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News release


Competition Soars: Investors Seek to Dominate San Diego’s Skyline

JLL predicts San Diego will see increasingly landlord-friendly landscape

​CHICAGO, March 17, 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), competition is fierce for those planting their stake in iconic properties towering over American cities. While the flight to quality by law, finance, insurance and real estate firms leaving the downtown San Diego market continues, in-bound migration, led by design, creative and tech firms, is offsetting the loss, and asking rents are increasing for the 20 buildings that make up San Diego’s downtown’s skyline inventory.

Thanks to intense capital demand, rents among Trophy assets are soaring around the nation, even more so than rising leasing demand, according to JLL’s Spring 2014 U.S. Skyline Review.   

“It’s an improving picture for landlords of downtown San Diego’s Trophy buildings, though not without its challenges,” said Jay Alexander, Managing Director at JLL.  “Asking rents were up 1.3 percent in 2013, and leasing activity rose 32.2 percent, but direct vacancy inched up ten basis points to 16.6 percent.  We predict rents in the Skyline market will continue to rise, though, and with fewer concessions, based upon a lack of new product in the near-term and a burgeoning downtown tech sector.”  

JLL’s proprietary Skyline report identifies and tracks micro-segments of 43 city centers across the nation.  The Skyline features 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.

“Investors who presently own or who are looking to invest in national CBD’s have come to rely on our skyline report to understand overall activity. In San Diego, our skyline assets come to market infrequently and when they do, our report provides investors with a snapshot of the health of our market and where blocks of space are located.  San Diego’s skyline asset values are on the rise as rents continue their recovery and demand strengthens” said Lynn LaChapelle, Managing Director at JLL. 

“San Diego saw more than 800,000 square feet of space transacted in its Skyline inventory in 2013. Core plus and value-add Investor interest is extremely high for the San Diego’s skyline, however opportunities are limited.”

In spite of tightening market fundamentals, construction remains limited across the country. 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, rates in the nation’s skylines increased 17.1 percent compared to the 9.8 percent increase seen by the broader market.

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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