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News release


Charlotte’s Skyline to See New Development Amid Strong Demand

JLL’s 2016 Skyline reveals that tenants demand more bang for their buck as trophy rental rates continue to command a premium

CHARLOTTE, July 20, 2016 – Rents for the office buildings that make up the Charlotte Skyline have jumped into near record territory in 2016 — an average of $27.80 per square foot, four percent higher than the first quarter of 2015. And rents for trophy assets (those ultra-premium office towers within the Skyline) are even pricier at $32.81 per square foot. But JLL's 2016 Skyline shows that while rents in uptown Charlotte are expected to continue their growth trajectory for the next couple of years, rent growth nationally may be moderating, especially in high-growth markets that have recorded consistent rent appreciation over the last several years.

  • Skyline and trophy asset rents at near record highs; owners retain leverage due to limited stock
  • Rent growth expected to continue for time being

"The Charlotte Skyline has led the resurgence of the city's office market over the past few years," said Patrick Byrnes, Charlotte research analyst. "Strong leasing, low vacancy, and steadily climbing asking rates have been common themes of Charlotte's premier group of office buildings."

New construction commands a premium

Owners, especially those with Skyline properties currently under construction, still have the upper hand for now. Rents for those rising towers are hitting $37 per square foot, a 28 percent premium over average Skyline asking rents due to greater efficiencies inherent in such factors as layouts, operating and construction costs.

Local gains in investment volumes

Investment volumes into Charlotte Skyline properties increased in the first quarter of 2016, with total volume rising to $1.2 billion during the period, up from $821 million during the first quarter of 2015.

Skyline investment volumes fell slightly across the U.S. in 2015, due to strong demand and liquidity for Skyline assets earlier in the economic cycle as well as the generational nature of many acquisitions since the Global Financial Crisis. The scarcity of opportunities meant only 9.5 percent of the Skyline across North America traded in 2015, down from 10.7 percent in 2014.  However, the drop in investment volumes in the first quarter of 2016 was even more precipitous—down more than 72 percent in primary markets and nearly 47 percent in secondary markets.

Foreign investors now own more than 14 percent of the national Skyline, with Canadians and Germans claiming more than 60 percent of that total.  In 2015, those cross-border buyers remained focused on the biggest and the best—with more than 60 percent of those dollars targeting trophy assets.  And they haven't strayed far—planting nearly 94 percent of their investment dollars into primary markets such as New York ($4.6B), Boston ($1.4B) and Seattle-Bellevue ($700M).

This has caused a change in investment strategies across North America. Challenged by peak pricing and scarce investment opportunities, both foreign and domestic buyers will continue to be drawn to hot secondary markets where rent growth is still achievable and tenant demand will persist in the months to come. Many cities in the sunbelt region have benefited from that interest.

What have you done for me lately?

Despite the rise in popularity of older creative buildings and fringe markets, assets within the national Skyline are still the gold standard, but owners need to stay mindful they don't tarnish with complacency. In Charlotte, several uptown landlords are making substantial renovations in order to keep their properties competitive. The new owners of the 101 North Tryon building, formerly 101 Independence Center, plan to remove an existing atrium between the building and the Marriott next door and add a patio, public space and new ground-floor retail spaces. Similarly, Bank of America Plaza is undergoing renovations that will result in a new lobby and exterior facade as well as four new street-level retail spaces.

"Office tenants are looking for more than traditional space in well-located trophy assets--they want their building to provide them with an edge when it comes to recruiting young talent," said Charley Leavitt, Managing Director with JLL's agency leasing in Charlotte. "A growing number of landlords have realized that investing in new amenities and common area upgrades will increase an asset's value as well as its appeal among today's employers."

About the Skyline Review

Investors and tenants alike can access JLL's Skyline via a digital platform.  The fully interactive website will feature JLL's proprietary market insights regarding office supply, demand, rents, leverage and investment into 52 markets across the United States and Canada, with the ability to compare and contrast individual markets or multiples of markets as well as individual properties or portfolios.  In addition, the site will offer videos and infographics. All information will also be available via mobile access.

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. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $58.3 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