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News release


Competition Soars as Investors Seek to Dominate the Skyline

JLL predicts increasingly landlord-friendly landscape

CHICAGO, March 10, 2014 - “Game on” seems to be the sentiment of buyers aggressively seeking office properties across the skyline markets of the United States. From local High Net Worth Investors (HNWIs) to international sovereign wealth funds (SWFs), the competition is fierce for those planting their own stake in the iconic properties towering over American cities. Intense capital demand is propelling rents among those Trophy skyscrapers, even more so than rising leasing demand, according to JLL’s Spring 2014 U.S. Skyline Review.   Bottom line:  it’s a good time to be a landlord.

“It’s a perfect storm for landlords as space options in the Skyline are decreasing.  This has fueled their confidence to raise rents,” said Gregory Green, International Director at JLL. “As such, tenants, especially large users, are advised to secure lease terms in the near future, rather than waiting for the tides to change. We predict rents in the Skyline will rise even higher with fewer concessions in this supply-constrained environment over the next 24 months.” 

“Primary Skylines, such as New York, San Francisco and Chicago, saw year-over-year investment sales growth of more than 43 percent, but they’re not the only beneficiaries. With competition increasingly fierce, secondary Skylines such as Raleigh, Miami and Philadelphia experienced pricing gains per square foot that exceeded their primary brethren,” said Steve Collins, International Director at JLL. “Investors across the spectrum continue to narrow their focus to the Skylines of their respective markets—bidding for the top-tier, Trophy assets.”

Although market fundamentals are tightening, construction remains limited. Ten Skylines have vacancy levels below 10 percent, with seven showing no current development and two seeing just one proposed project.

The constrained development pipeline has led to climbing rents. Over the past three years, rental rates in the skyline have increased 17.1 percent compared to the 9.8 percent increase seen by the broader market.

”The lack of development is causing a space crunch on each end of the spectrum,” said John Sikaitis, Managing Director of Research at JLL. “Trophy properties are far outperforming the broader market with respect to occupancy levels and rents and a similar tightening exists in value-add properties. This squeeze from both ends is expected to have a significant impact on the properties in the middle as tenants are being priced out of their former go-to options.”

Major Market Highlights

• New York: As stock market indices reached new highs in 2013, demand for top-tier office space in Manhattan’s Trophy market drove both asking and taking rents to levels not approached since 2008.  

• San Francisco: The San Francisco Skyline continues evolving with more than 1.6 million square feet planned in 2014 and 2015, further shifting the heart of the business district to the South Financial District (SFD) and reestablishing the relevance of the high-rise building among creative companies.  View San Francisco’s Skyline video.

• Washington, D.C.: Despite restrained levels of tenant demand in 2013, Trophy fundamentals remained solid and vacancy rates fell to 9.9 percent, the lowest level since 2010. That’s due to tenants migrating from second-generation core to new and efficient product on the outer core.  View Washington, D.C.’s video​.

• Chicago: After remaining flat in 2012, the Chicago skyline asking rents increased by $0.47 to $36.94 per square foot in 2013 and surpassed the high-water mark set in 2008, a clear indicator that rents have recovered from the recession.  View Chicago’s video.

 Houston: Entering 2014, Houston’s overall office market continues to benefit from the overall robust STEM-powered economy. Growth amongst energy and energy service companies combined with compressed vacancy rates pushed skyline owners rates upward by 5.0 percent year-over-year to their current average of $44.50 per square foot full service gross.  View Houston’s video.

For more news, videos and research resources on JLL, please visit the firm’s U.S. media center Web page:

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About JLL 

JLL (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $4 billion, JLL operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $47.6 billion of real estate assets under management. For further information, visit

LL’s proprietary Skyline report identifies and tracks micro-segments of 43 city centers across the nation.  The Skyline features the Trophy and Class A buildings where tenants and investors alike focus demand for office space in a flight to quality and efficiency.  Check out the themes that shape the U.S. skyline.
Competition for office properties across skyline cities in 2013 propelled vacancy levels to an average 13.4 percent and 170 basis points below the U.S. office sector.