After a slow first quarter, office market fundamentals made a significant rebound at the close of Q2, undermining suggestions that both economic and office-market growth were slowing. As activity returns—and in many markets, intensifies—much needed supply will offer new opportunities to carry us into latter half of the decade. Since the start of the year, rents have increased by 2.5%, with some in-demand markets increasing up to 5%. If market momentum continues as we anticipate, rents could reach a 5-7% annual growth rate by year end.

1. Sustained economic improvement
driving occupancy and rent growth
United States Office Review Q2 2015

2. After a markedly slow first quarter, office
market fundamentals made a significant
rebound at the close of the second quarter,
undermining suggestions that both economic
and office-market growth were slowing. As
activity returns and, in many markets,
intensifies, much needed supply will offer new
growth opportunities to help carry the cycle
into the latter half of the decade.

3. Organic growth due to stronger macroeconomic fundamentals is
chipping away at vacancy and boosting landlord confidence
2
Source: JLL Research
Leasing activity
• Leasing activity jumped in Q2 2015 to 64.2 million square feet, up 16.9 percent compared to Q1. In line with
uptick in total transactional activity, six markets saw more than 3.0 million square feet of leasing in Q2.
Absorption
• After a slower Q1, Q2 posted a return to 0.4-percent levels of occupancy growth, or 14.4 million square feet,
while YTD absorption currently rests at 0.5 percent (20.6 million square feet) and is on track to exceed the
historic average for the sixth consecutive year.
• Industry hubs (Raleigh-Durham, Austin, Denver) joined primary markets as leads in YTD net absorption,
although sharp decreases in Houston’s growth push energy markets’ contribution down to just 5.9 percent.
Vacancy
• Strong quarterly absorption, even with an increase in completions, pushed total vacancy down 30 basis points
to 15.3 percent. CBD vacancy just 40 basis points from historic low, while suburban vacancy is 200 basis points
away.
Rents
• Markets continue to move along the property clock as rents rise on aggregate, although Houston is now in
falling phase. While not as fast as in Q1, Q2 2015 rental growth was among the highest quarterly figures this
cycle at 1.1 percent.
• CBD and suburban rents both rose in Q2 2015, but the gap widened even more to $16.43 per square foot.
Similarly, the premium for Class A space held steady at $5.12 per square foot.
Construction
• Construction volumes have risen by 9.3 percent since year-end 2014 to 86.2 m.s.f. in Q2 2015. Year-to-date,
completions already total 62.1 percent of YTD 2014, but this is still well below historical norms.
• Slightly under half of all U/C space is preleased, but this figure falls sharply looking only at speculative
development

4. Leasing activity

5. Leasing activity jumped in Q2 2015 to 64.2 million square feet,
up 16.9 percent compared to Q1
4
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
2007 2008 2009 2010 2011 2012 2013 2014 2015
Leasingactivity(s.f.)
Source: JLL Research

6. Year-to-date, leasing activity is on track to meet 2014 levels;
currently 50.4 percent of 2014 total
5
258,547,529
246,521,385
228,764,145
275,274,581
282,356,988
234,094,033
249,187,644
236,140,690
119,130,711
0 50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 300,000,000
2007
2008
2009
2010
2011
2012
2013
2014
YTD 2015
Leasing activity (s.f.)
Source: JLL Research

7. In line with uptick in total transactional activity, six markets saw
more than 3.0 million square feet of leasing in Q2 2015
6
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
Leasingactivity(s.f.)
Source: JLL Research
11.9 MSF

8. 7
31.5 m.s.f.
total square feet leased in Q2 in transactions
20,000 s.f. or larger
96
average term in months
43.7% / 46.3% /
10.0%
of tenants are growing / shrinking / stable
49.1% / 50.9%
urban 2 suburban breakdown
of Q1 volume
Only one-tenth of leasing activity was contractionary, while
transaction volumes continued to increase in Q2
Source: JLL Research

9. 1,246,936
1,304,748
1,421,864
1,770,000
2,154,403
2,250,000
2,325,645
2,443,873
2,703,254
2,757,812
0 2,000,000 4,000,000
Houston
Phoenix
Chicago
Orange County
Denver
Washington, DC
Boston
New Jersey
Dallas
Los Angeles
1,770,000
2,443,873
2,770,815
3,032,955
3,333,813
3,444,800
3,626,133
5,250,000
7,105,496
0 5,000,000 10,000,000
Orange County
New Jersey
Denver
Dallas
Los Angeles
Boston
Chicago
Washington, DC
New York
8
Urban Suburban Total metro
423,950
472,275
576,001
609,746
616,412
1,119,155
1,451,987
2,204,269
3,000,000
7,105,496
0 5,000,000 10,000,000
Phoenix
Portland
Los Angeles
Minneapolis
Denver
Boston
San Francisco
Chicago
Washington, DC
New York
Coastal markets dominated leasing activity in Q2 2015, led by
New York and DC
Source: JLL Research

10. 9
Large leasing continues to take place throughout the United
States and by companies of varying industry clusters
Silicon Valley
Palo Alto Networks: 721,953 s.f.
Dallas
RealPage: 399,788 s.f.
Source: JLL Research
Detroit
Ally: 321,027 s.f.
San Francisco
Stripe: 300,000 s.f.
Denver
Comcast: 288,000 s.f.
New York
Bloomberg: 254,556 s.f.
Austin
Apple: 217,490 s.f.
Philadelphia
ABB: 115,000 s.f.
Seattle-Bellevue
HBO: 112,222 s.f.
Charlotte
Walmart: 107,609 s.f.
Phoenix
Infusionsoft: 100,622 s.f.

11. 10
Other
Creative
Nonprofit
Consumer-oriented
Finance
Professional services
Scientific and technical
0 5,000,000 10,000,000 15,000,000 20,000,000
Aerospace and defense
Association nonprofit union
Education
Accounting and consulting
All other industries
Advertising and marketing
Real estate
Media and entertainment
Life sciences
Energy and utilities
Manufacturing and distribution
Government
Retail and hospitality
Architecture and engineering
Law firm
Healthcare
Other PBS
Telecom
Banking and finance
Technology
0 2,000,000 4,000,000 6,000,000
Leasing activity within the scientific and technical industry cluster… …dominated by technology companies, led activity in the fourth quarter
Tech, finance, telecom and other professional services dominated
leasing activity during Q2 2015
Source: JLL Research

12. 11
214
88
49
58
24
52
24
0
50
100
150
200
250
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
10,000,000
Numberoftransactions(s.f.)
Leasingactivity(s.f.)
s.f. leased number of transactions
Small and mid-sized leases dominated number of transactions,
although large leases represented 49.8 percent of volume
Source: JLL Research

13. 12
Total leasing activity >20,000 s.f. by building class % of tenants expanding in each building class
Leasing continues to be robust in Class A space, although
expansions are occurring across property classes
Source: JLL Research
450,929
2,110,618
7,350,039
21,596,213
0 10,000,000 20,000,000 30,000,000
C
Trophy
B
A
25.7%
41.4%
53.8%
67.0%
0.0% 20.0% 40.0% 60.0% 80.0%
Trophy
A
B
C

14. 13
43.7%
of companies grew in Q2
10.0%
of companies shrunk in
Q2
46.3%
of companies were stable
in Q2
Technology
32.0% of companies
Banking, finance, insurance
12.6% of companies
Other professional services
10.9% of companies
Telecom
15.6% of companies
Banking, finance, insurance
15.0% of companies
Technology
10.4% of companies
Law firm
35.1% of companies
Healthcare
14.7% of companies
Architecture, engineering
12.3% of companies
Expansionary leases account for more than half of all large-block
activity, dominated by tech and finance
Source: JLL Research

15. 43.2%
48.0%
56.0%
43.7%
48.7% 41.0%
34.0%
46.3%
8.1% 11.0% 10.0% 10.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q3 2014 Q4 2014 Q1 2015 Q2 2015
Growing Stable Shrinking
14
Source: JLL Research
On average, slightly under half of quarterly leasing activity is
now expansionary; only one-tenth represents contraction
9.8%
Shrinking
42.5%
Stable
47.7%
Growing
4-quarter average share

16. 12.4%
19.5%
19.8%
22.4%
24.4%
27.1%
30.8%
33.1%
33.7%
36.0%
40.1%
41.8%
43.2%
55.0%
58.1%
62.3%
69.8%
75.2%
77.5%
40.6%
80.5%
74.3%
75.3%
67.8%
58.8%
69.2%
66.9%
66.3%
37.8%
40.5%
52.2%
48.4%
45.0%
26.6%
36.7%
25.8%
18.9%
22.5%
47.0%
0.0%
5.9%
2.3%
7.8%
14.1%
0.0%
0.0%
0.0%
26.2%
19.4%
6.0%
8.4%
0.0%
15.3%
0.0%
4.4%
5.9%
0.0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Law
Transportation and aerospace
Manufacturing
Telecom
Accounting and consulting
Government
Life sciences
Energy and utilities
Associations
Architecture and engineering
Health care
Finance and banking
Media and entertainment
Education
Retail and hospitality
Other professional services
Technology
Advertising and marketing
Real estate
Share of leasing activity (%)
15
Skilled sectors such as real estate, advertising, tech and other
PBS posted the highest shares of expansionary leasing activity
Source: JLL Research

17. Absorption

18. After a slower Q1, Q2 posted a return to 0.4-percent levels of
occupancy growth
17
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2008 2009 2010 2011 2012 2013 2014 2015
Quarterlynetabsorption(as%ofinventory)
Source: JLL Research
15-year trailing annual average

19. YTD absorption currently rests at 0.5 percent; on track to exceed
the historic average for the sixth consecutive year
18
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
YTDnetabsorption(as%ofinventory)
Source: JLL Research
15-year trailing
annual average

20. Nearly 69.6 percent of occupancy growth in Q2 2015 took place
in Class A properties
19
-10,000,000
-5,000,000
0
5,000,000
10,000,000
15,000,000
20,000,000
2010 2011 2012 2013 2014 2015
Quarterlynetabsorption(s.f.)
Class A (CBD) Class A (suburban)
Class B (CBD) Class B (suburban)
Class C (CBD) Class C (suburban)
Source: JLL Research

21. Quarterly absorption in Class B space is now occurring 2.7x
faster than during earlier in the recovery
20
Source: JLL Research
21,579,344
12,845,274
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2010-Q2 2014 Past four quarters
ClassBnetabsorption(s.f.)
1,198,852 s.f. per quarter 3,211,318 s.f. per quarter

22. Market YTD net absorption (s.f.) Share
Dallas 2,880,550 14.0%
Silicon Valley 1,420,029 6.9%
Atlanta 1,260,109 6.1%
Boston 1,205,200 5.8%
Raleigh-Durham 1,182,448 5.7%
Chicago 1,085,046 5.3%
Los Angeles 887,879 4.3%
Austin 885,221 4.3%
Denver 829,801 4.0%
Philadelphia 815,226 4.0%
Detroit 795,213 3.9%
Tampa 728,710 3.5%
San Francisco 704,926 3.4%
Seattle-Bellevue 611,990 3.0%
All other markets 5,320,899 25.8%
United States 20,613,247 100.0%
Dallas Silicon Valley Atlanta Boston Raleigh-Durham
Chicago Los Angeles Austin Denver Philadelphia
Detroit Tampa Bay San Francisco Seattle-Bellevue All other markets
21
Source: JLL Research
Industry hubs (Raleigh-Durham, Austin, Denver) join primary
markets as leads in YTD net absorption

23. Growth in Atlanta, Boston, DC and New York, among other
markets, pushes East Coast into leading position
22
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
2010 2011 2012 2013 2014 2015
Shareofquarterlynetabsorption
East Coast Central West Coast
Source: JLL Research

24. Sharp decreases in Houston occupancy growth push energy
markets’ contribution down to just 5.9 percent YTD in 2015
23
Source: JLL Research
NYC and DC (*excludes Midtown South)
Tech markets (*includes Midtown South)
Energy markets
Sun belt
All other markets
70.0%
29.7%
6.4%
2010
5.1%
33.5%
19.0%
18.4%
23.9%
2011
0.0%
37.5%
26.0%
29.1%
7.4%
2012
11.1%
21.6%
22.3%
18.6%
26.4%
2013
13.7%
23.1%
15.3%
20.1%
27.8%
2014
0.0%
28.5%
5.9%
25.1%
40.5%
YTD 2015

25. Energy losses severe, but not yet negative; tech at or surpassing
national average, although supply constraints intensifying
24
0.8%
0.1%
0.4%
0.7%
0.9%
0.7%
0.8%
2.1%
0.9%
0.6% 0.6%
2.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
YTDnetabsorption(s.f.)
Source: JLL Research
Energy Tech Sun belt
U.S.
average

26. Occupancy growth on the East Coast coming back, but must
make up for Q1 losses in New York and DC
25
Source: JLL Research
-10,000,000
-5,000,000
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2010 2011 2012 2013 2014 YTD 2015
Netabsorption(s.f.)
Atlanta South Florida Rest of the East Coast

27. Quality space continues to lead, having contributed to 82.3
percent of net absorption since Q1 2010
26
Source: JLL Research
Trophy and Class A
net absorption
157.6
m.s.f.2010-YTD 2015
Class B and C net
absorption
33.9
m.s.f.2010-YTD 2015

28. -10,000,000
-5,000,000
0
5,000,000
10,000,000
15,000,000
2010 2011 2012 2013 2014 YTD 2015
Netabsorption(s.f.)
Atlanta Chicago Los Angeles Miami Philadelphia Phoenix
Diversified markets have posted 5.1 million square feet of
occupancy growth in 2015 so far and poised for continued gains
27
Source: JLL Research

29. Class A’s share of annual occupancy growth has steadily
declined, but up slightly in 2015 year-to-date
28
133.4%
90.5%
85.3%
71.1% 70.5%
82.3%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
2010 2011 2012 2013 2014 2015
ClassAshareofannualabsorption
Source: JLL Research

30. CBD Class A’s share of absorption has fallen even more, but
largely due to growth in suburbs and commodity space
29
70.1%
39.9%
4.5%
23.7%
30.8% 30.9%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
2010 2011 2012 2013 2014 2015
ClassAshareofannualabsorption
Source: JLL Research

31. Demand for creative space pushing occupancy gains above
national average % of inventory
30
8.6%
4.9%
3.1% 3.1%
2.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Mid-Market (San
Francisco)
Mid-Cambridge (Boston) Austin CBD Pioneer Square (Seattle) Santa Monica (Los
Angeles)
YTDClassBnetabsorption(%ofinventory)
Source: JLL Research
U.S. average

32. Still, Class A continues to outperform Class B according to most
indicators
31
Source: JLL Research
82.3%of absorbed space in 2015
has been Class A
$11.43per square foot difference
between Class A and B space…
45.8%premium charged for Class A space
versus Class B
-270bpdifference between Class A and
Class B total vacancy

33. Vacancy

34. Strong quarterly absorption, even with an increase in
completions, pushed total vacancy down 30bp to 15.3 percent
33
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
2009 2010 2011 2012 2013 2014 2015
Totalvacancy(%)
Source: JLL Research

35. Total vacancy is now roughly halfway to its pre-recession low;
high preleasing levels should help keep vacancy down
34
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2015
Totalvacancy(%)
Source: JLL Research

36. Vacancy is falling fastest in quality space, then core locations;
uneven in Class C and suburban B properties
35
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
2010 2011 2012 2013 2014 2015
Totalvacancy(%)
Class A (CBD) Class A (suburban)
Class B (CBD) Class B (suburban)
Class C (CBD) Class C (suburban)
Source: JLL Research

37. After a pause in Q1, increasing office-sector hiring once again
coincided with falling vacancy
36
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
18.0%
19.0%
25,500
26,000
26,500
27,000
27,500
28,000
28,500
29,000
29,500
30,000
30,500
31,000
2011 2012 2013 2014 2015
Totalvacancy(%)
Office-usingemployment(thousands)
Office-using employment (thousands) Total vacancy (%)
Source: JLL Research

38. CBD vacancy just 40 basis points from historic low, while
suburban vacancy is 200 basis points away
37
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
21.0%
23.0%
Totalvacancy(%)
Source: JLL Research

39. Despite an increase in sublease space in peaking markets such as
Houston, total sublease space is falling sharply across the U.S.
38
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
100,000,000
2009 2010 2011 2012 2013 2014 2015
Subleasespace(s.f.)
Source: JLL Research

40. Rents

41. Peaking
phase
Falling
phase
Rising
phase
Bottoming
phase
Markets continue to move along the property clock as rents rise
on aggregate; Houston now in falling phase
Source: JLL Research
Atlanta, Denver, Jacksonville,
Miami, Orange County, Phoenix, United States
Fort Lauderdale, Orlando, Kansas City,
Richmond, Salt Lake City
Baltimore, San Antonio
West Palm Beach, Westchester County
Chicago, Indianapolis, Raleigh-Durham
Austin, Dallas, San Francisco
Charlotte, Cincinnati, Fairfield County, San Diego
Boston, Tampa
Columbus, Sacramento
Hampton Roads, St. Louis
Houston
Cleveland, Detroit, Long Island,
Milwaukee, Philadelphia
New York
Seattle-Bellevue
Los Angeles, Pittsburgh, Portland
Minneapolis
San Francisco Peninsula, Silicon Valley
New Jersey,
Washington, DC

42. Peaking
phase
Falling
phase
Rising
phase
Bottoming
phase
Source: JLL Research
Fort Lauderdale, Miami
Baltimore, Richmond,
St. Louis
Milwaukee, Phoenix, West Palm Beach
Charlotte, Greenwich, Indianapolis
Boston, Dallas, Los Angeles, Pittsburgh, Seattle
Orlando, United States
Cincinnati, Cleveland, Stamford
Columbus, San Antonio
Minneapolis, San Jose, Tampa
Detroit; Sacramento; San Diego;
Washington, DC; White Plains
Atlanta, Denver
Midtown (New York), Raleigh-Durham
Austin, Midtown South (New York),
San Francisco
Chicago, Downtown (New York),
Philadelphia, Jacksonville, Salt Lake City
Houston
Portland
Kansas City
CBDs display slightly less variance, continue to be ahead of
suburbs as supply constraints are evident

43. Peaking
phase
Falling
phase
Rising
phase
Bottoming
phase
Source: JLL Research
Charlotte, Detroit, Fairfield County, Fort Lauderdale, Hampton
Roads, Miami, Milwaukee, Orlando, Philadelphia, Raleigh-Durham
West Palm Beach
Atlanta, Denver, Indianapolis,
San Diego, Westchester County, United States
Dallas
Baltimore, Chicago, Cincinnati
Cleveland, Columbus, San Antonio
Richmond
Boston, Jacksonville, Minneapolis,
Orange County, Phoenix, Salt Lake City, Tampa
Seattle-Bellevue (non-CBD), St. Louis
Cambridge, San Francisco (non-CBD)
Houston
Bellevue CBD
Nassau County, Portland
Central New Jersey,
Lehigh Valley, Northern
Delaware, Sacramento
Northern New Jersey
San Francisco Peninsula
Austin
Silicon Valley
Kansas City, Los Angeles
Suffolk County
Pittsburgh
Washington, DC
Southern New Jersey
Tech and energy suburbs are at peak, while remainder are
catching up to urban cores

44. Although not as fast as in Q1, Q2 2015 rental growth was among
the highest quarterly figures this cycle at 1.1 percent
43
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
2008 2009 2010 2011 2012 2013 2014 2015
Quarterlyrentgrowth(%)
Source: JLL Research

45. Up 5.3 percent year-on-year CBD Class A rents continue to grow
the fastest; flat for Class B
44
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
2010 2011 2012 2013 2014 2015
Averageaskingrents($p.s.f.)
Class A (CBD) Class A (suburban)
Class B (CBD) Class B (suburban)
Class C (CBD) Class C (suburban)
Source: JLL Research

46. Since Q1 2010, CBD Class A rents have grown by more than
one-fifth; Suburban Class B barely increased in nominal terms
45
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2010 2011 2012 2013 2014 2015
GrowthinaskingrentssinceQ12010
Class A (CBD) Class A (suburban)
Class B (CBD) Class B (suburban)
Class C (CBD) Class C (suburban)
Source: JLL Research
+22.7%
CBD Class A
+12.8%
Suburban Class C
+14.5%
CBD Class C
+8.1%
Suburban Class A
+7.7%
CBD Class B
+1.7%
Suburban Class B

47. CBD and suburban rents both rose in Q2 2015, but the gap
widened even more to $16.43 p.s.f. (+66.3 percent)
46
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
2010 2011 2012 2013 2014 2015
Averageaskingrent($p.s.f)
CBD Suburbs
Source: JLL Research
$11.36
$16.43

48. The Class A premium held firm in Q2 due to limited supply and
higher-priced new construction pushing up rents
47
$3.40
$3.49 $3.49
$3.53
$3.68
$3.81
$3.97 $3.99
$4.21
$4.26
$4.37 $4.38
$4.86
$4.71
$4.82
$4.76
$4.97
$4.92 $4.90
$4.81
$5.13 $5.12
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
2010 2011 2012 2013 2014 2015
ClassApremium($p.s.f.)
Source: JLL Research

49. TI allowances are beginning to elevate due to new construction
providing higher concessions, but free months are declining
48
3.5
4.1
5.1
6.1 6.2
5.7
5.1
5.3
5.8
5.4
$23.00
$24.00
$25.00
$26.00
$27.00
$28.00
$29.00
$30.00
$31.00
$32.00
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
TIallowance($p.s.f.)
Freemonthsofrent
Free months of rent TI allowance ($ p.s.f.)
Source: JLL Research

50. Construction

51. 0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Underconstruction(s.f.)
50
Source: JLL Research
Construction volumes up 8.4 percent since year-end 2014 to 86.2
m.s.f. in Q2 2015

52. Market Under construction (s.f.) Share
Houston 11,114,260 12.9%
New York 9,487,363 11.0%
Dallas 8,508,652 9.9%
Seattle-Bellevue 7,030,599 8.1%
Washington, DC 5,227,655 6.1%
Silicon Valley 5,043,620 5.8%
Boston 4,522,701 5.2%
Phoenix 3,411,901 4.0%
San Francisco 3,134,205 3.6%
Denver 3,120,372 3.6%
Chicago 3,055,164 3.5%
Philadelphia 2,967,329 3.4%
Austin 2,913,140 3.4%
Los Angeles 1,951,171 2.3%
All other markets 14,779,400 17.1%
United States 86,267,532 100.0%
Houston New York Dallas Seattle-Bellevue Washington, DC
Silicon Valley Boston Phoenix San Francisco Denver
Chicago Philadelphia Austin Los Angeles All other markets
51
Source: JLL Research
Houston’s share of development activity has fallen due to
completions and slowing demand; rising elsewhere

53. 0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Completions(s.f.)
52
15.6 m.s.f.
Source: JLL Research
Average completions: 46.0 m.s.f.
YTD 2015 completions already total 62.1 percent of YTD 2014;
still well below historical norms

54. 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
2015 2016 2017 2018 2019
Completions(s.f.)
Speculative BTS
53
Source: JLL Research
Roughly half of all development will deliver in 2016; remainder
will mostly deliver throughout the rest of 2015 and 2017

55. 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
45,000,000
50,000,000
2015 2016 2017 2018 2019
Completions(s.f.)
Available Preleased
54
Source: JLL Research
Due to high levels of preleasing, only 43.4 m.s.f. of construction
will be available upon delivery in 2015 and 2016

56. 7,322,061
11,407,786
13,060,032
4,781,395
11,818,372
9,168,187
9,855,374
12,720,560 12,810,553
9,748,464
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2013 2014 2015
Starts(s.f.)
55
Source: JLL Research
Construction starts slowed somewhat in Q2, but are 6.3 percent
higher than this time last year

57. Market Starts (s.f.) Share
New York 2,300,000 23.6%
Dallas 1,240,824 12.7%
Charlotte 978,309 10.0%
Denver 904,767 9.3%
San Francisco Peninsula 775,614 8.0%
Chicago 763,000 7.8%
Cincinnati 485,000 5.0%
Seattle 473,937 4.9%
Washington, DC 439,394 4.5%
Miami 315,000 3.2%
San Diego 297,441 3.1%
Portland 244,444 2.5%
New Jersey 185,000 1.9%
Fort Lauderdale 143,535 1.5%
Phoenix 125,000 1.3%
Silicon Valley 77,199 0.8%
United States 9,748,464 100.0%
New York Dallas Charlotte
Denver San Francisco Peninsula Chicago
Cincinnati Seattle Washington, DC
Miami San Diego Portland
New Jersey Fort Lauderdale Phoenix
Silicon Valley
56
Source: JLL Research
The office component of Brookfield’s Manhattan West project
made New York the leader in starts in Q2

58. Market Starts (s.f.) Share
Trammell Crow 3,631,840 4.2%
Hines 3,539,334 4.1%
KDC 3,015,000 3.5%
Silverstein 2,861,402 3.3%
Brookfield 2,554,500 3.0%
Boston Properties 2,220,081 2.6%
Related 1,700,000 2.0%
Liberty 1,462,000 1.7%
Schnitzer West 1,391,000 1.6%
Lincoln 1,334,115 1.5%
O'Donnell 1,229,064 1.4%
Crescent 1,130,000 1.3%
Touchstone 1,098,044 1.3%
Tishman Speyer 1,025,248 1.2%
All other markets 58,828,904 67.3%
United States 86,267,532 100.0%
Trammell Crow Hines KDC Silverstein Brookfield
Boston Properties Related Liberty Schnitzer West Lincoln
O'Donnell Crescent Touchstone Tishman Speyer All other markets
57
Source: JLL Research
Trammell Crow, Hines, KDC and Silverstein are building 15.1
percent of development underway

59. 58
47.8%
All properties
29.8%
Spec only
Source: JLL Research
Although slightly under half of all U/C space is preleased, this
figure falls sharply looking only at speculative development

60. 19.6%
22.9%
27.5%
35.2%
39.6%
46.6%
48.1%
50.6%
52.5%
55.6%
65.4%
66.6%
69.3%
74.5%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
Los Angeles
Denver
New York
Austin
Seattle-Bellevue
Silicon Valley
Houston
Boston
Washington, DC
San Francisco
Dallas
Chicago
Philadelphia
Phoenix
Preleasing rate (%)
59
Source: JLL Research
BTS-heavy markets such as Phoenix, Philadelphia and Dallas are
posting the highest preleasing rates nationally

61. 60
609 Main at Texas (Hines)
Houston
1,057,668 s.f.
390 Madison Avenue (L&L)
New York
858,710 s.f.
One SoHo Square (Rockpoint)
New York
768,000 s.f.
6 Houston Center (Crescent)
Houston
600,000 s.f.
Source: JLL Research
Energy Center V (Trammell Crow)
Houston
505,000 s.f.
1775 Tysons Boulevard (Lerner)
Northern Virginia
476,913 s.f.
929 Office Tower (Trammell Crow)
Bellevue
462,000 s.f.
Three Alliance (Tishman Speyer)
Atlanta
500,000 s.f.
As confidence builds, speculative developments without any
preleasing are rising

62. $51.66
$45.15
$36.38
$24.95
$23.52
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
Trophy U/C Class A U/C Class A Class B Class C
Directaverageaskingrent($p.s.f.)
61
Source: JLL Research
With rents approaching $52 per square foot for Trophy space,
new construction commands a very large premium

63. $75.00
$75.50
$76.00
$80.00
$80.00
$80.00
$85.00
$85.00
$85.00
$90.00
$95.00
$110.00
$159.00
$60 $80 $100 $120 $140 $160 $180
100 Northern Avenue (Boston)
222 2nd Street (San Francisco)
2001 M Street NW (Washington, DC)
600 Massachusetts Avenue NW (Washington, DC)
333 Brannan Street (San Francisco)
345 Brannan Street (San Francisco)
350 Bush Street (San Francisco)
Pickwick Plaza (Fairfield County)
1000 F Street NW (Washington, DC)
1450 Page Mill Road (Silicon Valley)
181 Fremont Street (San Francisco)
Salesforce Tower (San Francisco)
135 Hamilton Avenue (Silicon Valley)
62
Source: JLL Research – data for many high-profile properties, such as 3 World Trade Center and 10 Hudson Yards in New York, is not available
Speaking to demand and the need for new, quality space, multiple
buildings in the Bay Area and DC are asking more than $80 p.s.f.

64. Sales

65. With $39.2 billion of office transactions in second quarter, nearly
60 percent of full-year 2014 deal flow closed in first half 2015
64
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Officeinvestmentsalevolumes($billions)
Q1 Q2 Q3 Q4
Source: JLL Research

66. Strong deals in Boston, NY and growing pipeline in others driving
primary market growth of 55.3 percent first half 2015 Y-o-Y
65
18
6
5
6
8
26
4
11
17 17
7
1
5
8
4
5
19 19
2
9
7
12
6
8
0
5
10
15
20
25
30
Boston New York San Francisco Seattle-Bellevue Chicago Los Angeles Washington, DC Houston
Numberofofficeinvestmentsales
Source: JLL Research

67. ..with four of eight primary markets exceeded $1.0 billion
66
Atlanta second quarter deal flow more than doubled over first quarter
$6,137
$2,284
$1,942
$1,388
$1,179
$841 $676 $667 $656 $568
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Toptenmarketvolumes($millions)
Primary markets Secondary markets
Source: JLL Research

68. From broader perspective, primary markets are up 55.3 percent
YTD compared to 2014
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Primarymarketinvestmentvolumes($millions)
First Half 2014 First Half 2015
67
San Francisco and LA are currently behind first half of 2014
Source: JLL Research

69. As East Coast CBD investment increases, Boston and West Coast
investment strategies diversifying further into the Suburbs
68
100%
81%
60%
66% 65%
50%
55%
25%
100% 99%
69%
90%
47%
66%
55%
13%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
New York Chicago Houston Washington, DC Boston Seattle-Bellevue San Francisco Los Angeles
CBDinvestmentsales(asa%oftotalvolumes)
2014 First Half 2015
Source: JLL Research
Westside
Palo Alto /
Santa Clara
Lake Union /
Belltown
Cambridge /
495 Mass
Pike

70. 14.1%
62.2%
23.7%
Trophy Class A Class B
Resurgence in Trophy activity with one-third of comparable full-
year 2014 sales in second quarter
69
19.3%
55.8%
24.9%
Trophy Class A Class B
Source: JLL Research
2014
YTD
2015

71. $1,054
$841
$417 $331 $253
Atlanta Northern
and Central
NJ
San Diego Phoenix Northern
Virginia
$6,137
$1,926
$1,049 $1,031
$667
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Primary markets dominating CBD investment activity; non-CBD
volumes led by secondary markets
70
Most active CBD markets Most active Non-CBD markets
Of CBD volumes in Primary markets Of Non-CBD volumes in Secondary markets
Source: JLL Research
Q1officeinvestmentsalevolume(millionsof$US)

72. 56.7%
43.3%
Primary markets Secondary markets
Secondary market activity continues to rise on a square footage
basis, accounting for 56.0 percent of 2015 activity year-to-date
71
Source: JLL Research
47.1%
52.9%
Primary markets Secondary markets
43.9%
56.0%
Primary markets Secondary markets

73. And more than 45.0 million square feet of non-CBD deal flow
drove secondary market volumes in the second quarter
72
44%
40%
50%
57%
43%
69%
52%
45%
56%
51%
27%
28%
27%
24%
27%
15%
17%
24%
16%
15%
13% 17%
10% 7%
14%
9%
10% 14% 8%
11%16% 15% 13% 13% 17%
7%
21% 17% 21%
2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2
Primary CBD Primary Non-CBD Secondary CBD Secondary Non-CBD
Source: JLL Research

74. Moreover, secondary markets grew 19.6 percent in Q2 outpacing
Primary market growth
$4.6
$5.6
$6.3
$7.4
$5.8
$3.7
$5.8
$6.6
$6.2
$7.4
$0
$1
$2
$3
$4
$5
$6
$7
$8
2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2
Secondarymarketvolume($billions)
73
Source: JLL Research

75. Only Phoenix was top five secondary market to fall short of first
quarter volume
$451
$28
$133
$227
$639
$1,179
$841
$676
$461 $435
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Atlanta Northern and Central NJ Philadelphia San Diego Phoenix
Top5secondarymarket($millions)
Mesirow Realty
purchase of Verizon
Center
Source: JLL Research
74

76. Secondary market class A, B and Trophy volumes are at 62
percent of 2014 volumes year-to-date
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2
Secondarymarketbuildingclassvolumes($millions)
75
Class A office
$150 M from
peak levels
Source: JLL Research

77. Foreign investment up 57.1 percent year-to-date, China has
surpassed high water mark in 2007
76
Norway
33%
Germany
22%
Canada
21%
South Korea
14%
United
Kingdom
5%
All else
5%
China, 35%
Canada, 27%
Germany,
10%
Norway, 6%
South
Korea, 5%
All else, 15%
2015 YTD2014Source: JLL Research
Percentageofforeigninvestmentbycountry

78. New York,
70%
Washington,
DC, 14%
Seattle-
Bellevue, 8%
San
Francisco, 3%
All else,
5%
2015 YTD
77
New York,
47%
Washington,
DC, 21%
Northern
Virginia, 6%
Seattle-
Bellevue, 5%
Houston, 5%
All else, 16%
2014Source: JLL Research
Percentageofinvestmentintomarketsbyforeigncountries
Foreign appetite for quality assets in New York remains high
and growing

79. Outlook

80. 79
Source: JLL Research
2015 outlook strongest in nearly a decade
Nearly half of all tenants leasing space over the past four quarters are growing, dominated by
scientific and technical industries (most predominantly tech and telecom). This should accelerate
over the next 12-18 months as economic stability encourages business growth.
Occupancy gains were more diversely spread across markets with DC and New York making
significant comebacks from the first quarter while Los Angeles, Atlanta and Dallas continued to heat
up. This geographic and industry diversity will continue to boost absorption in coming quarters with
the notable exception of Houston, where fallout from the oil and energy will further slow growth and
potentially lead to occupancy losses later in the year.
As expansionary leases begin to commence ahead of new supply, we expect to see vacancy fall
below 15 percent by year-end. Over the next two years, however, that rate will creep back upward
as markets steady themselves for the largest pipeline of new supply in nearly a decade—currently at
86 million square feet.
If market momentum continues, as we expect it will, rents could see additional increases that reach
a cumulative 5-7 percent annual growth rate by year-end.
1.
2.
3.
4.

81. By all accounts, economic and corporate
confidence are stable and growing. This will
only further translate into office market
expansion and value appreciation as supply
and demand become unbalanced in landlords’
favor over the next two to four quarters.
Occupiers will be hard-pressed in negotiations
in the near-term, but rent growth and leverage
should begin to decelerate toward the end of
2016 as the majority of the development
pipeline will be complete.

82. COPYRIGHT © JONES LANG LASALLE IP, INC. 2015
Julia Georgules
Director – Office Research
+1 415 354 6908
Julia.Georgules@am.jll.com
Phil Ryan
Research Analyst – Office and Economy Research
+1 202 719 6295
Phil.Ryan@am.jll.com
Sean Coghlan
Director – Capital Markets Research
+1 215 988 5556
Sean.Coghlan@am.jll.com
Seth Kazarian
Research Analyst – Capital Markets
+1 312 228 3478
Seth.Kazarian@am.jll.com
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