Skyline
Trophy rental rate
was 77% higher
than the Skyline
non-Trophy rate

3. 5 key themes shaping the U.S. Skyline
Source: JLL Research
2
Navigating
the gulf
The gap between
Trophy and
non-Trophy rents
will widen even
further over the
near term

4. 5 key themes shaping the U.S. Skyline
Source: JLL Research
3
Is B the
new Trophy?
The country’s
fastest-growing
industries are
relatively
indifferent to
building quality

5. 5 key themes shaping the U.S. Skyline
Source: JLL Research
4
Emerging
demand,
emerging
markets
Emergence of
Class B buildings
as viable
contenders has led
to a revitalization
of submarkets

6. 5 key themes shaping the U.S. Skyline
Source: JLL Research
5
Fierce
competition
for quality
product
Foreign capital
has been a key
factor in the
current
competitive
environment

7. Skyline leverage: 2015
Source: JLL Research

8. Skyline leverage: 2016
Source: JLL Research

9. Skyline leverage: 2017
Source: JLL Research

10. 2015 U.S. Skyline office clock
Industry hubs remain farthest along the rent cycle, nearing peak in Houston
Peaking
phase
Falling
phase
Rising
phase
Bottoming
phase
Dallas, Downtown Los Angeles, Pittsburgh
Austin, Raleigh-Durham, San Francisco
Baltimore, Indianapolis, Newark, Phoenix, San Diego, St. Louis
Bellevue, Century City
Atlanta, Boston, Dallas,
Fort Worth, New York, Philadelphia
Charlotte, Chicago, Orlando, Portland
Cincinnati, West Palm Beach
Cleveland,
Hudson Waterfront,
Richmond
Columbus, Detroit, Washington, DC
Denver, Seattle
Fort Lauderdale, Oakland, Orange County,
Salt Lake City, Tampa
Houston
Stamford
Minneapolis
Sacramento
Miami
Source: JLL Research

11. Net absorption
12,560,001
10,740,036
162,714
-3,280,790
5,188,038 5,356,018
6,397,451
9,065,381
16,300,836
6,994,948
-5,000,000
0
5,000,000
10,000,000
15,000,000
20,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Netabsorption(s.f.)
2014 net absorption surpassed previous cycle’s peak; on track for another record in 2015
Source: JLL Research

12. 240,725
245,259
249,920
258,030
335,120
355,686
381,774
529,462
673,005
722,600
780,607
967,410
1,301,290
5,735,210
10,867,621
0 5,000,000 10,000,000 15,000,000
Boston
Baltimore
San Diego
Charlotte
Denver
Miami
Washington, DC
Austin
Philadelphia
Houston
Atlanta
Dallas
San Francisco
Chicago
New York
2.8%
2.8%
2.9%
3.3%
3.3%
3.8%
3.9%
4.2%
4.5%
4.7%
4.7%
5.0%
8.5%
10.3%
11.1%
0% 2% 4% 6% 8% 10% 12%
Cincinnati
Atlanta
Washington, DC
Houston
San Diego
Columbus
Miami
Baltimore
West Palm Beach
Dallas
San Francisco
Fort Lauderdale
Chicago
New York
Austin
Highest net absorption (2014 and Q1 2015, s.f.)
Net absorption
New York and Chicago far surpass all other Skylines in terms of total net absorption since 2014
Fastest net absorption (2014 and Q1 2015, s.f.)
Source: JLL Research

13. Occupancy
451,406,332
476,823,343
487,563,379 487,792,927
484,512,138
489,700,176
495,056,194
501,453,645
511,860,471
528,104,262
535,099,210
82.0%
83.0%
84.0%
85.0%
86.0%
87.0%
88.0%
89.0%
90.0%
400,000,000
420,000,000
440,000,000
460,000,000
480,000,000
500,000,000
520,000,000
540,000,000
560,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Occupancyrate(%)
Occupancy(s.f.)
Occupancy
Occupancy rate
Occupancy reaches a record 535.1 m.s.f., while occupancy rate is still below previous peak at 86.6%
Source: JLL Research

14. 88.7%
88.7%
89.0%
89.4%
89.8%
89.8%
90.1%
90.8%
91.0%
91.0%
91.1%
92.0%
92.6%
94.2%
97.0%
84% 86% 88% 90% 92% 94% 96% 98%
Raleigh
New York
Boston
Oakland
Richmond
Washington, DC
Baltimore
Charlotte
Houston
St. Louis
Portland
Philadelphia
San Francisco
Pittsburgh
Bellevue
84.8%
84.6%
84.2%
83.1%
83.0%
82.8%
82.2%
81.4%
81.1%
79.6%
79.4%
78.8%
78.0%
74.6%
61.3%
50% 60% 70% 80% 90%
Century City
Sacramento
Columbus
Fort Worth
Hudson Waterfront
Newark
Orange County
Atlanta
Los Angeles
Cleveland
Indianapolis
Cincinnati
Dallas
Phoenix
Stamford
Highest occupancy rates (%)
Occupancy
Nine markets have Skyline occupancy rates exceeding 90.0 percent
Lowest occupancy rates (%)
Source: JLL Research

15. Total vacancy
67,735,400
63,060,130
61,183,357
65,511,612
81,585,553
87,889,909 86,817,441
90,282,246 88,935,850
82,966,641 83,071,868
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
100,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Totalvacancy(%)
Totalvacancy(s.f.)
Total vacancy
Vacancy rate
Total vacancy stable in Q1 2015 due to new deliveries; rate at recovery low of 13.4%
Source: JLL Research

16. Asking rents
$29.01
$30.95
$36.76
$39.06
$35.67
$35.22
$36.70
$39.19
$40.17
$41.08
$42.30
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Directaverageaskingrent($p.s.f.)
Rents reached a record high of $42.30 per square foot, up 20.1 percent since bottoming in 2010
Source: JLL Research

17. $38.20
$38.76
$39.30
$39.51
$41.83
$43.92
$44.51
$47.35
$51.14
$51.98
$53.75
$59.46
$68.75
$75.37
$82.97
$0 $20 $40 $60 $80 $100
Hudson Waterfront
Oakland
Los Angeles
Seattle
Miami
Houston
Bellevue
Austin
Century City
Orange County
Stamford
Boston
San Francisco
Washington, DC
New York
$25.92
$25.80
$25.56
$25.04
$24.94
$24.73
$24.43
$24.39
$23.52
$23.21
$22.90
$21.70
$20.88
$20.20
$19.67
$15 $17 $19 $21 $23 $25 $27
Charlotte
Atlanta
Dallas
Orlando
Tampa
Richmond
Baltimore
Salt Lake City
Phoenix
Cincinnati
St. Louis
Detroit
Indianapolis
Cleveland
Columbus
Most expensive Skyline markets ($ p.s.f.)
Asking rents
Skyline rents in numerous markets exceed $50 per square foot
Lease expensive Skyline markets ($ p.s.f.)
Source: JLL Research

18. Concessions
$35.38
$36.19
$37.69
$39.44
$41.41
$43.28 $43.42 $43.08
$43.95 $43.96
$44.95
3.0
4.0
5.0
6.0
7.0
8.0
9.0
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Freemonths
TIallowance($p.s.f.)
TI allowance ($ p.s.f.)
Free months
Although TI allowances have risen steadily since 2005, free months are slowly falling
Source: JLL Research

19. Under construction
18,548,370
21,685,152
25,376,443
26,020,837
19,416,028
10,433,911
6,602,008
11,161,968
13,696,941
23,546,748
28,856,491
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Underconstruction(s.f.)
Tightening conditions have prompted the highest level of Skyline construction in a decade
Source: JLL Research

20. Under construction
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Underconstruction(s.f.)
Atlanta Miami Phoenix
Charlotte Raleigh-Durham Orlando
Tampa Fort Lauderdale West Palm Beach
Sun Belt development is slowly returning, but more restrained than during the mid-2000s
Source: JLL Research

21. Preleasing
9,168,120 9,043,572
10,576,169
13,114,484
8,983,316
4,945,971
3,362,168
6,339,733
8,083,797
10,523,323
12,381,433
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Preleasingrate(%)
Preleased(s.f.)
Preleasing
Preleasing rate
Preleasing is also near record highs, although improved confidence is lowering the preleasing rate
Source: JLL Research

22. Future completions
5,433,267
14,341,567
5,190,895
2,861,402
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
2015 2016 2017 2018
Underconstruction(s.f.)
The vast majority of projects currently underway will deliver in 2016; only 3WTC scheduled for 2018
Source: JLL Research

23. Sales volume
65,811,910
102,715,918
118,173,930
29,712,811
11,464,307
31,019,912
58,400,893
48,586,797
64,460,298
69,502,660
18,309,764
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Salesvolume(s.f.)
Sales activity is slowly growing but remains well below previous peaks
Source: JLL Research

24. Total sales and pricing
$17,784,804,562
$32,258,475,400
$47,002,733,255
$11,456,603,167
$3,010,753,389
$10,386,706,985
$16,546,878,222
$13,795,739,689
$18,492,700,357
$24,763,181,964
$7,942,562,395
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$0
$5,000,000,000
$10,000,000,000
$15,000,000,000
$20,000,000,000
$25,000,000,000
$30,000,000,000
$35,000,000,000
$40,000,000,000
$45,000,000,000
$50,000,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Preleasingrate(%)
Preleased(s.f.)
Total sales Sales pricing
Even though sales volume and total sales are below previous peak, pricing is at record highs
Source: JLL Research

25. New York Boston Chicago San Francisco
Century City Washington, DC Los Angeles Austin
Atlanta Philadelphia Denver Fort Lauderdale
Charlotte Houston All other markets
Market 2014-Q1 2015 sales ($)
New York $4,021,823,685
Boston $3,527,968,697
Chicago $2,786,000,000
San Francisco $2,341,103,050
Century City $1,641,500,000
Washington, DC $1,337,250,549
Los Angeles $1,066,520,000
Austin $937,900,000
Atlanta $696,279,533
Philadelphia $559,000,000
Denver $557,840,278
Fort Lauderdale $522,400,000
Charlotte $445,000,000
Houston $425,700,000
All other markets $11,839,458,567
United States $32,705,744,359
Total sales by market
Nearly $20.9 billion in sales has occurred in large investment markets over the past five quarters
Source: JLL Research

26. Largest buyers
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
KBS
Morgan Stanley
Salesforce
Parkway
SL Green
Heitman
Deutsche Bank
JPMorgan Chase
MetLife
Blackstone
Oxford
Hines
Ivanhoe Cambridge
Norges
2014-Q1 2015 acquisitions ($ millions)
With more than $3.5 billion in acquisitions, Norges dominates the Skyline investment sales market
Source: JLL Research

27. Cap rates
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Averagecaprate(%)
Cap rates have fallen to previous lows as pricing continues its steady increase
Source: JLL Research

28. Trophy market at a glance
The Trophy market has consistently outperformed the overall office market since 2010
295,756,939 s.f.
Inventory
The Trophy market represents 47.8 percent of the national
Skyline, but only 7.6 percent of the overall office market.
+44,334,895 s.f.
Net absorption since 2010
Despite comprising just 7.6 percent of national inventory, the
Trophy segment has been responsible for 25.0 percent of
occupancy growth.
10.0%
Direct vacancy
Direct vacancy in the Trophy segment is 440 basis points
below the national rate of 14.4 percent.
$57.97
Average asking rent
Trophy properties command a 96.6-percent rent premium
compared to the overall market and are growing 1.4x faster
than average.
Source: JLL Research

29. Occupancy rate
74.0%
76.0%
78.0%
80.0%
82.0%
84.0%
86.0%
88.0%
90.0%
92.0%
94.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Occupancyrate(%)
Trophy Non-Trophy
Occupancy rates are below historical highs as Trophy occupiers have become more efficient
89.3%
Trophy
83.7%
non-Trophy
Source: JLL Research

30. Net absorption
5,315,328
4,847,384
-1,431,075
1,540,172
11,083,772
9,546,922
12,161,786
6,960,293
10,494,847
5,172,048
-4,000,000
-2,000,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Netabsorption(s.f.)
Flight to quality has resulted in occupancy growth of 55.4 million square feet since 2010
Source: JLL Research

31. 113,916
114,477
136,540
193,368
211,414
347,374
361,333
361,675
377,700
422,130
434,443
505,611
508,178
602,340
10,867,621
0 5,000,000 10,000,000 15,000,000
Portland
Baltimore
Chicago
Denver
Los Angeles
Miami
Austin
San Francisco
Houston
Orange County
Boston
Dallas
Washington, DC
Hudson Waterfront
New York
27,206
21,255
12,949
7,540
-287
-13,742
-29,132
-35,459
-38,000
-44,829
-54,127
-55,294
-55,613
-63,019
-160,867
-200,000 -150,000 -100,000 -50,000 0 50,000
Newark
Bellevue
Tampa
Richmond
Salt Lake City
Sacramento
St. Louis
Raleigh
Phoenix
Oakland
Pittsburgh
Minneapolis
Seattle
Philadelphia
Indianapolis
Highest Trophy net absorption since Q1 2014 (s.f.)
Net absorption
New York commands largest occupancy growth; Trophy absorption exceeds 400,000 s.f. elsewhere
New York’s net absorption partially the result of expanding
Trophy inventory by 8.7 m.s.f. (including deliveries of 1 and 4 WTC)
Lowest Trophy net absorption since Q1 2014 (s.f.)
Source: JLL Research

32. Occupancy growth
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2010 2011 2012 2013 2014 2015
Occupancygrowthsince2010(%)
Trophy Non-Trophy
Occupancy growth in Trophy properties is triple that of non-Trophy buildings
+20.2%
Trophy
+6.5%
non-Trophy
Occupancy has
grown 3.3x faster
in Trophy properties
Source: JLL Research

33. Direct vacancy
14,397,311 14,097,131 14,451,173
15,664,353
23,548,793
30,156,402
37,206,522
32,416,830 32,817,648
28,853,230
29,533,169
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Vacancyrate(%)
Directvacancy(s.f.)
Direct vacancy
Vacancy rate
Deliveries keep direct vacancy for Trophy space stable at 10.0 percent in Q1 2015
Source: JLL Research

34. 7.8%
7.7%
7.1%
6.2%
6.1%
5.5%
4.7%
4.6%
4.6%
4.4%
3.6%
3.3%
3.2%
2.9%
0.9%
0% 2% 4% 6% 8% 10%
Minneapolis
San Francisco
Fort Lauderdale
Raleigh
Chicago
Richmond
St. Louis
Pittsburgh
Portland
Newark
Philadelphia
Houston
Baltimore
Charlotte
Bellevue
10.3%
10.4%
10.8%
11.2%
11.5%
14.3%
14.5%
14.6%
15.1%
15.7%
16.3%
17.5%
17.7%
23.2%
24.5%
0% 5% 10% 15% 20% 25% 30%
New York
Austin
Orlando
Oakland
Indianapolis
Century City
Sacramento
Denver
Miami
Detroit
Dallas
Fort Worth
Los Angeles
Orange County
Phoenix
Markets with lowest direct Trophy vacancy (%)
Direct vacancy
Bellevue, Houston, Chicago and San Francisco among Trophy markets with lowest direct vacancy
Markets with highest direct Trophy vacancy (%)
Source: JLL Research

35. Large blocks
Despite generally tightening conditions, some high-profile buildings do have large blocks remaining
Map shows sum of contiguous blocks per building,
not all buildings with large blocks shown
609 Main at Texas
1,043,873 s.f.
Houston
Renaissance Tower
660,000 s.f.
Dallas
4 WTC
873,711 s.f.
New York
1 WTC
574,801 s.f.
505 Madison Street
706,000 s.f.
Seattle
600 Peachtree Street
481,056 s.f.
Atlanta
350 S Grand Avenue
364,600 s.f.
Los Angeles
555 12th Street NW
363,348 s.f.
Washington, DC
200 Spectrum Center
425,044 s.f.
Orange County
53 State Street
382,332 s.f.
Boston
Source: JLL Research

36. Asking rents
$32.42
$39.43
$55.02
$58.82
$46.78
$45.20 $45.10
$52.27
$53.80
$55.46
$57.97
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
$55.00
$60.00
$65.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Directaverageaskingrent($p.s.f.)
Trophy rents up 4.5 percent in Q1 2015, growinig at an annualized rate of 18.1 percent
Source: JLL Research

37. $31.35
$30.93
$30.00
$29.94
$28.75
$28.50
$28.48
$28.40
$28.02
$27.14
$26.53
$25.94
$25.50
$24.25
$23.00
$15 $20 $25 $30 $35
St. Louis
Charlotte
Pittsburgh
Dallas
Tampa
Richmond
Fort Worth
Raleigh
Salt Lake City
Cleveland
Phoenix
Orlando
Indianapolis
Cincinnati
Detroit
Most expensive Trophy markets ($ p.s.f.)
Asking rents
Six Trophy markets post asking rents averaging more than $60 per square foot
Least expensive Trophy markets ($ p.s.f.)
$42.35
$42.39
$43.14
$44.37
$45.17
$48.66
$50.14
$50.22
$50.74
$61.92
$63.00
$63.41
$71.83
$75.37
$82.97
$0 $20 $40 $60 $80 $100
Hudson Waterfront
Seattle
Fort Lauderdale
Miami
Bellevue
West Palm Beach
Houston
Chicago
Austin
Century City
Orange County
Boston
San Francisco
Washington, DC
New York
Source: JLL Research

38. 5.0%
5.6%
5.8%
6.1%
6.6%
8.1%
10.1%
10.1%
10.7%
12.1%
13.5%
14.8%
15.4%
23.9%
27.3%
0% 5% 10% 15% 20% 25% 30%
Chicago
Seattle
Portland
Minneapolis
Bellevue
West Palm Beach
New York
Denver
Austin
Boston
Fort Lauderdale
Houston
Oakland
Raleigh
Atlanta
1.5%
1.4%
1.0%
0.8%
0.7%
0.0%
0.0%
-0.3%
-0.3%
-0.5%
-1.3%
-2.1%
-2.2%
-4.9%
-5.7%
-8% -6% -4% -2% 0% 2%
Newark
Orlando
Phoenix
Los Angeles
Pittsburgh
Baltimore
Richmond
Washington, DC
Detroit
Dallas
Philadelphia
Fort Worth
Salt Lake City
Cincinnati
Sacramento
Trophy markets with fatest-growing rents since Q1 2014 (%)
Asking rents
Sun Belt markets such as Atlanta, Raleigh and South Florida have registered fastest rent growth
Trophy markets with slowest-growing rents since Q1 2014 (%)
Source: JLL Research

39. Asking rents
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2010 2011 2012 2013 2014 2015
Rentgrowthsince2010(%)
San Francisco leads primary Trophy markets in terms of rent growth; Houston seeing slowdown
+49.9%
San Francisco
+0.1%
Washington, DC
+2.6%
Los Angeles
+17.9%
Chicago
+6.6%
Century City
+15.0%
New York
+28.9%
Houston
+37.6%
Boston
+16.2%
Seattle
Source: JLL Research

40. Now that you’ve seen the trends, dig
deeper into your market(s) of interest.
Explore your
Skyline