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News release

New York

Jones Lang LaSalle Reports New York Office Market Vacancy Rates Appear to Have Stabilized

Midtown posts slight increases in vacancy rates; Downtown records decreases


NEW YORK, January 5, 2010 — Jones Lang LaSalle announced that vacancy rates throughout the New York office market appear to have stabilized in the final quarter of 2009. Vacancy rates increased only slightly in Midtown, and vacancy rates Downtown posted small decreases. Average asking rental rates, however, continued to drop in all property types in all three submarkets.
 
“The number of deals in excess of 100,000 square feet increased dramatically during the final six months of the year,” said James Delmonte, vice president and director of research for Jones Lang LaSalle’s New York office. “There were 25 major deals completed during the third quarter and the fourth quarter, compared with just eight during the first six months of 2009. However, the fact that eight of the top 10 leases signed during the year were renewals illustrates the point that there is a lack of new demand in the market. Despite a pick-up in overall leasing in the latter half of the year, 2009 will mark a record low for total activity in the market.”
 
Midtown saw vacancy rates rise slightly in all property types this quarter. The overall vacancy rate rose to 14.3 percent in the fourth quarter of 2009, an increase of 1.6 percent from the overall vacancy rate of 14.1 percent recorded in the third quarter of 2009. Class A vacancy rates remained unchanged at 14.7 percent this quarter compared with the previous quarter. The submarket’s Class B vacancy rate increased to 13.7 percent in the final quarter of 2009, a boost of 4.1 percent from the Class B vacancy rate of 13.2 percent posted in the third quarter of 2009.
 
Midtown’s Class A space posted an average asking rental rate of $65.19 per square foot in the fourth quarter of 2009, a drop of 6.9 percent from Class A rents of $70.05 per square foot seen in the third quarter of 2009. Class B buildings recorded rents of $48.42 per square feet this quarter, a decrease of 2.6 percent from Class B rates of $49.73 per square foot posted the previous quarter.
 
“Despite prevailing stability in the vacancy rate, average asking rents throughout Manhattan moved lower,” said Delmonte. “Adjustments in pricing have been the most dramatic among Class A properties in Midtown. At $65.19 per square foot, the Midtown Class A rate is down by 28 percent from the same time last year and off by 33 percent from peak in May 2008.”
 
Downtown’s overall vacancy rate remained unchanged at 10.9 percent in the fourth quarter of 2009 compared with the previous quarter. Class A vacancy rates fell to 8.6 percent, a 1.2 percent decrease from the Class A vacancy rate of 8.7 percent recorded in the third quarter. The submarket’s Class B vacancy rate rose to 15.1 percent, a 2 percent increase from the Class B vacancy rate of 14.8 percent posted the previous quarter.
 
Lower Manhattan’s Class A buildings posted average asking rental rates of $40.17 per square foot in the fourth quarter of 2009, a decrease of 4.3 percent from the Class A rents of $41.96 per square foot seen in the third quarter of 2009. The submarket’s Class B buildings recorded average asking rental rates of $35.23 per square foot this quarter, a drop of 5.6 percent from the Class B rate of $37.31 per square foot posted the previous quarter.
 
Midtown South presented more of a mixed picture in the fourth quarter of 2009, with decreases in its overall and Class B vacancy rates offset by a large increase in its Class A vacancy rate. The submarket’s overall vacancy rate dropped to 11.2 percent in the final quarter of the year, falling 1.7 percent from the overall vacancy rate of 11.4 percent posted in the third quarter of 2009. Midtown South’s Class A buildings saw vacancy rates climb to 11.3 percent this quarter, an increase of 26.9 percent from the Class A vacancy rate of 8.9 percent posted the previous quarter. The submarket’s Class B vacancy rate dropped to 11.1 percent in the fourth quarter of 2009, a decrease of 8.8 percent from the Class B vacancy rate of 12.2 percent seen in the third quarter of 2009.
 
Class A space in Midtown South posted an average asking rental rate of $46.54 per square foot in the fourth quarter of 2009, a drop of 15.4 percent from Class A rents of $55.00 per square foot seen in the third quarter of 2009. Class B buildings recorded rents of $41.92 per square feet this quarter, a decrease of 4.1 percent from Class B rates of $43.70 per square foot posted the previous quarter.
 
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. In the New York area, Jones Lang LaSalle provides leasing and management services for nearly 45 million square feet of commercial real estate. For further information, please visit our Web site, www.joneslanglasalle.com.
 
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