jll-global-market-perspective-q2-2015

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Global Real Estate

Finds New Rhythm

Global Market Perspective | Q2 2015

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015. All Rights Reserved 2

Global Market Perspective, Second Quarter 2015

Global Market Perspective

Contents

Global Real Estate Finds New Rhythm ........................................................................................................................... 3

Global Economy ................................................................................................................................................................ 6

Real Estate Capital Markets ............................................................................................................................................. 8

Investment Volumes ............................................................................................................................................................ 8

Capital Values and Yields ................................................................................................................................................. 13

Corporate Occupiers ...................................................................................................................................................... 14

Global Real Estate Health Monitor ................................................................................................................................. 16

Office Markets ................................................................................................................................................................. 17

Office Demand Dynamics ................................................................................................................................................. 17

Office Supply Trends ......................................................................................................................................................... 20

Office Rental Trends ......................................................................................................................................................... 23

Retail Markets .................................................................................................................................................................. 25

Industrial Warehousing Markets .................................................................................................................................... 27

Hotel Markets ................................................................................................................................................................... 28

Residential Markets ........................................................................................................................................................ 30

Key Investment Transactions in Q1 2015 ..................................................................................................................... 32

Illustrative Office Occupational Transactions in Q1 2015 ........................................................................................... 36



Global Real Estate Finds New Rhythm

Markets settle into a steady growth pattern

Following a strong final quarter of 2014, the first few months of 2015 have seen the global real estate market settle into a

steady pattern of growth. The dominant real estate markets are displaying an air of quiet confidence, underpinned by

expectations of robust activity and performance during the course of 2015. Corporates are now committing to new office

space, improving consumer confidence has put the stride back into the retail markets, and the warehousing sector is

benefiting from the vigorous expansion of e-commerce. Now that the global economy appears to be on a sounder

footing, the main downside risks are geopolitical.

Direct Commercial Real Estate Investment, 2006-2015

Source: JLL, April 2015

Investment markets continue to strengthen

Investment activity has continued to expand in 2015, but the strength of the U.S. dollar has masked the true depth of

activity. Volumes in the first quarter were up 9% year-on-year in U.S. dollar terms; however, they were 13% higher when

denominated in local currencies. Yields for core primary office property are at record lows, yet spreads remain healthy

and further yield compression is likely in H1 2015.

The U.S. is currently the standout investment market, with volumes up 24% year-on-year. In the meantime, Japan is

driving expansion in Asia Pacific while the UK and Germany have put in respectable growth in Europe. There is further

evidence of movement up the risk curve into Europe’s recovering markets (such as Spain and Italy), as well as in India

and Vietnam.

0

100

200

300

400

500

600

700

800

Americas EMEA Asia Pacific Global

US

$ bi

llion

s

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (F)

xx% Projected Change 2014-2015

5-10%

-15%

20%

5%



With abundant equity, availability of debt and the continued low interest rate environment, investment volumes are

expected to continue to rise in 2015 by at least 5% to US$740-760 billion. Both the Americas and Asia Pacific are set to

hit new records this year. However, in Europe, despite improving economic fundamentals, it may well be geopolitical

developments that play a bigger role and guide investor behaviour. We anticipate European volumes to be stable in

euro terms in 2015.

Confidence builds in the office leasing markets

Office absorption rates in the first quarter of 2015 have been modest, but the figures belie a global leasing market that is

building in confidence as corporates across a broad range of industries commit to new space and increase employee

numbers. Expansion demand across the globe remains elusive, but nonetheless a 20% uplift in net absorption is

projected for this year. In the U.S. office market, expansionary activity is more evident and we expect a spike in net

absorption later in 2015. The occupational markets in several Asia Pacific and European cities are also showing

improved sentiment, which is translating into new deals.

Corporate occupiers are focusing primarily on CBD space and/or those decentralised markets that have amenity, density

and a diverse mix of office inventory to create dynamic environments. However, tenants are finding it increasingly

difficult to procure prime CBD space, particularly in the dominant office markets – such as London, New York, Tokyo

and Hong Kong – where single-digit vacancy rates prevail. New construction is emerging quickly, but there are limited

prospects of a respite from supply shortages until at least 2016. These shortages are encouraging landlords to push up

rents, but there is still some resistance from cost-conscious tenants.

Sustained global growth, job creation and the diversity of demand will power further rental uplifts. Annual growth of 4%

is projected for the full-year 2015 across major markets. Tokyo is forecast to be the star rental performer, but the main

U.S. markets have the potential to see a sharp increase in rents during the year.

Prime Offices – Projected Changes in Values, 2015

*New York – Midtown, London – West End, Paris - CBD. Nominal rates in local currency.


+ 10%

+ 5-10%

+ 0-5%

- 0-5%

- 5-10%

Sydney, London*, Boston Chicago, Los Angeles, New York* San Francisco, Madrid, Beijing

Tokyo

Capital ValuesRental Values

Hong Kong, Shanghai, Dubai, Toronto, Washington DC, Mexico City Stockholm, Seoul, Paris* Brussels, Frankfurt

Mumbai, SingaporeSao Paulo

Tokyo, Madrid

London*, Sydney, BostonChicago, Los Angeles, New York* San Francisco, Seoul, Beijing

Paris*, Shanghai, FrankfurtDubai, Toronto, Washington DCMexico City, Stockholm, BrusselsHong Kong

Mumbai, Singapore

Sao Paulo

- 10-20% Moscow Moscow



Consumer confidence fuels optimism in the retail sector

Increased consumer confidence and retail sales are fuelling optimism in the U.S., Europe and selectively across Asia

Pacific. Several standout U.S. markets like Miami and New York are continuing to see the strongest growth conditions

typical of a rising market. Meanwhile, the outlook for Europe’s recovery markets has improved significantly, particularly

in Spain and Ireland. In Asia Pacific, new-to-market foreign retailers and/or growth of inbound tourism are supporting

retail markets in Tokyo, Australia and South East Asia.

Demand for rapid delivery drives warehousing boom

There is growing pressure on companies to implement seamless omni-channel distribution services and this is boosting

warehousing demand across the globe. There is a particular push on mega-sheds and smaller urban/urban fringe

distribution and sortation centres to support a seamless customer experience and, in particular, shorter delivery times.

The fastest growth in warehousing rents is being recorded in global gateways such as Los Angeles, London, Tokyo

and Hong Kong.

Flying start to 2015 for hotels

2015 has got off to a robust start for the hotel investment market, with transaction volumes rising by more than 80% in

Q1 to US$20.4 billion; this equates to 30% of the US$68 billion that we expect to be transacted during the year.

Investment funds and private equity firms were the most active buyers in the quarter.

Mounting new supply in the U.S. multifamily rental market

Economic growth and evolving demographics continue to bring strong demand levels to the U.S. multifamily rental

segment. However, new supply is building and by 2016-2017 the demand for units will begin to fall short of supply.

Policy restrictions have remained in place in various Asian markets to curb speculation, but China is seeing an

improvement in buying sentiment after the recent loosening of lending requirements.



Global Economy

Uneven start to the year obscures emerging upside

An eventful start to 2015 has raised as many questions as answers about the health of the global recovery. There have

been several positive surprises – the sharp oil price decline has been sustained; the ECB announced a more extensive

QE programme than most expected; bond rates sank ever lower; and rises in short-term policy rates look further down

the road. All of these should be net positives for growth, at least in the developed world.

But while there is tentative support for forecast upgrades, the risks have not disappeared. The surging U.S. dollar was a

key trend in Q1. For the advanced economies, notably those in the Eurozone, this is good news; however, this may not

be so welcome elsewhere. Emerging markets’ exports will benefit from a stronger U.S. economy, but the resurgent

dollar and the prospect of U.S. interest rate hikes will divert capital away from the developing world. This is also

compounding existing concerns about the impact of the slowdown in China.

Meanwhile, continued wrangling with Greece over its bailout has detracted from an improving picture in the Eurozone.

The hard line taken by creditors crushed the early pleas for concessions by the new Greek government, but a reform

programme has yet to be agreed. Grexit is still a possibility, yet markets remain unflustered and the episode highlights

how little the underlying problems have changed since 2011-2012. Without institutional and structural reforms in the

Eurozone, the only solution remains enforced austerity, the limits of which may soon be reached in Greece.

While the spread of risks is probably wider than before, an upside to the central view is emerging in forecasts for the

major economies. Only the U.S. has been given a downgrade, largely due to a slow Q1 and the expected impact of the

strong dollar on exports. By contrast, the UK and the Eurozone’s laggards have received an uplift compared with

January. Concerns about emerging markets have not fed into forecasts, with India strongly improved and China holding

steady.

GDP Projections for 2015 in Major Economies – Recent Movements

Australia China France Germany India Japan UK U.S.

January 2.6 6.5 1.0 1.8 5.7 0.8 2.7 3.1

April (Latest) 2.7 6.6 1.2 2.4 7.5 0.8 2.8 2.7

Change (bps) +10 +10 +20 +60 +180 0 +10 -40

Source: Oxford Economics, April 2015

Eurozone QE pushes bond yields to historic lows

The most important economic news in Q1 was the ECB’s late conversion to quantitative easing (QE) in the face of the

opposition of some national Central Banks (notably Germany). The announcement was well-received by markets in

January and, by its inception in March, some were already declaring it a success. In reality, the full impact will not be

apparent for months, though the early signs are good – the euro has plunged, bond rates have fallen and economic

confidence is rebounding. The slide in bond rates has been global, though more pronounced in Europe, with German

bund rates now close to zero and U.S. and UK rates touching new historic lows.

Part of the reason for the downward lurch in bond rates has been a reassessment of the monetary policy outlook. With

the Eurozone still loosening and UK hikes delayed, the U.S. alone is still expected to tighten rates during 2015. The

consensus remains that U.S. rates will rise during 2015, albeit probably in Q3. Policymakers will likely err on the side of

caution, but the U.S. recovery should be robust enough to absorb the change without a serious wobble.



Global upturn continues

Asia Pacific has maintained its lead at the top of the global growth rankings. This is in spite of the continued slowdown

in China, whose policies are being carefully managed to minimise financial strain as its economy matures. By contrast,

India is expected to slowly pick up this year on lower prices of imported oil while slow inflation provides more scope for

monetary easing, although ongoing structural reform will be a pre-requisite for sustaining this performance over the

longer term. Japan had a disappointing 2014, but cheaper oil, easy money and improving external demand will help to

stimulate a slow revival this year and beyond.

The U.S. economic recovery faltered slightly at the turn of the year and forecasts have been modestly downgraded.

Even so, healthy employment and a modest revival in wages highlight the underlying strength of the upturn, though the

strong dollar will curb export demand. Projected U.S. growth rates indicate further uplift, but they remain below past

historic averages. The U.S. economy is driving a steady North American performance, supported by healthier Latin

American activity projected for this year and next.

Tentative signs of economic recovery and a fillip to confidence from QE have offset any concerns from the Greek bailout

in Europe. A weaker euro, low interest rates and falling oil prices will help foster a recovery in demand this year and

next, albeit a relatively slow one. The outlook for both Germany, the strongest of the core Eurozone economies, and

France has been upgraded since the start of the year. Outside of the single currency area, the UK was the top

performing developed economy in 2014. Thus far, a fractious election and the prospect of interest rate hikes in 2016

have had limited impact and the UK is predicted to experience further above-trend expansion over the next two years.

Global Outlook, GDP Change (%), 2014-2016

2014 2015 2016

Global 3.3 3.4 3.9

Asia Pacific 5.5 5.6 5.5

Australia 2.7 2.7 2.8

China 7.4 6.6 6.1

India 7.2 7.5 7.5

Japan -0.1 0.8 1.8

Americas 2.0 2.1 2.6

United States 2.4 2.7 2.8

MENA 2.1 3.0 3.9

Europe 1.5 2.0 2.4

France 0.4 1.2 1.7

Germany 1.6 2.4 2.1

UK 2.8 2.8 2.8

Source: Oxford Economics, April 2015



Real Estate Capital Markets

Investment Volumes

Further increases in transactional activity

Real estate investment markets have started the year in a positive manner with transactional volumes 9% higher than

the same period last year at US$155 billion. Much of the increase has been generated by activity in the U.S. where the

24% growth over the last 12 months has been one of the strongest performances globally. The higher U.S. dollar

against most currencies across the world has deflated the comparable picture slightly in the other regions, but that

shouldn’t detract from the increased level of activity that we are seeing in investment markets globally.

More of the same in Asia Pacific as Japan continues to provide the impetus

In Asia Pacific, markets have started 2015 slightly stronger than 2014, with volumes 7% higher than the same period last

year at US$25 billion. The region’s biggest market, Japan, was 6% higher year-on-year in Q1 2015 with almost US$13

billion of transactions as the end of the country’s fiscal year encouraged investment. The other large markets of China

and Australia have begun the year more slowly, although both were affected by major national holidays during the first

quarter. Singapore has exhibited signs that 2015 will be better than 2014 with a 67% rise in transactional activity in Q1,

and there is promise of more on the way with several large assets either on or coming to the market in the next few

months.

Political and geopolitical events will guide investor decisions in Europe

Europe looks set to have a more turbulent year ahead, although the first quarter has kicked off strongly in euro terms

with growth of 21%. Given the weaker euro, this translates into a more or less flat comparison to Q1 2014 with volumes

1% lower at US$57 billion. The UK had one of its most robust starts to a year with volumes of US$23.4 billion.

However, the UK is approaching pivotal elections which may be a drag on investor activity in the short term. Despite

improving economic fundamentals across the Eurozone, it may well be geopolitical developments that play a bigger role

and guide investor behaviour in 2015. If all the potential issues in the Ukraine, Russia and Greece dissipate, then the

support that QE provides to asset markets could prove to be very significant.

U.S. markets continue to drive ever upwards

The United States was the standout performer globally in the first quarter with close to US$70 billion in transactions, but

markets generally disappointed elsewhere in the Americas. The US$73 billion traded across the region was 18% higher

than a year ago, but every market was lower apart from the U.S. Latin America is notoriously volatile, so not too much

should be read into the weaker start to the year; however, Canada has seen volumes drop by 30% as lower oil prices

have had a dampening effect on the national economy, with interest rates having already been cut to compensate for

expected lower GDP growth.

Global activity continues to grow, but the higher U.S. dollar is masking scale of activity at a local level

Although the first quarter marked another period of growth for investment markets, the 9% underestimates the true scale

of activity at the local market level. The biggest markets outside the U.S. – the UK, Eurozone, Japan and Australia –

have all seen their currencies weaken substantially over the last 12 months against the U.S. dollar, thus making regional

and global comparisons slightly more ambiguous. While the dollar presents headwinds in this regard, activity at the local

level continues to accelerate and we still expect full-year 2015 transactional volumes to increase by approximately 5% to

US$740-760 billion.



Direct Commercial Real Estate Investment – Regional Volumes


Direct Commercial Real Estate Investment – Largest Markets, 2013-2015


REGIONAL TRENDS

U.S. commercial property a favoured asset class on global stage

The U.S. investment market has continued to build momentum and can fairly be described as ‘robust’. The flow of

institutional-quality deals is nearing the pace seen at the historic 2006-2007 cyclical peak. Moreover, macroeconomic

and financial indicators suggest that the current cycle still has ample potential for further growth – if not sustaining the

current pace being enjoyed.

Potential hazards in the market, such as excessive and ‘risky’ leverage and fast-eroding underwriting and lending

standards, have yet to present themselves in any notable fashion, but indications of these and others need to continue to

be carefully monitored. Growth was evident across all of the asset types in the U.S. over the first quarter, with the

majority of markets seeing increased transaction activity over Q1 2014.

US$ billion Q4 14 Q1 15

% change

Q4 14-Q1 15 Q1 14

% change

Q1 14-Q1 15 2013 2014

% change

2013-2014

Americas 94 73 -22% 62 18% 241 302 25%

EMEA 94 57 -39% 57 -1% 221 278 26%

Asia Pacific 44 25 -43% 23 7% 127 131 3%

TOTAL 231 155 -33% 142 9% 589 711 21%

US$ billions Q4 14 Q1 15

% change

Q4 14-Q1 15 Q1 14

% change

Q1 14-Q1 15 2013 2014

% change

2013-2014

U.S. 85.4 69.5 -19% 55.9 24% 214.6 269.1 25%

UK 33.8 23.4 -31% 22.0 6% 87.3 106.5 22%

Japan 14.8 12.9 -13% 12.2 6% 41.7 43.4 4%

Germany 16.5 10.4 -37% 11.2 -7% 38.5 46.3 21%

France 12.2 4.6 -62% 5.7 -19% 24.6 34.1 39%

China 7.0 2.6 -63% 3.0 -13% 25.1 19.2 -23%

Canada 6.7 2.6 -62% 3.8 -32% 18.1 19.1 5%

Australia 7.9 2.5 -68% 4.1 -38% 21.9 26.8 22%

Italy 3.2 2.2 -31% 1.1 93% 6.0 7.0 18%

Spain 3.1 2.0 -36% 1.6 24% 3.4 9.8 189%

Singapore 1.2 2.0 65% 1.2 67% 11.9 8.1 -32%

Sweden 6.2 1.8 -71% 3.2 -44% 10.3 16.3 58%

Norway 3.2 1.5 -51% 0.8 94% 6.5 7.0 8%

Switzerland 1.0 1.4 33% 1.5 -8% 3.7 3.1 -15%

Denmark 1.1 1.2 7% 0.7 81% 3.7 3.3 -12%

Ireland 1.6 1.1 -30% 1.3 -14% 2.5 5.4 119%

Belgium 1.5 1.0 -32% 0.3 235% 3.0 4.1 39%

Hong Kong 2.2 1.0 -54% 1.0 -1% 7.3 7.2 -1%



Return of large deal-making

The investment market environment – particularly in the U.S. – is becoming ripe for larger and more numerous portfolio

deal-making. This includes entity-level buyouts, as shown by six such transactions that closed in Q1 2015. Most, if not

all sectors, are seeing conditions align for increased activity, including portfolio owners looking to extract the value of the

strong run-up in values over the last few years. Very large pools of equity fund capital are still being raised, mainly

related to increasing institutional allocations to real estate and the liquidity, availability and very attractive rates of the

debt markets.

Americas on track for record volumes in 2015

With an encouraging economic outlook for the remainder of 2015 – particularly on a relative basis globally – and

property market fundamentals poised to have another strong year ahead, domestic and foreign investors will find the

U.S. market offers both stability and opportunities for outsized growth this year.

Driven once again by the U.S. market, investment volumes for the Americas region are projected to increase by

approximately 20% for the full-year 2015 and surpass last cycle’s historic peak level (on an ex-entity-level transaction

basis).

Strong capital inflows into New York

From a city perspective, New York had one of its busiest quarters ever in Q1 with US$13 billion transacted, of which

over 60% involved international investors. As is usual, London and Tokyo made up the top three global destinations,

with London at US$10.4 billion and Tokyo at US$8.5 billion. The top 20 destinations continue to be dominated by U.S.

cities, but several European cities have made an appearance in the first quarter. Madrid and Milan, for example,

feature for the first time since the Global Financial Crisis.

Direct Commercial Real Estate Investment – Top 20 Cities, Q1 2015


0 5 10 15

Frankfurt

Denver

Sydney

Milan

Orange County

Miami

Madrid

Boston

Honolulu

Singapore

San Jose

Paris

Chicago

Seattle

Washington DC

San Francisco

Los Angeles

Tokyo

London

New York

Americas

EMEA

Asia Pacific

US$ billions



UK leads EMEA volumes in Q1 – slowdown ahead of election likely to be felt in Q2

The UK, EMEA’s largest market, accounted for 41% of the region’s volumes in Q1 2015, rising by 13% year-on-year in

sterling terms. Likewise, Germany managed a 13% year-on-year uplift (in euro terms), while France was flat. The UK

does not as yet show any signs of slowing down in reaction to its elections in May and a possible future EU referendum,

but this may in part be due to the spillover of deals from an exceptional Q4 2014 and we will need to wait until Q2 to look

for evidence of a cooling in sentiment.

Southern Europe shows strong growth, though Greece remains the outlier

The recovering markets of Southern Europe continued to show strong growth in the first quarter, up nearly 80% (in euro

terms) year-on-year, though Greece was the exception, where the potential for exclusion from the Eurozone continues

to weigh on sentiment.

Signs that European markets are stabilising

While it is hard to draw conclusions from one quarter of data, there are signs that investment activity across Europe is

stabilising. JLL’s forecast for full-year 2015 is for a 15% decrease in EMEA investment volumes on 2014 in U.S. dollar

terms, which would reflect a modest gain in euro terms of some 2.5%.

Robust start to the year in Asia Pacific led by Japan

Asia Pacific is on track to achieve another record volume of transactions at about US$140 billion, translating to a 7%

year-on-year gain. The vigorous start to the year has been largely led by Japan, which accounted for half of the regional

volumes. Capital inflow into Japan continues to build, as evidenced by ongoing yield compression. In terms of asset

classes, commercial, retail and hotel are in favour, with robust interest from J-REITs and developers as well as unlisted

real estate funds. JLL expects investment sentiment to remain high in 2015, with investment volumes possibly

outperforming last year’s strong results.

Investor caution in China but domestic players to be more active

Transaction volumes in China were below expectations in Q1 at US$2.6 billion, down 13% on the same period last year.

Macro concerns around developers and an ongoing housing market correction continued to weigh on commercial

investment volumes. Logistics remains a preferred asset class with investors seeking platform deals as a result of

limited stock availability. In addition, sentiment in the core office sector is improving in Tier 1 or at the top-end of Tier 1.5

cities. China’s sovereign wealth fund (CIC) along with domestic insurers and finance companies are expected to be

active in 2015.

A slow start to the year in Australia but volumes to pick up

Australia surprised on the downside in Q1, but we expect volumes to pick up through the year with some sizeable deals

in the pipeline. Overseas investors, particularly from within Asia Pacific, are drawn by the weaker Australian dollar. With

the Reserve Bank of Australia signalling further interest rate cuts, the attractions of the weaker dollar are likely to persist

at least for the next few quarters.

Emerging Asian markets surge over 200% on higher risk-taking

Other non-core Asia Pacific markets ended the first quarter blazing on all fronts, recording US$3.2 billion in transaction

volumes, up 226% on the same quarter last year as investors move up the risk spectrum seeking higher returns on

improved global economic confidence. India was the standout market with volumes averaging US$1 billion per quarter

over the past six months on the back of rising investor sentiment. In terms of activity, private equity funds, in particular

opportunistic funds, have been prominent.



Direct Commercial Real Estate Investment – Quarterly Trends, 2007-2015


Prime Office Yields, 2010-2015

*Across 25 major office markets.


5.2

5.6

6.0

6.4

-30

-20

-10

0

10

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

‘Mean’ Prime Office Yields*6.62%

5.36%

Yield Compression (bps)

%

0

30

60

90

120

150

180

210

240Q

107

Q20

7

Q30

7

Q40

7

Q10

8

Q20

8

Q30

8

Q40

8

Q10

9

Q20

9

Q30

9

Q40

9

Q11

0

Q21

0

Q31

0

Q41

0

Q11

1

Q21

1

Q31

1

Q41

1

Q11

2

Q21

2

Q31

2

Q41

2

Q11

3

Q21

3

Q31

3

Q41

3

Q11

4

Q21

4

Q31

4

Q41

4

Q11

5

Americas EMEA Asia Pacific Rolling Four-Quarter Average

US

$ bi

llion

s

205

107110100

113

7369666666

100

118120

159

204

190

119

91

110100

163

41 4335

108

125

146

211

142

162

175

231

155



Capital Values and Yields

Prime yields compress further

Prime office yields continued to compress during Q1, with Frankfurt, Madrid and Paris recording 25 basis point

declines, while Boston, New York, San Francisco, Washington DC, Tokyo and Sydney have shown compression of

10 basis points or more.

Yields for core primary office property are at record lows, yet spreads remain healthy and further yield compression is

likely in H1 2015. The beginning of a short-term interest rate hike in the U.S. is still considered likely in the third quarter,

which may create greater volatility in risk-free rates.

Steady capital value growth of 3%-5% in 2015

San Francisco and Boston have recorded the strongest capital value appreciation on prime assets, with growth of

close to 30% year-on-year. Other high-performers include New York, Madrid, Tokyo and Los Angeles.

Capital value appreciation of 3%-5% is projected for prime assets across 25 major office markets during 2015. Tokyo

and Madrid are expected to be the star performers.

Prime Offices – Annualised Capital Value Change, 2010-2015

Unweighted average of 25 major office markets across the globe


0

5

10

15

20

25

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

% pa

23.5%

13.0%

2.8%

6.6% 7.0%8.2%



Corporate Occupiers

Positive corporate sentiment but expansionary demand remains elusive

Corporate sentiment continues to be upbeat with confidence in the global economic outlook holding firm, despite

recognition of an emerging market slowdown and lingering geopolitical uncertainty. Yet this optimism has so far failed to

deliver a clear upturn in leasing market momentum. Having finished 2014 strongly, global occupier markets remain

active but are, in the main, starved of large-scale expansionary demand as corporate revenues are bolstered through

M&A activity. A prolonged period of portfolio restructuring, often with associated net reductions in overall portfolios,

appears to be the path ahead for many corporates and, as a result, global leasing volumes are forecast to rise only

moderately over 2015.

A varied role for domestic occupiers

A more marked variation in the strategy and execution of domestic occupiers has been in evidence in global leasing

markets during Q1. In Asia, domestic companies are dominant in the demand profiles of local leasing markets.

Business model cost and agility present such companies with a competitive advantage over larger multinational

corporations and they have not been afraid to use it in changeable market conditions. In contrast, the lack of activity by

domestic occupiers has been a key aspect in the significant reduction of leasing volumes in Europe’s largest office

market, Paris, during Q1. While their reticence to act is founded on the French economic outlook and future policy

intentions, the contrast with Asia could not be starker.

Occupier and investor intentions lacking synchronicity

As markets improve in Asia, we have found landlords’ increasing optimism on asking rents for CBD buildings can stymie

leasing activity. Some landlords have been slow in acknowledging that office space remains extremely price-sensitive,

particularly for financial and business service occupiers. In a similar vein, the acute current shortages and limited

pipelines of quality office supply in Europe are driving strong increases in asking rents. This dynamic has been

threatening for the last 18 months but demand has yet to reach levels where this pinch point has become a reality across

the region, arguably with the exception of the London market. Again, the price sensitivity of many occupiers will serve to

either constrain or compromise more occupier decision-making over the medium term.

This same pricing pressure is apparent in the U.S. with average asking rents up by around 3%, but there is a contrasting

dynamic in many U.S. markets. The proliferation of cranes across the U.S. – construction volumes are double those of a

year ago - indicates the optimism of developers and investors, but is disconnected to moderating levels of demand. This

is no more apparent than in Houston, as 2 million square feet of new office space is being delivered each quarter into a

market where the dominant oil and gas occupiers are responding to changing operating conditions and scaling back their

growth plans.

Changing operational structures bring new markets into play

The portfolio housekeeping of major occupiers is creating some real impetus around shoring activity, with traditional and

emerging BPO markets seeing healthy levels of demand and decentralisation from core markets. Occupiers are

restructuring operations to build efficiency, to respond to regulatory pressure or to align operational activity to

appropriate cost profiles. This is notable in the finance sector where HSBC has recently followed Deutsche Bank in

committing to a sizeable new operation in Birmingham, UK. The cost profile of these operations, coupled with future

transport improvements that will bring a quicker connection between London and Birmingham (through HS2 – the UK’s

new high-speed rail network), will provide clear operational benefits to the banks. This follows on from increased

banking sector activity in ‘alternative’ U.S. markets such as Salt Lake City, Fort Lauderdale and Columbus, Ohio.



Global Office Market Conditions Matrix*, 2015-2017

* Relates to conditions in the overall office market of a city. Conditions for prime CBD space may differ from the above. Source: JLL, April 2015

MARKET

Brussels Beijing

Frankfurt Hong Kong

London (West End) Mumbai

Madrid Shanghai

(Pudong)

Moscow Singapore

Paris Sydney

Stockholm

Dubai

Market 2015 2016 2017 Market 2015 2016 2017

Tokyo

Neutral Market

Landlord Favourable

Tenant Favourable

Market

Chicago

Los Angeles

New York

San Francisco

Toronto

Washington DC

Mexico City

Sao Paulo

2015 2016 2017



Global Real Estate Health Monitor

Economy Real Estate Investment Markets Real Estate Occupier Markets

National

GDP

OECD

Leading

Indicator

City

Investment

Volumes

Capital

Value

Change

Prime

Yield Yield Gap

Rental

Change

Net

Absorption

Vacancy

Rate

Supply

Pipeline

Dubai 2.8% na 20% 2.3% 7.5% na 2.3% na 23.0% 15.7%

Frankfurt 2.4% 0.10 47% 8.0% 4.4% 417 0.0% 0.5% 10.2% 1.7%

Hong Kong 2.8% na 42% 1.0% 3.0% 145 3.4% 0.4% 4.1% 4.7%

London 2.8% -0.10 0% 11.9% 3.8% 218 11.9% 1.8% 4.8% 4.5%

Madrid 2.5% 0.20 238% 23.0% 4.8% 352 6.2% 1.5% 11.1% 1.5%

Moscow -5.6% -0.10 -29% -34.5% 10.5% -162 -23.6% 4.1% 17.0% 8.7%

Mumbai 7.5% 0.20 164% -2.2% 10.0% 207 -3.7% 6.9% 19.4% 14.3%

New York 2.7% -0.10 27% 24.5% 3.4% 147 3.3% 1.7% 10.0% 0.9%

Paris 1.2% 0.20 18% 12.0% 3.5% 308 -2.0% -0.7% 7.6% 3.7%

Sao Paulo -1.3% -0.20 102% -17.2% 9.8% na -5.0% 3.2% 22.5% 19.6%

Seoul 3.5% 0.20 18% 6.1% 4.8% 262 -0.3% 0.5% 11.5% 1.5%

Shanghai 6.6% -0.10 -15% 2.9% 5.9% 228 3.3% 11.0% 10.0% 40.4%

Singapore 3.3% na -19% 0.5% 4.2% 191 11.7% 5.0% 5.9% 12.6%

Sydney 2.7% 0.20 21% 10.5% 6.1% 378 1.3% 2.2% 9.5% 3.9%

Tokyo 0.8% 0.10 27% 19.7% 3.2% 280 6.4% 5.7% 3.0% 10.8%

Toronto 2.2% -0.10 23% -1.4% 5.1% 373 -1.4% 0.6% 9.8% 2.7%

Real estate data as at end Q1 2015

Definitions and Sources

National GDP: Change in Real GDP. National Projection, 2015. Source: Oxford Economics

OECD Leading Indicator: Composite Leading Indicator. Change in Index. Latest Month. Source: OECD

City Investment Volumes: Direct Commercial Real Estate Volumes. Metro Area Data. Rolling Annual Change. Source: JLL

Capital Value Change: Notional Prime Office Capital Values. Year-on-Year Change. Latest Quarter. Source: JLL

Prime Yield: Indicative Yield on Prime/Grade-A Offices. Latest Quarter. Source: JLL

Yield Gap: Basis Points that Prime Office Yields are above or below 10-year Government Bond Yields. Latest Quarter. Source: JLL, Datastream

Rental Change: Prime Office Rents. Year-on-Year Change. Latest Quarter. Source: JLL

Net Absorption: Annual Net Absorption as % of Occupied Office Stock. Rolling Annual. Source: JLL

Vacancy Rate: Metro Area Office Vacancy Rate. Latest Quarter. Source: JLL

Supply Pipeline: Metro Area Office Completions (2015-2016) as % of Existing Stock. Source: JLL



Office Markets

Office Demand Dynamics

Modest Q1 absorption rates disguise rising momentum in office leasing markets

Overall leasing volumes posted minimal gains during Q1 2015. However, this belies a global office leasing market that is

building in confidence as corporates across a broad range of industry sectors commit to new space and increasing

employee numbers.

Global office gross leasing volumes, at 8.4 million square metres in the first quarter, were marginally lower than Q4 2014

(-2%) and Q1 2014 (-4%):

The Asia Pacific region recorded the most notable improvement in Q1, with volumes 5% higher than a year

ago and net absorption up an impressive 31% year-on-year.

The United States had an unexpectedly quiet Q1; volumes were unchanged on Q4 2014 while net absorption

fell sharply to its lowest level in three years. First-quarter figures are likely to be an anomaly however, and

there are expectations of a significant build-up in net absorption over the remainder of the year.

In Europe, volumes fell by 3% year-on-year, but this is due to particularly weak markets in Paris and

Moscow, which typically account for one-third of European leasing activity. Excluding these two large

markets, there was a 7% year-on-year rise.

For the full-year 2015 we forecast that gross leasing volumes will be moderately higher than 2014 levels (+0%-5%). The

strongest uplift is expected in Asia Pacific (+15%), while leasing levels in the U.S. and Europe are likely to remain flat,

but with a notable shift in the composition of demand towards expansionary activity.

Expansion demand remains elusive

Expansion demand still remains elusive. Nonetheless we expect expansionary activity to mount during the remainder of

the year, with net absorption likely to be 20% higher for the full-year 2015 compared to 2014. Occupancy growth during

2015 is projected to be 25% higher in the U.S, up 20% in Asia Pacific and 15% higher in Europe. The focus will be on

CBD space, notably markets that have amenity, density and a diverse mix of office inventory to create dynamic

environments.

U.S. office market at a positive tipping point

Quarterly absorption volumes have been disappointing in the U.S, driven by space givebacks in New York, Washington

DC and a significant slowdown in Houston. Nonetheless, expansionary activity continues to mount and we anticipate a

spike in new absorption later in the year as the likes of Comcast, Facebook, Google, Fannie Mae and Indeed take on

new leases.

Key trends emerging in the U.S. leasing market include:

Technology is leading expansionary demand. Banking, professional and business services are making

significant comebacks, and even law firms have signed a few expansionary deals.

The U.S. West Coast is anticipated to see significant absorption as technology companies such as Google,

Salesforce and WeWork take large amounts of space in markets along the U.S. west coast.

Technology and finance sector growth in Boston and New York will push U.S. East Coast markets ahead in

occupancy gains



Healthy momentum in Europe masked by underperformance in Paris and Moscow

European office leasing activity totalled 2.3 million square metres in Q1, which is 3% down on Q1 2014. While most

European office markets recorded positive growth, following a strong end to 2014, two of Europe’s largest office markets

(Paris and Moscow) dragged down the European aggregate with somewhat weaker performances. Indeed, in many

other European office markets demand was healthy in the first quarter, with leasing volumes pointing to a more solid

start to the year:

Although there have been reports of British firms scaling back hiring earlier than expected due to the uncertain

outcome of the general election, sentiment in the London leasing market remains upbeat, with volumes up

9% on Q1 2014.

In Southern Europe, the robust recovery of the largest Spanish office markets in the second half of 2014

continues apace, with Q1 leasing levels in Madrid and Barcelona up by 31% and 16% respectively on Q1

2014.

In Germany, most markets have maintained their strong performance from last year as the economy gains

more momentum and employment figures further improve. Four of the five largest markets saw an increase in

leasing volumes compared to last year, with aggregate levels up 8% on Q1 2014.

Many other Western European office markets also experienced growth in Q1, including Rotterdam (+94%),

Amsterdam (+37%) and Milan (+30%).

In CEE, Warsaw and Budapest put in strong first-quarter performances with leasing volumes up 48% and

18% respectively.

In the absence of further geopolitical or macroeconomic shocks, demand for office space in Europe should pick up from

Q1 levels during 2015. Nonetheless, full-year 2015 take-up volumes are likely to be similar to those in 2014. There

remains a clear occupier preference for modern, highly accessible space to drive productivity and increase efficiency.

Selectively stronger office leasing activity in Asia Pacific

The 5% year-on-year increase in gross absorption in Asia Pacific in the first quarter came mostly from local corporates,

second-tier financial institutions, a select number of MNCs and technology-related firms:

India has seen vigorous growth in occupier activity (Bangalore witnessed the highest volume in the region).

Take-up strengthened in most Indian Tier I cities, driven by the expansion of IT and e-commerce firms.

China experienced sustained demand from domestic occupiers and select MNCs (e.g. professional services

firms). Shanghai was the standout market.

One-quarter of take-up in the Asia Pacific region related to pre-commitments to new completions (mainly in

Manila, Tokyo, Singapore).

Expansion demand picked up in Hong Kong (e.g. asset management, hedge funds and banks) and Tokyo

(from IT-related firms).

Sydney (supported by tech-related sectors) and Melbourne accounted for the bulk of take-up in Australia.

JLL is cautiously optimistic that office leasing volumes will continue to improve (by around 15%) in 2015, with China and

Asia Pacific’s financial centres remaining stable, and India, Australia and South East Asia markets providing some

uplift. Domestic financial firms, technology and offshoring should remain active.



Global Office Demand – Net Absorption Trends, 2004-2015

24 markets in Europe; 25 markets in Asia Pacific; 44 markets in the U.S. Asia relates to Grade A only. Source: JLL, April 2015

Global Office Completions, 2000-2017

24 markets in Europe; 25 markets in Asia Pacific; 44 markets in the U.S. Asia relates to Grade A only. Source: JLL, April 2015

-5

0

5

10

15

20

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

mill

ions

sq

m

Pro

ject

ion

0

5

10

15

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015(F)

2016(F)

2017(F)

U.S. Europe Asia Pacific

mill

ions

sq

m

Average



Office Supply Trends

Office Construction

Construction is rising

Levels of new construction are steadily rising, with global new deliveries expected to be one-third higher in 2015 than

last year, at close to 15 million square metres. This is forecast to increase to close to 16.5 million square metres in

2016, representing the highest level since 2009.

Developer confidence in the United States

Increasing developer confidence in the U.S. has further boosted construction activity, although levels are still 22% below

the 2007 peak. Houston continues to have the highest levels of new construction, but the pace is slowing. Developers

are particularly focused on the tech hubs of Silicon Valley, Seattle and Austin; however, markets like Denver, Dallas

and Phoenix are also witnessing notable increases in new development.

Investors boost development in Europe

Office completions in Europe are expected to pick up considerably towards the end of the year, with full-year 2015

completions forecast to climb to 4.9 million square metres, the highest level since 2010. Increasing development levels

underline the strong demand for modern space in most markets. Development has also been fuelled by improving

funding conditions and growing investor appetite to enter into development rather than direct trading, given that

competition and pricing for prime office product has increased significantly in many markets.

Asia Pacific set for sharp rise in construction

Asia Pacific Grade A office stock additions were up 49% year-on-year in Q1 2015, with 43% of the total in India and

14% in China. At 6.1 million square metres in 2015, new construction volumes will be nearly 80% higher than in 2014.

Office Supply Pipeline – Major Markets, 2015-2016

Covers all office sub-markets in each city. Tokyo – CBD - 5 kus Source: JLL, April 2015.

0 5 10 15 20 25 30 35 40 45

Los AngelesNew York

Washington DCMadridSeoul

StockholmChicago

FrankfurtToronto

BrusselsSan Francisco

BostonParis

SydneyLondon

Hong KongMoscow

TokyoBeijing

SingaporeMumbai

DubaiSao Paulo

Mexico CityShanghai

Completions as % of existing stock

2015 2016



Office Vacancy

Vacancy rates projected to fall

The global office vacancy rate (across 98 markets) has remained stable at 12.7%, but is projected to decline steadily to

below 12.5% by the end of 2015, driven primarily by a further drop in U.S. vacancy rates. With a declining proportion of

readily-available space in Grade A buildings, tenants are facing increasing challenges in procuring space.

U.S. vacancy to fall below 15% by year-end

U.S. vacancy is at its lowest post-recession level at 15.6% and is expected to fall below 15% by year-end as corporate

expansion accelerates. Single-digit direct vacancy is a feature of Salt Lake City, New York, San Francisco and

Portland.

Canada’s office market sees vacancy rates rise

Canada’s national vacancy rate increased by 60 basis points and reached a cyclical high of 10% in Q1, a rate last seen

a full decade ago. Calgary is feeling the effects of falling oil prices and several oil companies have been forced to put

capital intensive projects on hold and cut their workforces. Meanwhile, Toronto also recorded negative net absorption in

the first quarter, pushing the city’s vacancy rate to 9.8%.

High levels of new supply in 2015 in major Latin American markets

For both Mexico City and Sao Paulo’s office markets, an onslaught of deliveries coming online will test their markets.

Total projected completions for 2015 and 2016 amount to nearly 20% of each city’s existing inventory – with the majority

of the volume to be delivered for both cities in 2015. Moreover, the great bulk of the incoming new space has yet to be

leased. Mexico City seems currently better positioned in terms of macroeconomic fundamentals and tenant demand to

absorb the additional space.

Europe vacancy falls

The European vacancy rate in the first quarter, at 9.5%, fell for the first time since late 2012. This was mainly due to a

decline in available space in Western Europe, where the rate decreased to 8.8% (falling below the 9% mark for the first

time since Q2 2009). The shortage of quality space in prime locations is intensifying, with the supply squeeze

particularly noticeable in markets such as London (4.8% vacancy), Munich (6.5%) and Hamburg (6.9%).

Dubai to see new supply in 2015

Despite high current vacancies (23%), much of the vacant space in Dubai is in secondary-quality buildings, many of

which are in strata-title ownership and of little interest to major corporate occupiers. The lack of high-quality space will

result in the delivery of a number of new office projects during 2015, some of which have been pre-leased.

Single-digit vacancy in Asia’s key markets

Most major Asian markets are still recording single-digit vacancy levels, with the lowest rates seen in the CBDs of Hong

Kong, Tokyo, Manila and Jakarta (<4%). The exceptions include the Shanghai decentralised market and most Indian

and Australian cities, where levels generally range between 10% and 20%. Regional vacancy has declined to 10.8%

but, with increasing new supply, it is likely to be pushed back over the 11% mark by year-end.



Office Vacancy Rates in Major Markets, Q1 2015

Regional vacancy rates based on 49 markets in the Americas, 24 markets in Europe and 24 markets in Asia Pacific. Covers all office submarkets in each city. All grades except Asia and Latin America (Grade A only). Tokyo relates to CBD – 5 kus. Source: JLL, April 2015

Global and Regional Office Vacancy Rates, 2009-2015

44 markets in the Americas, 24 markets in Europe, 25 markets in Asia Pacific. Grade A space vacancy only for Asian markets Source: JLL, April 2015

0

5

10

15

20

25

Tor

onto

San

Fra

ncis

co

New

Yor

k

Mex

ico

City

Bos

ton

Los

Ang

eles

Chi

cago

Was

hing

ton

DC

Sao

Pau

lo

Lond

on

Par

is

Sto

ckho

lm

Bru

ssel

s

Fra

nkfu

rt

Mad

rid

Mos

cow

Tok

yo

Bei

jing

Hon

g K

ong

Sin

gapo

re

Syd

ney

Sha

ngha

i

Seo

ul

Mum

bai

Europe 9.5% Asia Pacific 10.8%Americas 15.1%%

Quarterly movement

Increased

Decreased

Stable

Global 12.7%

8

10

12

14

16

18

Q4

2009

Q2

2010

Q4

2010

Q2

2011

Q4

2011

Q2

2012

Q4

2012

Q2

2013

Q4

2013

Q2

2014

Q4

2014

Vac

ancy

Rat

e (%

) Americas

Asia Pacific

Europe

GLOBAL

17.9%

15.1%

14.4%

12.7%

11.9%

10.8%

11.9%

10.3%

9.5%

Q1

2015



Office Rental Trends

Rental growth still moving at a steady pace

Rental growth continues to move at a steady pace, with the annual rate of growth on prime office assets across 24

markets standing at just over 3%. Sustained global growth, job creation and the diversity of demand sectors will power

further growth in rents; over 4% per annum growth rate for the full-year 2015 is projected across the same 24 markets1:

The U.S. is seeing more consistent rental growth in 2015. Landlords are responding to rising demand by

aggressively increasing rents, with quarterly rental growth at 3.1%, the highest level in the current cycle.

Tech-rich cities, such as San Francisco and Boston, are now among the world’s top rental performers.

Net effective rents increased in most Asia Pacific markets in Q1, with average growth picking up to 0.6%

quarter-on-quarter (versus 0.2% in Q4 2014). Growth on an annual basis averages 2.6%. Tokyo and

Sydney are forecast to be the top-performing large markets in the region in 2015 but, following a strong 2014,

rents in Singapore will likely start correcting this year due to upcoming supply.

In Europe, a decline in Paris and Moscow’s prime rents dragged down the weighted European Office Index

by -0.6% in Q1 2015. Nonetheless, we expect European rental growth to pick up again in the quarters ahead

due to the combination of: an intensifying supply squeeze boosting rental values in some markets; a recovery

in markets such as Madrid; and a strong performance from most UK cities and the top German office markets

(led by Munich). London is likely to be the standout market in Europe in 2015. Moscow continues to see

downward pressure on prime rents, although there are expectations that rents will stabilise within the next

couple of quarters.

Prime Offices – Projected Changes in Values, 2015

*New York – Midtown, London – West End, Paris - CBD. Nominal rates in local currency. Source: JLL, April 2015

1 Excludes Moscow which, due to the sharp falls in rents, is distorting the average

+ 10%

+ 5-10%

+ 0-5%

- 0-5%

- 5-10%

Sydney, London*, Boston Chicago, Los Angeles, New York* San Francisco, Madrid, Beijing

Tokyo

Capital ValuesRental Values

Hong Kong, Shanghai, Dubai, Toronto, Washington DC, Mexico City Stockholm, Seoul, Paris* Brussels, Frankfurt

Mumbai, SingaporeSao Paulo

Tokyo, Madrid

London*, Sydney, BostonChicago, Los Angeles, New York* San Francisco, Seoul, Beijing

Paris*, Shanghai, FrankfurtDubai, Toronto, Washington DCMexico City, Stockholm, BrusselsHong Kong

Mumbai, Singapore

Sao Paulo

- 10-20% Moscow Moscow



Prime Offices – Rental Change, 2010-2015

Prime office rental growth: unweighted average of 25 major markets. Source: JLL, April 2015

Prime Offices – Rental Clock, Q1 2014 v Q1 2015

Based on rents for Grade-A space in CBD or equivalent. U.S. positions relate to the overall market Source: JLL, April 2015

0

1

2

3

4

5

6

7

8

9

10

2010 2011 2012 2013 2014 2015

8.9%

7.9%

1.9%1.2%

Ren

tal c

hang

e (y

-o-y

%)

4%

3.1%

Americas EMEA Asia Pacific

Q1 2015

Rental Value

growth slowing

Rental Value

growth

accelerating

Rental Values

bottoming

out

Rental Values

falling

Q1 2014

Sao Paulo

New York

Stockholm

Hong Kong, Beijing

Berlin

Paris, Brussels, Istanbul

Washington DC

Dubai, Milan

Chicago

Moscow

Johannesburg

Shanghai, Houston

San Francisco

Dallas

London, Los AngelesTokyo, Boston

Rental Value

growth slowing

Rental Value

growth

accelerating

Rental Values

bottoming out

Rental Values

falling

Brussels, Paris, Madrid, Beijing

Hong Kong, Sydney

Singapore

Seoul

Boston, Los Angeles

Istanbul

Shanghai

Amsterdam

Johannesburg

London

Milan

Moscow

Chicago, Dubai Washington DC

Houston

Toronto

Mexico City

Sao

Paulo

Dallas

San Francisco

Berlin, Frankfurt

New York

Stockholm, Tokyo

Amsterdam

Frankfurt

Madrid, Sydney

Singapore

Seoul

Toronto

Mexico City

Mumbai

Mumbai



Retail Markets

U.S. retail markets pause, but stronger tailwinds gather

With only modest net absorption in Q1, the U.S. retail vacancy rate inched down to 6% and rents rose by a marginal

0.3%. Mall vacancy increased 10 basis points quarter-on-quarter and net absorption represented only one-third of total

new supply in Q1. Among U.S. shopping centre types, power centres are still witnessing the tightest overall market

conditions, registering total vacancy of 4.7% in Q1. Several standout markets, like Miami, New York, Houston, Dallas,

Fort Lauderdale, Boston and San Francisco, continue to experience the strongest growth conditions typical of a rising

market, as rents see assertive growth and vacancy levels continue to compress.

Positive retail sales growth outlook for Europe as confidence continues to improve

Consumer sentiment in Europe has reached its highest level since 2007 and the region’s retail sales are anticipated to

expand by 2.4% in 2015, driven by strong growth in the CEE and Germany. Sales growth up to 2017 is expected to

remain particularly robust in Turkey and the CEE. The outlook for Europe’s recovery markets has also improved

significantly, especially in Spain and Ireland.

Europe’s recovery markets outperform

During Q1, appreciable growth in prime high street rents was recorded in Dublin (+8.7%), Rome (+6.7%), Madrid

(+4.3%) and Milan (+2.7%), indicating strengthening retailer interest in Europe’s recovery markets. However, there was

a notable fall in rents in Bucharest (-7.7%), St. Petersburg (-4.5%) and Helsinki (-2.3%). Prime high street rents are

anticipated to grow robustly in 2015 in UK cities (notably London, Leeds, Birmingham and Manchester) and key

German cities (such as Munich and Hamburg).

International retailers target Japan, Australia and South East Asia

Greater China saw healthy demand maintained from F&B and lifestyle tenants in the first quarter, although luxury brands

are increasingly cautious, with Chanel, for example, recently cutting prices (and other brands are likely to follow suit).

Tokyo, Australia and South East Asia remain the target of international brands.

For the next 12 months, new-to-market foreign retailers and growth of inbound tourism (particularly from China) should

continue to support major Asia Pacific retail markets.



Prime Retail – Rental Clock, Q1 2015

Prime Industrial – Rental Clock, Q1 2015

Relates to prime space. U.S. positions relate to the overall market Source: JLL, April 2015

Rental Value

growth slowing

Rental Values

falling

Rental Value

growth

accelerating

Rental Values

bottoming

out


Delhi

Milan

Dubai

Mumbai, Washington DC

Los Angeles

Singapore, Hong Kong

Miami, New York

Houston, Boston

Paris

Shanghai, Beijing

Madrid

Sydney, Chicago

Berlin, San Francisco

Moscow

London

Tokyo

Rental Value

growth slowingRental Values

falling

Rental Values

bottoming

out

Warsaw


Rental Value

growth

accelerating

Amsterdam, Paris

Boston

Frankfurt

London, Chicago

Los Angeles

Singapore

Dallas

Shanghai

Tokyo, Hong Kong

New York, Atlanta, San Francisco

Madrid, Sydney

Beijing

Houston, Philadelphia

Moscow



Industrial Warehousing Markets

Realignment to omni-channel distribution boosts warehousing demand

There is significant pressure on companies to implement seamless omni-channel distribution services and this is

boosting warehousing demand across the globe. While occupational demand is healthy across all types of warehouse

space, the shift towards omni-channel distribution means a particular push on mega-sheds and smaller urban/urban

fringe distribution and sortation centres to support a seamless customer experience and, in particular, shorter delivery

times.

U.S. industrial reaches a cyclical ‘sweet spot’

Market conditions in the U.S industrial market remain particularly bullish, with vacancy finishing the first quarter at 6.8%,

a 10-year low. Fifteen of 50 U.S. markets had vacancies under 6.0%. Eight, including Seattle, Los Angeles and Salt

Lake City, had vacancies below 5%; rental growth in these markets is expected to strongly outpace the national average

this year.

Given active tenant requirements, nearly all U.S. markets have scenarios where their construction pipelines will be

unable to keep up with demand in 2015. However, certain markets which are leading development activity – such as the

Inland Empire – are setting the stage for likely vacancy increases moving into 2016.

Early signs suggest that the U.S. industrial market will continue 2014’s impressive momentum into 2015. Accelerating

global GDP growth, the high value of the U.S. dollar, a progressively recovering housing market and population growth

all favour the sector.

Build-to-suit development prevails in Europe

Construction activity in Europe continues to trend upwards, with full-year 2015 completion volumes likely to approach the

record 2008 levels. However, speculative development remains stubbornly absent. Excluding Russia, only 10% of

warehousing floorspace under construction is currently speculative and, despite the improved economic outlook, we do

not anticipate a significant return to speculative development in Europe this year.

Rental growth prospects brightening in Western Europe

Annual rental growth in Europe rose to 2.1% in Q1 2015, up from 0.9% in the previous quarter. Growth was driven

entirely by Western European markets with year-on-year increases recorded in London (+11.5%), Manchester (+4.8%),

Dublin (+4.2%), Barcelona (+4.0%), Antwerp (+2.2%), Madrid (+2.2%), Munich (+1.6%) and Birmingham (+0.7%).

By contrast, they fell by 17.9% in Moscow.

Continued robust occupational activity and an improving economic environment are expected to support rental growth of

2.1% per annum in Western European markets and 1.1% per annum in CEE markets over the five-year horizon.

Stable warehousing demand in Asia Pacific

Third-party logistics companies buoyed leasing activity across Asia in Q1, although demand remained below trend in

Australia. The largest quarterly rental growth was seen in Tokyo (4.2%) and Hong Kong (2.2%) on healthy demand

and high occupancy rates, but rents were mostly stable in China, Singapore and Australia.



Hotel Markets

Strong start to 2015 for global hotel investment market

The first quarter of 2015 got off to a robust start for the hotel investment market, with transaction volumes rising by more

than 80% to US$20.4 billion. The sharp increase in deal volume was overspill from the previous two quarters’ activity

and the Q1 figure equates to 30% of the US$68 billion we expect to transact during 2015. Investment funds and private

equity firms were the most active buyers during the first quarter, securing 37% of all deals, followed by hotel operators

(19%) and REITs (15%).

Hotel Investment Volumes, Q1 2015 v Q1 2014

US$ billions

Q1 2015 Q1 2014 % change

Americas 11.4 6.1 87%

EMEA 7.5 3.4 122%

Asia Pacific 1.5 1.8 -18%

Total 20.4 11.3 80.7%

Figures include hotel property transactions of US$5 million and above and exclude note sales, land sales, foreclosures and recapitalisations.


EMEA posts strongest growth

EMEA saw the strongest growth of all global regions, up 122% to US$7.5 billion. Portfolio deals represented 73% of total

volumes compared to 27% by single-asset sales. Investment into the UK hotel market accounted for 36% of all EMEA

deals, closing the quarter at US$2.7 billion. Appetite for UK hotel portfolios remains strong, highlighted by private equity

firm, Lone Star, completing a £1 billion acquisition. The largest portfolio deal to close in EMEA during the first quarter

was the sale of Groupe du Louvre by Starwood Capital to Shanghai-based Jin Jiang Hotels for US$1.5 billion.

EMEA is firmly on track to achieve the US$24.7 billion in hotel transactions forecast for 2015, having already secured

30% in the first quarter.

Offshore capital driving growth in Americas

The Americas experienced robust growth in Q1, with investment volumes increasing almost 90% to US$11.4 billion. The

bulk of buyers came from investment funds and private equity firms as they continue to pursue hotel portfolios. Offshore

capital is also driving significant hotel transaction volumes, especially in key markets such as New York, Los Angeles

and Miami. One of the most notable deals to date in 2015 has been the sale of the Waldorf Astoria New York for

US$1.95 billion.

Japan shines in Asia Pacific

Hotel transaction volumes in Asia Pacific reported double-digit declines during the first quarter, down 18% to US$1.5

billion. Despite this, and accounting for almost 55% of all deals in the region, the spotlight remained firmly on Japan with

its volumes up 108% to US$808 million. We expect investor interest to remain buoyant in Japan throughout the year,

led by an increase in debt and also investor confidence in hotel performance growth.

In second place in volume terms, Australia secured 20% of all deals in the region at US$304 million and is also forecast

to remain an active market during 2015. The most significant deal to date in 2015 has been the sale of the Australia’s

most popular snow holiday destination - Perisher Ski Resort –for US$135 million.

Positive outlook tempered with caution



It has been an exceptional start to the year for the global hotel investment market driven by activity in the U.S. where the

outlook remains very positive. Q2 will be muted in comparison and, while the industry continues to attract attention from

global investors, there are some regional variances and confidence is tempered with caution evident in some quarters of

the global economy and the rapid growth in supply in some markets, which is clearly ahead of demand growth.



Residential Markets

Demographic dividends for U.S. multifamily sector, but mounting new supply

The apartment market in the United States has continued to outperform. It managed to close 2014 maintaining its very

high occupancy rate and rental growth in the 3.5%-4% range. Economic growth and evolving demographics have

helped to sustain strong demand levels to the multifamily rental segment, as have structural changes in the national for-

sale housing market.

Despite the much larger volume of completions and still ongoing build-up of the supply pipeline, national vacancy has

held exceptionally low at the 4% level as 2015 opened. Some modest further declines in vacancy are possible until late

2015 or early 2016, at which time the vacancy rate is likely to have reached its cyclical low in the high 3% range.

As new project deliveries increase even further in 2016, reaching a cyclical peak in 2017, demand for units will begin to

fall short. Effective rental growth is forecast to decelerate from the mid to high 3% range in 2014 to the low 3% band in

2015, followed by further progressive annual moderation in 2016 and 2017. Even so, the cumulative performance for

the sector for this entire decade is expected to be a historically robust one.

UK market moderates

The UK residential market has continued to show signs of moderation in both activity and pricing in the run-up to the

general election in May. This is particularly the case in prime locations exposed to a proposed 'mansion tax', where

activity is down by around 35%. However, the mainstream market is very well-supported in economic terms and it is

widely expected that we will see mid single-digit price growth nationally over 2015, irrespective of the election outcome.

Investment and development activity remains buoyant, with still strong demand from domestic and international capital

keen to obtain greater exposure to the sector. The first multifamily style assets in the UK will complete later this year,

marking a watershed moment in the evolution of the asset class in the UK.

Demand pressures in Paris

The residential property market in Paris is currently subject to considerable pressure from demand with a lack of new

supply/developments. Prices have held up despite the weak economic climate, as shown in limited per annum drops of

1.1% in Paris intra-muros and 1.4% at the regional level. The Paris region as a whole is considerably more resistant to

the slowdown than the rest of the country in terms of pricing. A few domestic institutional investors (SNI, Caisse des

Dépôts) and foreign investors (Patrizia, Akelius) have demonstrated a renewed interest in the sector, seeking long-term

investments to take advantage of potential capital gains. The market is expected to continue to grow from its circa €3

billion per annum base, subject to stock availability.

Robust investor demand in Germany, Sweden and Netherlands

The residential transaction market in Germany started the year with a bang with Deutsche Annington’s purchase of key

competitor GAGFAH. This will result in a residential property company with around 350,000 apartments and a market

capitalisation of almost €12 billion. Even without this merger, the quarterly transaction volume would have been around

€2.9 billion, still around 20% above the five-year average.

Market activity in Germany is dominated by re-sales and portfolio rationalisations evidenced by the second largest deal,

the sale of a Berlin-based residential portfolio with 5,800 apartments owned by Deutsche Wohnen AG to the Israeli

opportunistic investor, ADO Properties. Demand for development projects and new-build apartment investments in the

major cities remains robust; €340 million was invested in residential building projects still under construction in the first

quarter, compared to €230 million in Q1 2014.



After a very strong 2014 for investment in Sweden’s residential sector, the first quarter of 2015 continued in the same

vein. Demand remains high for investment properties as well as development rights at various stages of execution.

Stock availability, particularly for quality assets, is still a challenge for many investors. However, there have been two

changes that will stimulate new construction of rental units – relieved noise regulations for new construction and

investment aid for the production of small apartments. Both are expected to foster further development activity and new

opportunities for investors.

Investment volumes in the residential market in the Netherlands showed a strong start of the year. Total investment

volume amounted to €710 million, which is a 189% increase year-on-year. The largest transaction was the acquisition

of Round Hill Capital who bought the WIF (Wooninvesteringsfonds) portfolio comprising 3,786 units – the portfolio traded

for approximately €365 million.

Dubai residential market reaches cyclical peak

Following two years of unsustainable price growth and fears of another bubble, prices and rents have stabilised in the

Dubai residential market over the past six months. Average prices declined by around 2% in Q1 with projections that

prices will fall by up to 10% during the full-year 2015, before increasing again from 2017.

Policy restrictions remain in place in several Asian markets

Policy restrictions have remained in place in various Asia markets to curb speculation. Nevertheless, China has seen

improved buying sentiment after loosening of lending requirements in late March. End-user demand in Hong Kong has

maintained its strength despite further tightening of mortgage lending rules in late February.

We anticipate steady or slightly stronger sales activity in most Asian markets this year, buoyed by prevailing low interest

rates. Prices are likely to be mostly stable over the next 12 months.



Key Investment Transactions in Q1 2015

Europe, Middle East and Africa

Country City Property Sector

Sales price

US$m Comments

Belgium Brussels Gateway Office 158 Belgian REIT Befimmo has agreed to acquire the 34,000 sq.m. Gateway office project at Brussels airport from developers Codic and Immobel. Deloitte Services and Investments has already signed an 18-year lease for the entire building.

Czech Republic Prague Palladium Shopping Centre

Retail 642

Union Investment has acquired a majority stake in the shopping centre for its open-ended real estate fund UniImmo: Deutschland. Completed in October 2007 with a gross floor area of 115,000 sq m, of which 41,000 sq m is dedicated to retail and 18,000 sq m to office use, the almost fully-let Palladium is the largest shopping centre in Prague's central retail district.

France Paris Qwartz Shopping Centre

Retail 225

French REIT/SIIC Altarea Cogedim has bought out its co-investor Orion Capital in this regional shopping centre in Greater Paris. According to Altarea, the deal was based on a 100% valuation of around €400m. Altarea and Orion Capital were previously 50/50 partners.

Germany Various Supermarket portfolio

Retail 307 Eurocastle Investment Ltd has sold 107 retail properties totalling approximately 229,000 sq m located throughout Germany to Patrizia Immobilien AG for €286m.

Italy Milan Porta Nuova Mixed 1,014 Hines, on behalf of a consortium of initial investors, has agreed for Qatar Holding LLC, a wholly-owned subsidiary of Qatar Investment Authority (QIA), to acquire the remaining 60% interest in the firm’s Porta Nuova development.

Multiple Various

Groupe du Louvre and Louvre Hotels Group

Hotels 1,455

Starwood Capital Group has completed the sale of the 90,000-room Groupe du Louvre and Louvre Hotels Group to Shanghai-based Jin Jiang International Hotels Development Co., Ltd. Jin Jiang established a partnership with Louvre some time ago, building brand awareness across European and Chinese markets. Jin Jiang already owns or operates 1,700 hotels and 250,000 rooms across Asia.

Multiple Various Jurys Inn Portfolio

Hotels 1,026

Private equity investor Lone Star Funds has purchased the Jurys Inn hotel chain from Mount Kellett Capital Management. The acquisition includes the brand, along with an estate of 25 hotels in the UK, five in Ireland and an outpost in Prague. Of the estate, three hotels in London and at Heathrow Airport are operated under Hilton flags, a deal agreed a year ago in a bid to enhance international guest numbers.

Multiple Various Bewleys and Moran Hotels

Hotels 515 Dalata Hotel Group has purchased 10 hotels with over 2,500 rooms that operate as Bewleys Hotels and Moran Hotels from T&S Taverns Ltd. The hotels are located in Ireland and the UK.

Netherlands, France

Various Corio Klepierre Shopping Centre Portfolio

Retail 1,127

Corio has sold 10 shopping centres in the Netherlands and one in France. The buyer of the Dutch portfolio is a JV between New York-based private equity group Mount Kellett and Dutch Sectie5 Investments, which structures high-yield retail real estate funds. The purchaser of the French asset, in the Paris suburbs, was not disclosed.

Spain Madrid Gran Vía 32 Mixed 451

Amancio Ortega, through his investment vehicle Grupo Pontegadea, has bought this prime retail and office building from international investors, led by advisor Drago Capital, which include Canada’s PSP Investments, Dutch pension fund APG and British insurer Phoenix Group.

Sweden Skärholmen Skärholmen Centrum

Retail 420 Grosvenor, backed by Finnish insurer Varma, has bought one of Sweden’s largest shopping centres from the Royal Bank of Scotland. The purchase price was not announced but is estimated to be in the region of US$420m.



Asia Pacific


Sales

price

US$m Comments

Australia Sydney Liberty Place Office 189

Blackstone Property Partners Asia and Canadian real estate fund manager Ivanhoé Cambridge have jointly acquired a 25% stake in Liberty Place from LaSalle Investment Management. The 42-storey office tower complex is located in the heart of Sydney on Pitt Street through Castlereagh Street. Ivanhoé Cambridge has US$44bn in real estate under management and Liberty Place is its first direct investment in Australia.

Australia Various Arena Portfolio Office 196

Anton Capital has purchased the office portfolio located in various locations in Australia from Arena Investment Management. The five-asset portfolio includes the Victoria Police Centre at 637 Flinders Street, Melbourne and Customs House in Fremantle.

China Beijing EC Mall Retail 401

The Link Real Estate Investment Trust (The Link REIT), Hong Kong’s first listed REIT and Asia’s largest, has made its first investment into mainland China with the acquisition of a shopping mall in Beijing. The mall is well-positioned to capitalise on the growing spending power of local residents of Zhongguancun, which is often referred to as ‘China’s Silicon Valley’.

India Chennai Latter's Business Park

Office 193

U.S.-based private equity fund New Vernon Capital has acquired Shapoorji Pallonji's 51% stake in the Chennai business park. New Vernon Capital, which already had a 49% equity stake in the office asset, exercised its buy-back option on the back of growing investor sentiment in India. The private equity investor now has 100% ownership of the asset.

Japan Kyoto Aeon Mall Kyoto

Retail 180

In a related-entity deal, AEON REIT Investment Corporation has purchased the retail mall from its parent Aeon Mall Corporation for JPY 21bn. Aeon Mall Corporation purchased this property in 2013 from Shimizu Corporation. The mall was completed in June 2010, has a total lease area of 50,000 sq m and is located close to Kyoto Station.

Japan Kyoto Rihga Royal Hotel Kyoto

Hotels 86 The 482-room hotel has been sold by RIHGA Royal Hotels to private equity firm Fortress Investment Group.

Japan Multiple Granvista Hotels & Resorts

Hotels Undisclosed The Granvista Hotels & Resorts portfolio of eight hotels has been sold by Regional Economy Vitalization Corporation of Japan (REVIC) to The Sankei Building Company and J-Will Partners Company for an undisclosed price.

Japan Tokyo Meguro Gajoen Office 1,175 Mori Trust has sold this asset to LaSalle Investment Management backed by China Investment Corporation in a JV deal for JPY 140bn. The property was originally acquired from Lone Star Funds in 3Q 2014 for JPY 130bn.

Japan Tokyo Tokyo Square Garden

Office 798

In a related-entity deal, Tokyo Tatemono Company Limited has purchased Tokyo Square Garden from its special purpose vehicle for JPY 95bn. The office building was completed in March 2013, comprises 24 storeys and four basement floors, and is located in the heart of the Yaesu area, close to Tokyo Station.

Japan Tokyo Aoyama Building

Office 386

GreenOak Real Estate has purchased this office building from Mitsubishi Jisho Investment Advisors. GreenOak is a Tokyo-based investment fund formed by former executives of Morgan Stanley and has been investing predominantly in mid and smaller-sized office buildings in Tokyo’s CBD.

Japan Tokyo GranTokyo South Tower

Office 326

Goldman Sachs Asset Management has acquired a portion of the property from Mitsubishi Estate. The NOI yield is estimated to be around 2.6%, which is one of the most aggressive cap rates for Tokyo office transactions in recent years.

Japan Tokyo

Former Fukagawa Governmental Warehouse

Industrial 253

The Ministry of Agriculture, Forestry and Fisheries has sold the former Fukagawa Governmental Warehouse to Daiwa House Industry. Three bids were submitted for the industrial building which was transacted at a local price of JPY 30bn.

Japan Tokyo Namikikan Retail 210

Ehime-based Imabari Shipbuilding Co., Ltd has acquired the asset from Elliot Advisors. Imabari Shipbuilding has set up two separate asset management companies for this acquisition. The property is located in the heart of the Ginza shopping district, which is recognised as the most prestigious retail precinct in Japan.

Japan Tokyo

Aoyama Bell Commons & Kita Aoyama Tees Building

Retail 204

Mitsubishi Estate has purchased the property, located on the fringe of Aoyama district and next to Omotesando and Harajuku retail districts, from Angelo, Gordon & Co. The buyer is to redevelop the property into a mixed-use retail and office development.




Sales

price

US$m Comments

Japan Tokyo Shibuya Sakuragaoka Square

Office 143

Mitsubishi Estate has acquired the office property from Sapporo Real Estate. The office building is occupied by TAC, one of the biggest preparation school networks in Japan, and is located near Shibuya station, one of the largest train hubs in Tokyo’s CBD.

Japan Yokohama Queen's Square Yokohama

Office 252

SC Realty Private REIT has acquired a portion of the property from Sumitomo Mitsui Finance and Leasing. Queen's Square Yokohama consists of three office towers and a hotel tower, with SC Realty Private REIT purchasing a 25% stake in two office buildings and the hotel.

Malaysia Selangor Tropicana City Mall and Office Tower

Mixed 149

In a de-gearing exercise, Tropicana Corporation Berhad has sold the Tropicana City Mall and Office Tower to CapitaMalls Malaysia Trust for RM 540m. The property is located in Petaling Jaya, Selangor and comprises a four-storey shopping mall with three basement floors, along with a 12-storey office building.

Singapore Singapore AXA Tower Office 863

A consortium led by Perennial Real Estate Holdings (PREH) has acquired AXA Tower in downtown Singapore. PREH is a Singapore-based developer, owner and manager of properties, most of which are in China and Singapore. PREH has purchased a 31.2% equity stake in the building while HPRY1 Holdings, a shareholder of PREH, has also bought a 10.1% interest in the tower.

Singapore Singapore Hotel Grand Chancellor Singapore

Hotels 183

Following an EGM, Hotel Grand Central has confirmed the sale of Hotel Grand Chancellor Singapore to Canali Logistics for SGD 248m. The 328-room hotel, located in the Little India neighbourhood, was opened in 2010 after Hotel Grand Central had successfully tendered for the land in 2007.

Singapore Singapore Capri by Fraser Changi City

Hotel 150

A unit of Frasers Centrepoint Limited has acquired Capri by Fraser, Changi City for SGD 203m from Ascendas Frasers Private Limited, an equal JV between Ascendas Land (Singapore) and Frasers Centrepoint. The hotel has 313 rooms and sits on land with a lease term balance of about 54 years.

Americas


Sales

price

US$m Comments

Brazil Sao Paulo Mais Shopping Largo 13

Retail 26 Brazilian owner Bradesco Asset Management has sold a 40% interest in the over 13,000 sq m retail asset to Israel-based investor Gazit-Globe.

Canada Toronto Loblaws Industrial 66 REIT Choice Properties has acquired the 86,000 sq m warehouse asset located in the Pickering submarket from corporate owner Loblaw Companies at a reported 6.5% initial yield.

Canada Vancouver 1550 Alberni Street

Office 38 Property firm Westbank Projects has purchased the 9,300 sq m CBD office building from Wicklow West Holdings.

Mexico Mexico City Utah Office Office 67 Mexican REIT Fibra Uno has acquired the office asset located in the Bosques de las Lomas area at a reported 8.8% initial yield.

Mexico Guadalupe Rockwell Automation

Industrial 58 Macquarie Mexican REIT (MMREIT) has purchased the industrial facility on Av. Frisa from U.S. REIT Ridge Property Trust at a reported 9% initial yield.

U.S. Chicago 58-104 East Oak Street

Retail 176 Spanish investor Pontegadea has purchased the 5,400 sq m urban retail asset in the Gold Coast neighbourhood from DRW Trading.

U.S. Houston 1301 Fannin Office 150 Amerimar Properties has acquired the 74,000 sq m CBD office tower from Griffin Properties.

U.S. Key West

Waldorf Astoria Casa Marina Resort Key West

Hotels Undisclosed JLL has advised Blackstone on the sale of the 311-room resort to Hilton Worldwide. In a concurrent transaction, Hilton Worldwide has also acquired the 150-room Waldorf Astoria The Reach Resort Key West.

U.S. Las Vegas Showcase Mall III

Retail 140 Unilev Capital has sold the 9,000 sq m retail asset on the Strip to Nakash Holdings.

U.S. Los Angeles Dreamworks Animation

Industrial 185 Studio DreamWorks Animation has sold its over 33,000 sq m property on Flower Street in Glendale to SunTrust Banks.




Sales

price

US$m Comments

U.S. Miami Beach The Royal Palm Miami Beach

Hotels 278 Acting on behalf of KSL Resorts, JLL has sold the 393-room hotel to U.S.-based REIT Chesapeake Lodging Trust.

U.S. Multiple Equity Inns Portfolio

Hotels 1,808

Affiliates of the Whitehall Real Estate Funds have sold the 116-strong Equity Inns Portfolio to ARC Hospitality Trust. The portfolio includes 13,744 rooms across 31 states in the U.S. franchised by Hilton Worldwide, Marriott International and InterContinental Hotels Group.

U.S. New York 1095 Sixth Ave. Office 2,200 Caisse de Dépôt has acquired the 96,000 sq m Midtown office tower from Blackstone.

U.S. New York Waldorf Astoria New York

Hotels 1,950

Hilton Worldwide has completed the sale of the 1,413-room Waldorf Astoria to China-based Anbang Insurance Group. The hotel has been owned by Hilton for 65 years and, as part of the terms of sale, Hilton Worldwide will continue to operate the hotel under a 100-year management agreement.

U.S. San Francisco 50 Fremont Street

Office 629 Institutional giant TIAA-CREF has sold the 76,000 sq m South Financial District office tower to technology industry tenant Salesforce.

U.S. Washington, DC Arch Square Retail 109 Swiss investor AFIAA has purchased this more than 5,000 sq m urban retail property from property firm McCaffery Interests at a reported 3.5% initial yield.



Illustrative Office Occupational Transactions in Q1 2015

Europe

Country City Property Tenant Industry Sector

Floorpsace

sq m

France Paris Rue Joseph Monier (Rueil Malmaison) Peugeot SA - Headquarters Automotive 15,049

France Paris Doublon 9130, Rue Lafayette (CBD) Richemont Holding France Luxury Goods 12,000

France Paris Papillon et Oasis, Avenue de Quebec (Villebon sur Yvette)

GE Energy Power Conversion France

Engineering 10,718

Germany Berlin GSW Hochhaus, Charlottenstrasse Rocket Internet ITES 22,000

Germany Frankfurt Windmühlstrasse Deutsche Vermögensberatung (DVAG)

Banking & Financial Services 31,400

Germany Hamburg Axel Spinger Passage, Caffamacherreihe Bezirksamt Hamburg-Mitte Public Administration 32,000

Germany Munich Landsberger Strasse Stadt München Public Administration 10,000

UK London 6 Pancras Square (West End) Google ITES n/a

UK London 1 New Street Square (City) Deloitte Banking & Financial Services 23,736

UK London Moor House (City) WeWork Construction & Real Estate 15,607

Russia Moscow LeFORT (Decentralised) General Electric Industrial / Financial Services 7,527

Russia Moscow Amber Plaza (Within TTR) ING Bank Banking & Financial Services 5,025

Asia Pacific


Floorpsace

sq m

Australia Melbourne 316-364 Elizabeth Street (CBD) NBN Co Limited Telecommunications 4,647

Australia Sydney 19 Martin Place (CBD) Sparke Helmore Law 5,100

China Beijing China Central Place (CBD) Epson Electronics 6,500

China Hong Kong One Harbour Square (Kowloon East) OOCL Shipping & Logistics 5,100

China Shanghai 100 Bund Square (Puxi) China Minsheng Investment Banking & Financial Services 20,000

India Delhi DLF Building 14, Tower C & D (NH-8) EXL Business Services 9,500

India Mumbai Winchester (East Suburbs) Housing.com E-Commerce / Construction & Real Estate

14,000




Floorpsace

sq m

Japan Tokyo Shinagawa Season Terrace (Minato-ku) Fujitsu Systems East Limited ITES 15,000

Malaysia Kuala Lumpur Capital Square Office Tower 2 (CBD) AIA Banking & Financial Services 12,500

South Korea Seoul Three IFC (Yeouido) IBM ITES 29,216

Americas


Floorpsace

sq m

Brazil Rio de Janeiro R. Assembleia, 100 Infraero Aviation / Public Administration 6,286

Brazil Sao Paulo Av. das Nações Unidas, 17891 Unisys ITES 5,730

Canada Mississauga 6985 Financial Drive Maple Leaf Foods Manufacturing 16,722

Canada Toronto 310-320 Front Street W TD Bank Banking 21,368

Canada Vancouver 468 Terminal Avenue Canada Revenue Agency Government 11,117

Mexico Mexico City Félix Cuevas No. 446 AXA Banking & Financial Services 21,419

Mexico Mexico City Eje 5 Norte BBVA Bancomer Banking & Financial Services 6,738

U.S. Chicago 1200 Lakeside Drive Baxalta Pharmaceuticals 24,229

U.S. New York 200 Park Avenue MetLife Banking & Financial Services 39,948

U.S. New York 85 Broad Street WeWork Professional & Business Services 21,821

U.S. Northern Virginia 1215 S Clark Street U.S. Marshals Service Public Administration 34,467

U.S. Philadelphia 1800 Arch Street Comcast Media 35,024

U.S. Seattle-Bellevue 1101 Dexter Avenue N Facebook ITES 25,405

U.S. Washington DC 1150 15th Street NW Fannie Mae Banking & Financial Services 65,032

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015.

This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are forward-looking involve known and unknown risks and uncertainties that may cause future realities to be materially different from those implied by such forward-looking statements. Advice we give to clients in particular situations may differ from

the views expressed in this report. No investment or other business decisions should be made based solely on the views expressed in this report

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