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Jones Lang LaSalle Spring Cross-Sector Survey Indicates Potential for Investment Activity to Regain Momentum in the Second Half of 2009

Multifamily and Industrial Sectors Appear Most Promising

ATLANTA, April 22, 2009 — In a continuation of the uncertainty that characterized much of 2008, investors and developers in the nationwide retail, office, multifamily, industrial and hotel commercial real estate sectors appear divided as to whether they will increase or reduce their overall investment activity this year compared to last, according to Jones Lang LaSalle’s 2009 Spring Cross-Sector Survey.  While slightly less than a third (30 percent) of those surveyed predict a drop in their investment spending of between zero and 30 percent, a healthy number appear to have a more hopeful look towards the future with more than a third (37 percent) foreseeing their investment activity to rebound by zero to 30 percent.
Jones Lang LaSalle’s spring survey of nationwide property owners, development firms and professional services firm/consultants was completed by planned attendees of the Urban Land Institute’s Spring Council Forum this week in Atlanta, Georgia.  The survey is conducted bi-annually in the spring and fall with comparative results provided in the following findings.
“Our Capital Markets teams in the primary international markets are reporting increasingly positive signs that pricing floors are being reached, with a corresponding uptick in transaction volumes.  This should bode well for the United States where the bid/ask gap still remains wide,” said Michael Zietsman, Managing Director of the Capital Markets Group at Jones Lang LaSalle.  “Buyers have set  pricing levels that are unappealing to most sellers, but it’s only a question of time before sellers move down and buyers move up to create a more efficient market.  We’ve seen this in the London market and I suspect that we are six to eight months behind.”
A lack of liquidity and continued constriction in the availability of debt remains high on the minds of most in the commercial real estate community with a vast majority claiming that is the one factor that will most influence the development/investment activity in the coming year.
While most survey respondents predict performance in all sectors to decline in 2009, pockets of opportunity appear to exist in both the multifamily and industrial sectors.
Multifamily Sector
• More than a third of respondents (38 percent) surveyed this year predict multifamily offers the best potential for outperformance among sectors of anywhere from zero to 30 percent.  That number represents a drop from 52 percent one year ago. Conversely, well over half of all respondents (57 percent) predict multifamily will underperform by as much as zero to 20 percent compared to other sectors in 2009.
Industrial Sector
• A quarter of respondents (26 percent) also predict the industrial sector will outperform other sectors by as much as zero to 20 percent this year.  However, nearly two-thirds of respondents (67 percent) predict the industrial sector would see a decline of zero to 30 percent in comparison to other sectors in 2009. Last year, only 40 percent predicted the same decline.
Office Sector
• Predictions for the office sector are continuing a downward trend in 2009 as a full 100 percent of respondents believe the office sector will underperform in comparison to other sectors by zero to 30 percent this year.  Last year, that number was slightly less than half (47 percent).
Hotel Sector
• A large majority of respondents (87 percent) predict the hotel sector will underperform relative to other sectors by zero to 40 percent in 2009.  This represents an increase from 2008, when 54 percent predicted the same decline.
Retail Sector
• Expectations surrounding the retail sector remain dismal for 2009—today, a full 100 percent of respondents predict the retail sector will underperform compared to other sectors anywhere from zero to 40 percent.  A year ago, more than half of all respondents (56 percent) believed the performance of that sector would decline by zero to 50 percent in comparison to other sectors.
As to the status of the occupancy of their commercial portfolios, respondents were quite clear:  a full 87 percent say occupancy has fallen by as much as zero to 20 percent for this year, compared to 2008.
Jones Lang LaSalle Capital Markets is composed of a broad range of real estate investment debt and equity specialists, and corporate finance experts, working on all property types and in all the major national markets on behalf of major institutional and local investors and developers, as well as corporations.  The firm's Capital Markets professionals are highly skilled at pinpointing and tailoring the right capital solutions for each of these client's needs.   The Investment Sales teams assist investors in developing and executing asset recapitalization strategies for office, industrial, retail, multifamily, healthcare and seniors housing product. The firm’s Real Estate Investment Banking experts raise debt and joint venture equity for investors and developers, and provide derivatives structuring and loan sale advisory services.  The Corporate Capital Markets professionals help corporations develop and execute strategies that bridge their occupancy, capital deployment and financial reporting objectives for their facility portfolios.  The Development and Asset Strategy team specializes in the sale of non-income-producing properties in their various forms from vacant buildings to raw land to entitled parcels and partially completed subdivisions.  The firm's Value Recovery Services assist clients affected by the current financial crisis by creating value while managing risks through evaluating operational and occupancy needs, assisting with challenged assets and liabilities on their balance sheets, providing receivership services, asset management, raising capital through sales-leasebacks and providing leasing and recapitalization strategies for distressed assets. In the past two years, the firm’s Capital Markets team handled $117 billion of transaction volume.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2008 global revenue of $2.7 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.4 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $46 billion of assets under management. For further information, please visit our Web site,
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