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News release

Wilmington, Del

Financial Sector Re-energizing Office Demand says Jones Lang LaSalle

Financial institutions rise to the forefront of market activity as a result of legislation and increased compliance costs

WILMINGTON, Del., Sept. 13, 2012 — With the majority of Delaware-based law firms having already secured long-term leases, a demand shift has taken root in Wilmington’s Central Business District (CBD). According to Jones Lang LaSalle’s (NYSE: JLL) inaugural Wilmington Skyline Review, the financial sector is now driving leasing activity in this strategically sought-after destination.

The report, which offers a unique look at 27 premier buildings totaling 7.4 million square feet from the CBD’s historic Rodney Square to its revitalized Riverfront, shows the impact of legislation, increased compliance costs and growing liquidity buffers on real estate strategy within the financial sector. While finance-anchored properties saw their fifteenth consecutive quarter without negative absorption, law firm-anchored buildings experienced 140,060 square feet of negative net absorption over the past 12 months. As a result, law firm relocations, subleases and consolidations drove a 320-basis-point increase in total vacancy, which has reached 17.9 percent.

“While law firm subleases and relocations are applying upward pressures on market vacancy, evolving workforce and real estate strategies within the financial sector are bringing new tenant requirements to the market — a trend that will drive positive net absorption,” explained Jones Lang LaSalle Vice President Blaise Fletcher, a Northern Delaware native who leads the firm’s team on the ground in Delaware.

“For example, Citi’s organic growth within its Downtown location demonstrates the market’s key presence as a cost-efficient, accessible option for Wall Street’s biggest banks. This is representative of the continued positive impact of financial institutions, which are increasingly migrating operational functions to lower cost geographies and serving as a stabilizing force for the Wilmington office market.”

Fletcher and his team, which includes Senior Vice President Harry Thomes and Leasing Associate Jamie Vari, have completed a significant number of market-moving deals over the last several years. “Moving forward, regardless of tenant sector or real estate strategy, the State’s key position as a legislative haven will continue to attract corporations and professional services firms,” Fletcher noted.

The report notes that, on the investment front, Keystone Property Group acquired the 221,686-square-foot, Class A Citizens Bank Center from Midland Asset Management in December 2011 for $22 million — or $99 per square foot — out of special servicing.

Additionally, owners are refinancing outstanding mortgages. In the Wilmington CBD, despite a lack of high transaction volume, this trend has taken root within the market’s A+ property set. For example, 500 Delaware Avenue and Renaissance Center both secured refinancing in the first six months of this year.

“Core plus assets with low debt exposure and strong cash flows are capitalizing on the favorable interest rate environment,” Fletcher added.
To request a copy of the Wilmington Skyline Review, please contact Jones Lang LaSalle Market Research Analyst Sean Coghlan at or 215-988-5556.

A fixture of the Delaware Valley real estate market since 1997, Jones Lang LaSalle has continued to expand throughout the region by adding offices in Harrisburg, King of Prussia and Cherry Hill, NJ. With 300 employees based here regionally, the firm currently manages more than nine million square feet of industrial space, over three million square feet of office space and leases more than eight million square feet of prime office and industrial space throughout the metro Philadelphia area.

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 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 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 $47 billion of assets under management. For further information, please visit​