Click here to close now.


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:
Image Available:

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
SYS-CON Events announced today that Interface Masters Technologies, provider of leading network visibility and monitoring solutions, will exhibit at the 17th International CloudExpo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Interface Masters Technologies is a leading provider of high speed networking solutions focused on Gigabit, 10 Gigabit, 40 Gigabit and 100 Gigabit Ethernet network access and connectivity products. For over 20 ye...
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
As enterprises capture more and more data of all types – structured, semi-structured, and unstructured – data discovery requirements for business intelligence (BI), Big Data, and predictive analytics initiatives grow more complex. A company’s ability to become data-driven and compete on analytics depends on the speed with which it can provision their analytics applications with all relevant information. The task of finding data has traditionally resided with IT, but now organizations increasingl...
DevOps is gaining traction in the federal government – and for good reasons. Heightened user expectations are pushing IT organizations to accelerate application development and support more innovation. At the same time, budgetary constraints require that agencies find ways to decrease the cost of developing, maintaining, and running applications. IT now faces a daunting task: do more and react faster than ever before – all with fewer resources.
Interested in leveraging automation technologies and a cloud architecture to make developers more productive? Learn how PaaS can benefit your organization to help you streamline your application development, allow you to use existing infrastructure and improve operational efficiencies. Begin charting your path to PaaS with OpenShift Enterprise.
SYS-CON Events announced today that Harbinger Systems will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Harbinger Systems is a global company providing software technology services. Since 1990, Harbinger has developed a strong customer base worldwide. Its customers include software product companies ranging from hi-tech start-ups in Silicon Valley to leading product companies in the US a...
SYS-CON Events announced today that Machkey International Company will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Machkey provides advanced connectivity solutions for just about everyone. Businesses or individuals, Machkey is dedicated to provide high-quality and cost-effective products to meet all your needs.
SYS-CON Events announced today that JFrog, maker of Artifactory, the popular Binary Repository Manager, will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Based in California, Israel and France, founded by longtime field-experts, JFrog, creator of Artifactory and Bintray, has provided the market with the first Binary Repository solution and a software distribution social platform.
“The Internet of Things transforms the way organizations leverage machine data and gain insights from it,” noted Splunk’s CTO Snehal Antani, as Splunk announced accelerated momentum in Industrial Data and the IoT. The trend is driven by Splunk’s continued investment in its products and partner ecosystem as well as the creativity of customers and the flexibility to deploy Splunk IoT solutions as software, cloud services or in a hybrid environment. Customers are using Splunk® solutions to collect ...
In recent years, at least 40% of companies using cloud applications have experienced data loss. One of the best prevention against cloud data loss is backing up your cloud data. In his General Session at 17th Cloud Expo, Bryan Forrester, Senior Vice President of Sales at eFolder, will present how organizations can use eFolder Cloudfinder to automate backups of cloud application data. He will also demonstrate how easy it is to search and restore cloud application data using Cloudfinder.
SYS-CON Events announced today that Agema Systems will exhibit at the 17th International Cloud Expo®, which will take place on November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Agema Systems is the leading provider of critical white-box rack solutions to data centers through the major integrators and value added distribution channels.
Clearly the way forward is to move to cloud be it bare metal, VMs or containers. One aspect of the current public clouds that is slowing this cloud migration is cloud lock-in. Every cloud vendor is trying to make it very difficult to move out once a customer has chosen their cloud. In his session at 17th Cloud Expo, Naveen Nimmu, CEO of Clouber, Inc., will advocate that making the inter-cloud migration as simple as changing airlines would help the entire industry to quickly adopt the cloud wit...
SYS-CON Events announced today that Secure Infrastructure & Services will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Secure Infrastructure & Services (SIAS) is a managed services provider of cloud computing solutions for the IBM Power Systems market. The company helps mid-market firms built on IBM hardware platforms to deploy new levels of reliable and cost-effective computing and hig...
Organizations already struggle with the simple collection of data resulting from the proliferation of IoT, lacking the right infrastructure to manage it. They can't only rely on the cloud to collect and utilize this data because many applications still require dedicated infrastructure for security, redundancy, performance, etc. In his session at 17th Cloud Expo, Emil Sayegh, CEO of Codero Hosting, will discuss how in order to resolve the inherent issues, companies need to combine dedicated a...
Clutch is now a Docker Authorized Consulting Partner, having completed Docker's certification course on the "Docker Accelerator for CI Engagements." More info about Clutch's success implementing Docker can be found here. Docker is an open platform for developers and system administrators to build, ship and run distributed applications. With Docker, IT organizations shrink application delivery from months to minutes, frictionlessly move workloads between data centers and the cloud and achieve 2...