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News release

Washington, DC.

Non-core Property Transactions Increase in the Nation’s Capital as Investors Adjust Their Risk Appetite

Older buildings that are not fully leased accounted for 28.5% of sales volume in 2010


WASHINGTON, DC, Feb. 28, 2011 — Last year was historic for the investment sales market in the nation’s capital, and a welcome relief following two years of sub-par market performance.  While many investors focused on safer, well-leased assets, some investors noticeably expanded their risk appetites to include less secure, non-core properties.
  
‘Opportunistic’ properties are classified as older buildings with high levels of vacancy and in need of physical improvement. In 2010 these transactions averaged at $168 per square foot. Value-add properties tend to be less risky since they are moderately leased, with little or no upgrades necessary, and accordingly command a significantly higher price, averaging $297 per square foot in 2010. There were 19 value-add and opportunistic transactions in 2010 for a total of $1.4 billion, the amount of all transactions realized in 2009.
 
“Significant leasing activity by the federal government brought stability to the Washington, DC market in 2010, and increased investor confidence leading to more sales of non-core buildings.  And so far this year, investor focus on these buildings does not seem to be waning,” noted Scott Homa, Research Manager, Jones Lang LaSalle.  “Three of the first four transactions of the new year were either value-add or opportunistic properties, and combined total $68.8 million.”

Consider the following statistics:

• Total capital markets transactions for 2010 in the Washington DC region equaled $5.7 billion.

• 28.5 percent of those transactions were for opportunistic and value added properties.

• Five vacant properties traded in the third and fourth quarter alone, more than 2008 and 2009 combined.

• Sales of these opportunistic and value-add assets were largely concentrated in Northern Virginia and Suburban Maryland.

• The buyer profile for these non-core assets was almost exclusively REITs and Opportunity Funds.

The Association of Foreign Investors in Real Estate recently named Washington, DC. the number two city in the world of foreign investment – New York is number one and London number three. As the supply of fully leased, downtown properties decreases, prices will potentially rise to historically high levels and drive investors to non-core assets.

About Jones Lang LaSalle Capital Markets

Jones Lang LaSalle Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. Our in-depth local market and global investor knowledge delivers the best-in-class solutions for our clients — whether a sale, financing, repositioning, advisory or recapitalization execution. In the last three years, Jones Lang LaSalle Capital Markets completed more than $143 billion transactions globally. Our Capital Markets team comprises approximately 1,500 specialists, operating in 180 major markets worldwide.

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 2010 global revenue of more than $2.9 billion, Jones Lang LaSalle serves clients in 60 countries from more than 1,000 locations worldwide, including 185 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $41 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.
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