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News release

New York

Jones Lang LaSalle Reports New York Office Vacancy Rates Fell in Most Submarkets in First Quarter of 2010

Average asking rental rates appear to have stabilized; positive absorption recorded


NEW YORK, March 31, 2010 — Jones Lang LaSalle announced that office vacancy rates in New York fell in most submarkets except Lower Manhattan in the first quarter of 2010. At the same time, average asking rental rates increased slightly for Class B office buildings in most areas of the city or decreased by less than 2 percent in most other submarkets.

“Much has changed for the New York office market in the past year,” said James Delmonte, vice president and director of research for Jones Lang LaSalle’s New York office. “Positive absorption levels indicate that activity has finally outpaced new supply coming to the market. As a result, overall vacancy levels improved slightly in Manhattan for the first time in several quarters and average asking rents showed signs of flattening.”

Midtown saw vacancy rates drop in all property types this quarter. The overall vacancy rate fell to 13.6 percent in the first quarter of 2010, a decrease of 4.9 percent from the overall vacancy rate of 14.3 percent recorded in the fourth quarter of 2009. Class A vacancy rates dropped to 13.9 percent this quarter, a decrease of 5.4 percent from the Class A vacancy rate of 14.7 percent seen the previous quarter. The submarket’s Class B vacancy rate fell to 13.2 percent in the first quarter of 2010, a decrease of 3.6 percent from the Class B vacancy rate of 13.7 percent posted in the fourth quarter of 2009.

Midtown’s Class A space posted an average asking rental rate of $64.26 per square foot in the first quarter of 2010, a drop of 1.4 percent from Class A rents of $65.19 per square foot seen in the fourth quarter of 2009. Class B buildings recorded rents of $48.60 per square feet this quarter, an increase of 0.4 percent from Class B rates of $48.42 per square foot posted the previous quarter.

“As Midtown’s less expensive sublease offerings are leased, we may see an increase in asking rents,” said Delmonte. “The increase in rents, however, will be a reflection of the mix of space on the market rather than price adjustments from landlords. Net effective rents, which had fallen by more than 42 percent from peak levels in 2008, have also begun to flatten. Since concession packages are a leading indicator of market conditions, these changes may be a further sign of market improvement.”
 
Midtown South also recorded decreases in vacancy rates in all property classes in the first quarter of 2010. The submarket’s overall vacancy rate dropped to 10.8 percent in the first quarter of the year, a decrease of 3.6 percent from the overall vacancy rate of 11.2 percent posted in the fourth quarter of 2009. Midtown South’s Class A buildings saw vacancy rates fall to 10.5 percent this quarter, a drop of 7.1 percent from the Class A vacancy rate of 11.3 percent posted the previous quarter. The submarket’s Class B vacancy rate dropped to 10.9 percent in the first quarter of 2010, a decrease of 1.8 percent from the Class B vacancy rate of 11.1 percent seen in the fourth quarter of 2009.

Class A space in Midtown South posted an average asking rental rate of $49.00 per square foot in the first quarter of the year, an increase of 5.3 percent from Class A rents of $46.54 per square foot seen in the fourth quarter of 2009. Class B buildings recorded rents of $41.90 per square feet this quarter, a decrease of 0.1 percent from Class B rates of $41.92 per square foot posted the previous quarter.
 
Lower Manhattan recorded an increase in overall and Class A vacancy rates this quarter while Class B space posted a decrease. The submarket’s overall vacancy rate increased to 11.4 percent in the first quarter of 2010, rising 4.6 percent from the overall vacancy rate of 10.9 percent in the fourth quarter of 2009. Class A vacancy rates rose to 9.6 percent this quarter, an 11.4 percent increase from the Class A vacancy rate of 8.6 percent recorded the previous quarter. Downtown’s Class B vacancy rate fell to 14.7 percent in the first quarter of 2010, a 2.6 percent decrease from the Class B vacancy rate of 15.1 percent posted in the final quarter of 2009.

Lower Manhattan’s Class A buildings posted average asking rental rates of $38.69 per square foot in the first quarter of the year, a decrease of 3.7 percent from the Class A rents of $40.17 per square foot seen in the fourth quarter of 2009. The submarket’s Class B buildings recorded average asking rental rates of $36.13 per square foot this quarter, an increase of 2.6 percent from the Class B rate of $35.23 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 2009 global revenue of $2.5 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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