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News release

New York

Jones Lang LaSalle Reports New York Class A Office Vacancy Rates Fell in All Submarkets at Mid-year 2010

Midtown, Midtown South see vacancy rate drops in all property types


NEW YORK, June 30, 2010 — Jones Lang LaSalle announced that Class A office vacancy rates in New York fell in all submarkets in the second quarter of 2010. At the same time, the Midtown and Downtown submarkets saw average asking rental rates for Class A space remain nearly unchanged in the past quarter.

“Leasing activity is up considerably over this past year, while the number of large blocks of space coming back to the market has slowed,” said James Delmonte, vice president and director of research for Jones Lang LaSalle’s New York office. “With demand finally outweighing supply, vacancy levels improved in some submarkets leading to positive absorption for the overall market. Encouraging data in the labor market bodes well for the market in the long term, but overall asking rents are likely to remain stationary for the remainder of the year.”

For the second consecutive quarter, Midtown saw vacancy rates drop in all property types. The overall vacancy rate fell to 13.2 percent at mid-year 2010, a decrease of 3.0 percent from the overall vacancy rate of 13.6 percent recorded in the first quarter of 2010. Class A vacancy rates dropped to 13.4 percent this quarter, a decrease of 3.4 percent from the Class A vacancy rate of 13.9 percent seen the previous quarter. The submarket’s Class B vacancy rate fell to 12.8 percent in the second quarter of 2010, a decrease of 2.9 percent from the Class B vacancy rate of 13.2 percent posted in the first quarter of 2010.

Average asking rental rates for Class A space in Midtown remained nearly unchanged this quarter. Midtown’s high-end buildings posted an average asking rental rate of $64.25 per square foot at mid-year 2010, representing a drop of just 1 cent from the Class A rate of $64.26 per square foot recorded in the first quarter of 2010. Class B buildings recorded rents of $48.39 per square feet this quarter, a decrease of 0.4 percent from Class B rates of $48.60 per square foot posted the previous quarter.

“It appears the Midtown market has bottomed statistically but rents in some segments of the market have shown improvement,” said Delmonte. “Absorption in Midtown measured 1.2 million square feet for the quarter, a stark contrast from the 4.1 million square feet of negative absorption recorded at mid-year 2009. The last time absorption reached more than 1.0 million square feet in Midtown was in fourth quarter 2006.”

Midtown South also recorded decreases in vacancy rates in all property classes for the second straight quarter. The submarket’s overall vacancy rate dropped to 10.1 percent at mid-year 2010, a decrease of 6.3 percent from the overall vacancy rate of 10.8 percent posted in the first quarter of 2010. Midtown South’s Class A buildings saw vacancy rates fall to 9.2 percent this quarter, a drop of 12.6 percent from the Class A vacancy rate of 10.5 percent posted the previous quarter. The submarket’s Class B vacancy rate dropped to 10.4 percent in the second quarter of 2010, a decrease of 4.4 percent from the Class B vacancy rate of 10.9 percent seen in first quarter of 2010.

Class A space in Midtown South recorded an average asking rental rate of $46.23 per square foot at mid-year 2010, a decrease of 5.7 percent from Class A rents of $49.00 per square foot noted in the first quarter of 2010. Class B buildings posted rents of $42.13 per square feet this quarter, an increase of 0.5 percent from Class B rates of $41.90 per square foot seen the previous quarter.

Lower Manhattan recorded a decrease in Class A vacancy rates this quarter while the submarket’s Class B space saw a significant increase in vacancy rates. The submarket’s overall vacancy rate increased to 12.1 percent at mid-year 2010, rising 5.7 percent from the overall vacancy rate of 11.4 percent in the first quarter of 2010. Class A vacancy rates fell to 9.3 percent this quarter, a 3.4 percent decease from the Class A vacancy rate of 9.6 percent recorded the previous quarter. Downtown’s Class B vacancy rate rose to 16.9 percent in the second quarter of 2010, a 15 percent increase from the Class B vacancy rate of 14.7 percent posted in first quarter of the year.

Just like Midtown, average asking rental rates for Lower Manhattan’s Class A buildings remained nearly unchanged this quarter. Downtown’s high-end buildings recorded Class A rents of $38.70 per square foot at mid-year 2010, a 1 cent increase in rates compared to the Class A rate of $38.69 seen in the first quarter of the year. The submarket’s Class B buildings posted average asking rental rates of $35.69 per square foot this quarter, a decrease of 1.2 percent from the Class B rate of $36.13 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 1.6 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, including 700,000 square feet in Connecticut and northern Westchester County, N.Y. For further information, please visit our Web site, www.joneslanglasalle.com.