JLL’s Office Skyline focuses on the top tier of the office market, looking at some of the most iconic and highest-rent properties within CBDs and urban cores. Take a look at these five 2016 U.S. office market trends.

1. What’s the beat of the Skyline?
2016 overview and trends
June 2016

2. Skyline at a glance
The Skyline set
continues to
demonstrate
success….
From a
fundamentals
perspective, the
top-tier office set
posts significantly
lower vacancy,
higher rents and
more developer
interest in relative
terms than the
overall market.
1
The top of the market continues to outperform, but faces competition from emerging segments
$32.28
$43.42
$43.79
$56.82
$61.82
$20 $25 $30 $35 $40 $45 $50 $55 $60 $65
Overall
CBD
Skyline
Trophy
Trophy U/C
Average asking rent ($ p.s.f.)

3. Skyline at a glance
JLL’s Skyline focuses on the top tier of the
office market, looking at some of the most iconic
and highest-rent properties within CBDs and
urban cores.
2
The top of the market continues to outperform, but faces competition from emerging segments
800
850
900
950
1,000
1,050
1,100
400,000,000
450,000,000
500,000,000
550,000,000
600,000,000
650,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Numberofbuildings
RBA(s.f.)
RBA (s.f.) Numer of buildings
Trophy
Non-
Trophy
50.6%
Trophy share
of supply

4. 3
What are the trends in
2016?

5. 4
1.
Gone today, here tomorrow
Many markets are expecting to see substantial
office building deliveries, which will begin to shift the
balance from landlord-favorable conditions and
ease the leasing environment for tenants.

6. 5
2.
More, more, more
Premium pricing for coveted Skyline buildings will
be exacerbated as new Trophy buildings are
delivered, forcing some tenants to look to lower cost
options or different markets altogether.

7. 6
3.
Ready, steady, go
The global economy combined with the concern
over the growth trajectory of the technology
industry, continues to weigh on the minds of
investors.

8. 7
4.
On the road
Cost and competition in primary markets mean
Skyline assets are harder to acquire, if at all.
Investors are looking to hot secondary markets
where rent growth is still achievable and tenant
demand persists.

9. 8
5.
What have you done for me lately?
Despite the rise in popularity of older creative
buildings and fringe markets, Skyline assets still
have lasting power, but only if owners meet the
needs of tenants to remain competitive.

10. Vacancy
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Vacancy(%)
9
Both direct and total vacancy continue to fall, but remain well above previous lows
12.7%
Total vacancy
11.8%
Direct vacancy
Source: JLL Research
Vacancy rate (%)

11. Direct vacancy
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Vacancy(%)
10
Direct vacancy for Trophy properties has fallen into the single-digits for the first time this cycle
14.2%
Non-Trophy
9.6%
Trophy
Source: JLL Research
Vacancy rate (%)

12. Net absorption
82.0%
83.0%
84.0%
85.0%
86.0%
87.0%
88.0%
89.0%
90.0%
-5,000,000
0
5,000,000
10,000,000
15,000,000
20,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Netabsorption(%)
Netabsorption(s.f.)
Net absorption (s.f.) Occupancy (%)
11
Limited space options and strong growth in 2014 and 2015 slowed down gains in Q1
Source: JLL Research

13. 2016 Skyline clock
12
The Skyline is enterting a new phase in the cycle after achieving peak rent growth
Peaking
phase
Falling
phase
Rising
phase
Bottoming
phase
Chicago, New York, Orange County, Philadelphia
Denver
Oakland, Seattle
Austin, Bellevue, Fort Lauderdale, Raleigh
Dallas
Charlotte, Salt Lake City
Hudson Waterfront, Milwaukee, West Palm Beach
Baltimore, Cincinnati, Detroit, Indianapolis,
Minneapolis, Stamford, Washington, DC
San Francisco
Atlanta, Century City, Fort Worth, Tampa
Portland
Boston, Los Angeles, Miami, San Diego, United States
Hampton Roads, Newark, Phoenix, Pittsburgh, St. Louis
Richmond
Cleveland
Columbus
Houston
Orlando
Wilmington
Sacramento
Source: JLL Research

14. Average asking rent
$10
$15
$20
$25
$30
$35
$40
$45
$50
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Averageaskingrent($p.s.f.)
13
Rents continue to reach record levels, rate of growth slowing markedly
$38.61
2008
$43.79
Q1 2016
Skyline rents are 13.4
percent above previous
peak in 2008
Source: JLL Research
$43.79
Skyline
$32.28
Overall
Direct average
asking rent ($ p.s.f.)

15. Average asking rent
$0
$10
$20
$30
$40
$50
$60
$70
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Averageaskingrent($p.s.f.)
14
Demand for non-Trophy space has boosted rents to new highs; Trophy beginning to flatline
$56.82
Trophy
$33.73
Non-Trophy
Source: JLL Research
$32.28
Overall
Direct average
asking rent ($ p.s.f.)

16. Under construction
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Preleased(%)
Underconstruction(s.f.)
Under construction (s.f.) Preleased (%)
15
Development slightly up in Q1 at a record 34.1 m.s.f.; preleasing down as confidence improves
Source: JLL Research

17. Market Under construction (s.f.)
New York 12,571,498
San Francisco 2,584,357
Chicago 2,250,000
Seattle 2,227,875
Philadelphia 1,970,864
Denver 1,326,821
Boston 1,215,000
Bellevue 1,078,693
Orange County 1,065,424
All other markets 8,855,014
Skyline 34,080,122
37%
8%
7%6%
6%
4%
3%
3%
26%
New York San Francisco Chicago
Seattle Philadelphia Denver
Boston Bellevue All other markets
Under construction
16
Hudson Yards pushes New York well above other markets in terms of development
Source: JLL Research

18. Sales volume
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Salesvolume(s.f.)
17
Sales volume on track to meet 2015 levels, but continues to be well below previous cycle
Source: JLL Research

19. Sales volume and pricing
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$0
$10,000,000,000
$20,000,000,000
$30,000,000,000
$40,000,000,000
$50,000,000,000
$60,000,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Salesprice($p.s.f.)
Salesvolume($)
Sales volume Price per square foot
18
Pricing growth of 26.7 percent from 2015 to Q1 2016 far exceeds expected increase in volume
Source: JLL Research

20. Average cap rate
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Averagecaprate(%)
19
Inbound capital flows for longer-term holds compressing yields to near-5.0 levels
6.2%
2008
5.3%
Q1 2016
Cap rates are down 90bp
from their previous low
Source: JLL Research

21. COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
Julia Georgules
Director – Office Research
+1 415 354 6908
Julia.Georgules@am.jll.com
Phil Ryan
Senior Research Analyst – Office and Economy Research
+1 202 719 6295
Phil.Ryan@am.jll.com
What else is on the horizon for Skyline?
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