Welcome!

News Feed Item

Competition Soars as Investors Seek to Dominate the Skyline

Investors From Around the World Are Gobbling Up America's Iconic Skyline; Vacancy Rates Are Falling and Rents Are Rising; Bottom Line: It's a Good Time to Be a Landlord

CHICAGO, IL -- (Marketwired) -- 07/16/14 -- JLL (NYSE: JLL) -- David Werner's pending $900 million+ purchase of the trophy Mobil building in New York. Sumitomo's acquisition of 203 North LaSalle in the Windy City. Panoramic Interests newly secured $50M in financing for 160-unit micro apartment complex in San Francisco.

It's "game on" in the intense competition for the U.S. skyline, as both local and international investors try to lock down the trophy skyscrapers that tower over American cities.

"Investors across the spectrum continue to narrow their focus to the skylines of markets -- bidding for the top-tier, trophy assets," said Steve Collins, international director at JLL.

Demand for these top-line office buildings is high and available space is scarce, but that's only part of the story. The surge in interest from capital-rich investors is propelling rents even more than the rising demand among tenants, according to JLL's U.S. Skyline Review.

More capital, higher demand and limited space puts landlords in the catbird seat, giving them confidence to raise rents and offer even fewer concessions. "Landlords are advising tenants, especially large users, to lock in leases now, rather than waiting for the tides to change," says Gregory Green, International Director at JLL and head of the firm's Agency Leasing. "Rents in the skyline will rise even higher over the next 24 months."

Overall, rents for skyline properties in 2013 broke the $40 per square foot mark for the first time, up $6 per square foot from the dark days of 2010, JLL found.

JLL tracked skyline investment in 43 city centers across the nation. Interest comes from so-called "high net worth investors" in local U.S. markets to global investment from international sovereign wealth funds. Canada and China lead the global investors, followed by Chile, Korea, Qatar and Norway. Foreign investment reached $5.2 billion last year, accounting for slightly more than half of all buying activity in the primary markets.

Last year's sales activity in those cities, such New York, Los Angeles and Chicago, is up 43 percent, on a square footage basis, over 2012. Investment in the Manhattan skyline hit 5.1 million square feet of transactions in 2013, including the sale of 350 Madison Avenue by JLL in March. In Los Angeles, Toronto-based Brookfield Office Properties acquired the 4.9 million square feet MPG Office Trust, whose properties include the gleaming 52-foot Gas Company Tower, the city's fourth largest building, and the distinctive reddish-brown Wells Fargo Center.

But the nation's biggest cities aren't the only beneficiaries of this surge in capital -- and competition. Investment activity in the secondary markets -- think Raleigh, Miami and Philadelphia -- was up 20 percent. And low vacancy rates in these cities are feeding price increases that exceed even those in the primary markets. Ten skyline markets examined by JLL had vacancy rates below 10 percent.

And there's more coming. Thanks to demographic shifts and urban re-migration, population growth in skyline centers is nearly triple the rate of cities overall. In the next three to five years, look to Downtown Atlanta, South Park Los Angeles and the Dallas Arts District, among others, to lead the way with new trophy office towers, residential housing and lively retail centers.

Inside the office, workplace strategies are evolving, as organizations move away from larger personal workspace to a more collaborative and open work environment. While companies continue to seek cost savings, planners are looking more toward retaining valued employees by improving workplace culture and environment.

Major Market Highlights

  • New York: As stock market indices reached new highs in 2013, demand for top-tier office space in Manhattan's Trophy market drove both asking and taking rents to levels not approached since 2008.
  • San Francisco: The San Francisco Skyline continues evolving with more than 1.6 million square feet planned in 2014 and 2015, further shifting the heart of the business district to the South Financial District (SFD) and reestablishing the relevance of the high-rise building among creative companies. View San Francisco's Skyline video.
  • Washington, D.C.: Despite restrained levels of tenant demand in 2013, Trophy fundamentals remained solid and vacancy rates fell to 9.9 percent, the lowest level since 2010. That's due to tenants migrating from second-generation core to new and efficient product on the outer core. View Washington, D.C.'s video.
  • Chicago: After remaining flat in 2012, the Chicago skyline asking rents increased by $0.47 to $36.94 per square foot in 2013 and surpassed the high-water mark set in 2008, a clear indicator that rents have recovered from the recession. View Chicago's video.
  • Houston: Entering 2014, Houston's overall office market continues to benefit from the overall robust STEM-powered economy. Growth amongst energy and energy service companies combined with compressed vacancy rates pushed skyline owners rates upward by 5.0 percent year-over-year to their current average of $44.50 per square foot full service gross. View Houston's video.

Image Available: http://www2.marketwire.com/mw/frame_mw?attachid=2640579
Image Available: http://www2.marketwire.com/mw/frame_mw?attachid=2640582

MEDIA CONTACT
Heather Filkins
[email protected]
@Heatherfilkins

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Conference Guru has been named “Media Sponsor” of the 22nd International Cloud Expo, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great deals to gre...
DevOps is under attack because developers don’t want to mess with infrastructure. They will happily own their code into production, but want to use platforms instead of raw automation. That’s changing the landscape that we understand as DevOps with both architecture concepts (CloudNative) and process redefinition (SRE). Rob Hirschfeld’s recent work in Kubernetes operations has led to the conclusion that containers and related platforms have changed the way we should be thinking about DevOps and...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develop...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
The next XaaS is CICDaaS. Why? Because CICD saves developers a huge amount of time. CD is an especially great option for projects that require multiple and frequent contributions to be integrated. But… securing CICD best practices is an emerging, essential, yet little understood practice for DevOps teams and their Cloud Service Providers. The only way to get CICD to work in a highly secure environment takes collaboration, patience and persistence. Building CICD in the cloud requires rigorous ar...
Companies are harnessing data in ways we once associated with science fiction. Analysts have access to a plethora of visualization and reporting tools, but considering the vast amount of data businesses collect and limitations of CPUs, end users are forced to design their structures and systems with limitations. Until now. As the cloud toolkit to analyze data has evolved, GPUs have stepped in to massively parallel SQL, visualization and machine learning.
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
"ZeroStack is a startup in Silicon Valley. We're solving a very interesting problem around bringing public cloud convenience with private cloud control for enterprises and mid-size companies," explained Kamesh Pemmaraju, VP of Product Management at ZeroStack, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Large industrial manufacturing organizations are adopting the agile principles of cloud software companies. The industrial manufacturing development process has not scaled over time. Now that design CAD teams are geographically distributed, centralizing their work is key. With large multi-gigabyte projects, outdated tools have stifled industrial team agility, time-to-market milestones, and impacted P&L stakeholders.
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Enterprises are adopting Kubernetes to accelerate the development and the delivery of cloud-native applications. However, sharing a Kubernetes cluster between members of the same team can be challenging. And, sharing clusters across multiple teams is even harder. Kubernetes offers several constructs to help implement segmentation and isolation. However, these primitives can be complex to understand and apply. As a result, it’s becoming common for enterprises to end up with several clusters. Thi...