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News release

COLUMBUS, OH

Columbus Digital Skyline Report Reveals Local Market Trends: Demand Gains Momentum

JLL releases its 2015 building-by-building Skyline report on Columbus’ commercial real estate market


COLUMBUS, June 3, 2015 – The premiere, Class A office towers that make up Columbus’ skyline boast—by far—the most expensive office space to rent, according to JLL’s 2015 Digital Skyline. Average asking rents in the first quarter of 2015 were $26.03 per square foot, or nearly $7 higher than the average Class B building rent ($19.35 per square foot).

“With a lack of Trophy space in Columbus, demand for Class A space is gaining momentum,” said Cody Brooks, Research Analyst at JLL. “Despite a slow start to 2015 in regards to leasing activity, the Columbus skyline enjoyed a lively 2014.”

Significant leasing announcements included Columbus Gas’ relocation to the Arena District, CoverMyMeds’ move to Miranova Corporate Tower and NiSources’ decision to lease space at Civic Center Drive.

“Demand is increasing and developers are noticing,” said Brooks. “For example, Daimler Group and Kaufman Development recently announced plans for a Class A, 17-story high-rise.”

JLL’s proprietary 2015 Digital Skyline identifies and tracks micro-segments of 47 city centers across North America. The Skyline features Trophy and Class A buildings where tenants and investors alike focus demand for office space in the highest-quality and most efficient assets.

Foreign investors show increased interest in the U.S. skyline

Foreign capital is playing a starring role in commercial real estate transactions across the U.S. Of the $35.3 billion transacted over the past five quarters nationally, 34.6 percent was driven by international buyers. In Houston and Seattle, every office deal transacted during this time period had a foreign buyer, while in Washington, D.C., Boston and New York, offshore capital led more than 50 percent of office purchases.

On the Columbus Skyline, foreign investors have not been active in recent years. The vast majority of investment in the Columbus market has originated from a national and local level.

Brooks noted, “Recent domestic transactions include the sale of Miranova Corporate Tower and the Columbus Gas Building in 2013, which sold for a combined total of roughly $42.8 million, or $89 per square foot.”

Tenants and investors look to lower-class assets for customizable space

As investors begin to diversify beyond the Trophies for investment opportunities, a growing segment of tenants are also turning away from skyline buildings in favor of non-core Class A and Class B buildings. The perception of an “address” has been replaced by the desire for highly customized office space, particularly among fast growing tech and other creative companies.

But, it’s not just tech companies looking for dynamic, flexible office space. The growing millennial workforce and their employers are increasingly drawn to architecturally significant Class B buildings located in dense neighborhoods packed with amenities.

Locally, a surge of investment activity can be seen in Columbus’ surrounding suburban markets, which boast newer inventories, new development and many Class A products. A recent example includes Garrison Investment’s purchase of 1 & 2 Easton Oval, which together total 254,000 square feet. The New York-based investment firm purchased the properties from Duke Realty Corp. for $25.9 million, or roughly $102 per square foot.

“Class B leasing activity has indeed surged as of late as vacancy continues to decline,” said Brooks. “Since 2014, Class B vacancy has fallen roughly 1.5 percent. Columbus enjoys a large amount of creative loft space, which sees high demand and heavy touring activity.”

Visit the full Columbus Skyline for more.

About the Skyline Review
For the first time, investors and tenants alike can now access JLL’s Skyline Review via a digital platform. The fully interactive website will feature JLL’s proprietary market insights regarding office supply, demand, rents, leverage and investment in 47 markets across the United States and Canada, with the ability to compare and contrast individual markets or multiple markets. In addition, the site will offer videos and infographics. All information will also be available via mobile access. Users can also directly access information about Columbus’ Skyline.

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 fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000.  On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $55.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.