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August 2017

Global Market Perspective

JLL Global Research

COPYRIGHT © JONES LANG LASALLE IP, INC. 2017. All Rights Reserved 2

Contents

Global Market Perspective 3

Renewed momentum extends real estate cycle

Global Economy 7

World recovery gaining momentum

Global Real Estate Health Monitor 10

Sydney, Stockholm and Toronto lead office rental performance

Real Estate Capital Markets 11

Investment volumes stable as capital continues to seek real estate exposure

Capital Values and Yields 17

Office capital value growth bounces back as yield compression continues

Corporate Occupiers 19

Human experience driving corporate real estate strategy

Office Markets 21

Leasing volumes are steady; rental growth accelerates with new supply boosting asking rents

Retail Markets 33

Structural change leading to polarisation in demand

Industrial Markets 35

Tight supply and continued robust demand putting upward pressure on rents

Hotels Markets 37

Transaction volumes lower, but sentiment remains positive; hospitality sector performance resilient

Residential Markets 40

Rental growth decelerates in U.S. multifamily market; robust institutional investment in Europe

Key Investment Transactions in Q2 2017 43

London maintains position as top investment destination for second quarter

Illustrative Office Occupational Transactions in Q2 2017 48

Leasing activity strengthens in China’s Tier 1 cities

Global Market Perspective | August 2017


Renewed Momentum Extends Real Estate Cycle

Market fundamentals remain robust

Renewed momentum in the global economy has provided fresh vigour to several real estate

markets. Office rental growth is accelerating once again on the back of robust leasing demand,

and projections for the full-year have been revised upwards. Improvements are most evident in

Western Europe which, together with China, has seen an impressive strengthening of leasing

activity so far in 2017. Meanwhile, strong rental uplifts have been recorded in the warehousing

sector in both the U.S. and Europe. The weight of capital seeking access to real estate continues to

increase, with deal flows in line with the solid levels of 2016.

Leasing, vacancy, development, rents and capital values relate to the office sector.

Source: JLL, July 2017

Investment volumes stable as capital targeting real estate continues to grow

Global transactional volumes have remained firm during the first half of 2017, coming in at US$297

billion, up 2% from the first half of last year. The second quarter saw a continuation of some of the

political tension which has dominated the headlines for much of the year; however, global markets

were largely unaffected as Q2 2017 volumes are 22% above the 10-year average for this period of

the year.

Global Commercial Real Estate Market Prospects, 2017

prospects2017Leasing

Stable

Capital values

6% Increasing

Rents

3% Increasing

Development

28% Peaking

Vacancy rate

Rising

Investment

Firm



Geopolitics will continue to play a major role in determining investor sentiment and market

activity in 2017, while the prospects of tighter monetary policy will also impact on investment

decisions. Despite these challenges global real estate investment continues to be accretive; even

though yields are at their cyclical low, the weight of capital targeting the sector continues to

increase. And while concerns about oversupply have begun to affect occupier fundamentals in

certain global markets, global rental growth and capital value growth are expected to remain

positive in 2017. Given this, we anticipate that 2017 transactional volumes will be more or less in

line with the US$650 billion recorded in 2016.

Global office leasing activity remains steady

Office leasing activity has been remarkably stable during the first half of 2017, with global volumes

virtually unchanged on the same period of 2016. Western Europe (+8%), where employment

prospects and corporate sentiment have improved, has taken the lead in driving growth in leasing

activity during 2017.

Activity has also strengthened in China’s Tier 1 Cities (+57% year-to-date), Southern Europe (+35%)

and South East Asia (+17%), while there were signs of improvement in the UK market (+17%).

For the full-year 2017, we expect global leasing volumes to remain stable, matching the levels

recorded in 2016. Volumes are anticipated to be slightly higher than in 2016 in the United States,

stable in Europe and slightly lower in Asia Pacific.

Global Office Demand – Gross Leasing Trends, 2007 - 2017

24 markets in Europe; 50 markets in the U.S; 22 markets in Asia Pacific Source: JLL, July 2017

30

33

36

39

42

45

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

mill

ions

sq

m

Pro

jec

tio

n



Vacancy expected to rise, but Europe bucks the trend

The global office vacancy rate is stable at 11.9%, where it has remained for much of the past year.

Nonetheless, supply is expected to trend upwards during the rest of 2017, with both the Americas

(14.7%) and Asia Pacific (11.1%) already seeing an uptick in supply in Q2. By contrast, Europe has

witnessed a further fall in vacancy to 7.8%, and is likely to stay below 8% for the rest of 2017.

Office rental growth surprises on the upside

Rental growth has quickened in recent months, with annual growth for prime offices (across 26

major markets) accelerating in Q2 2017 to 3.4% (from 2.7% in Q4 2016). We have upgraded overall

growth forecasts for 2017 to 3%, with Sydney, Stockholm and Brussels projected to top the global

ranks for rental growth for the full year.

Structural change becoming more prominent in global retail markets

The continued growth of online sales, omni-channel retailing and technical innovations are

leading to a bifurcation in retail markets, as major retailers invest in their distribution networks

and rightsize larger store portfolios. At the same time, demand for quality retail that offers brand

experience and convenience remains strong.

Major markets in the U.S. are approaching their peak for the cycle with retail performance

expected to slow this year as same-store growth stagnates for many retailers and store closures

accelerate. Prime rents are still predominantly stable in Europe across all retail classes. In Asia

Pacific, F&B operators continue to be the most active segment.

Tight supply and continued robust demand boost rental growth in logistics markets

Strong online retail sales growth coupled with automation, digital alignment of distribution

processes and the need for new city logistics networks continues to propel robust occupier

demand.

Vacancy rates in the U.S. and Europe are expected to carry on edging downwards through the

second half of 2017, which is boosting rents. In the U.S., rents have reached an all-time high

following growth of 6.5% on an annualised basis, while in Europe the majority of markets are

predicted to record rental increases over the year.

Hotel transaction volumes muted, but sentiment remains positive

The international hotel investment market was muted during the first half of 2017 with

transactional activity totalling US$23 billion, 12% behind the same period last year. Despite

ongoing geopolitical uncertainty investor sentiment remains positive, with improving economic

prospects and bullish forecasts of hotel performance. Transactional activity is expected to pick up

in the second half of the year.



Growth decelerating in U.S. rental apartments on wave of supply

Rental growth slowed further to 2.9% during Q2 2017 in the U.S. multifamily market, the first

quarter to dip below 3% rental growth since year-end 2010. In spite of the overall declines in the

pace of rental growth, a number of markets in the West region and Sunbelt continued to see gains

in excess of 5% on the quarter.

Institutional investment remains robust in continental Europe, with elevated transactional

volumes in Germany and demand pushing yields to record lows in the Netherlands, while the UK

institutional investment market continues to expand rapidly.

In Asia Pacific, policy restrictions and limited supply have impacted sales volumes in Shanghai,

while strong demand boosted the market upswing in Hong Kong and market sentiment has

improved in Singapore.



Global Economy

World recovery gaining momentum in H1

After a healthy set of Q1 indicators, the April-June period has witnessed further consolidation in

the global economic recovery, which has again been seen in a broadly-based upturn in sentiment,

activity and trade. This has been noticeable not only in the developed world but also in emerging

markets, where the recovery in commodity prices has also been important. As a result, there has

been another modest upward shift in global expectations for the year ahead with tentative upside

emerging for 2018.

This improvement has occurred against a background of continued political headwinds in the

developed world, though these risks appear to be receding. In Europe, elections in the

Netherlands and France delivered decisive defeats for populist Eurosceptic parties and reinforced

EU unity. The Eurozone has also experienced an upturn in its economic fortunes over recent

quarters, which has been reflected in upgrades to forecasts for this year across the region, notably

in France and Germany.

The contrast with the UK is striking. A snap General Election in June was expected to consolidate

Conservative party rule in the run-up to Brexit. The resulting unstable minority government looks

weak, raising concerns about direction at a critical time as the UK prepares to leave the EU. Even

before the vote, more equivocal demand had led to a downgrade in expectations for growth and

the UK appears to be falling behind the pace of the Eurozone.

There has also been a slight cooling in U.S. prospects, although forecasts have been broadly stable

in Q2. This has been evident in financial markets, where the Trump rally has appeared to be

running out of steam over recent weeks, and also in softer-than-expected data. Underlying growth

remains solid, but it seems that much of the previous buoyancy in expectations reflected a belief

that the new president would deliver a fiscal stimulus. Given stalled progress in other legislation

any stimulus is now unlikely this year but may bring upside in 2018.

GDP Projections for 2017 in Major Economies – Recent Movements

Australia China France Germany India Japan UK U.S.

April 2017 2.8 6.5 1.4 1.8 7.2 1.4 1.9 2.1

July 2017 (Latest) 2.5 6.6 1.6 2.0 6.9 1.4 1.7 2.2

Change (bps) -30 +10 +20 +20 -30 0 -20 +10

Source: Oxford Economics, July 2017



Central banks ponder the QE retreat

The Federal Reserve raised U.S short-term interest rates by a further 25 bps as expected in June.

This was the second rise in 2017 and takes rates to a cycle-high of 1.00%-1.25%, though this is still

very low by any historical standards. Market expectations are still for just one additional hike later

in 2017, as the recent appearance of softer inflation readings and more uneven economic data are

also being reflected by bond market investors in lower long-term Treasury yields. Nonetheless, the

tightening cycle is expected to continue into the medium term.

The Fed has turned its attention to ‘normalising’ in the autumn – that is, selling back the vast

quantities of bonds accumulated during asset purchasing programmes following the GFC. The

impact of this is still disputed, with some fearing the shock could halt the fragile global revival and

others that it is essential to sustaining it. This debate has not just been confined to the U.S., as

central bank rhetoric has become more hawkish elsewhere, notably from the Bank of England and

ECB. But any upward movement in Eurozone, Japan and even UK policy rates still looks at least

several quarters away.

Modest uplift to the global outlook

Improved data for H1 2017 have led to an upward revision in global growth forecasts. The change

is not dramatic and the pace is set to remain below par by historic standards. However, after years

of disappointed expectations and below-trend activity, this development is encouraging. In

addition, the revival is synchronised with both developed and emerging markets projected to

experience a cyclical upturn over the next 18 months.

Asia Pacific will remain the most dynamic region in terms of output growth. Fears of a hard

landing in China have waned thanks to government stimulus and a revival in trade. This year,

output growth is forecast to stabilise at just below 7%, though the long-established trend of

secular slowdown is on course to resume in 2018. India will continue to lead demand in Asia. De-

monetisation and tax changes have had a short-term negative impact, but the Indian economy is

expected to emerge stronger from 2018. Japan has seen upgrades in the near term, though the

economy will struggle to escape the sub-1.5% growth rut of recent years.

The European recovery presents an important global upside. In Europe’s core, growth has been

supported by solid domestic demand and jobs growth. German growth tops out at 2% in the

current year, while lagging France sees further improvement into 2018. Outside the Eurozone, the

UK is expected to slow as Brexit proceeds. Although the UK’s slowdown is less severe than once

feared, activity dips to a five-year low in 2018 and there is downside potential if Brexit negotiations

become fractious.

An acceleration in Americas’ growth is still elusive as the U.S. expansion continues to be slower

than in previous cyclical upturns. Last year, the Trump administration raised expectations about

pushing growth to a higher level. But with any fiscal stimulus delayed and interest rates rising, the

forecast remains firmly sub-3% over the next two years at least, albeit with the rate of growth

improving from 2016.



Global Outlook, GDP Change, 2016 - 2018

2016 2017 2018

Global 3.1 3.5 3.7

Asia Pacific 5.5 5.4 5.3

Australia 2.5 2.5 2.4

China 6.7 6.6 6.1

India 7.9 6.9 7.4

Japan 1.0 1.4 1.3

Americas 0.8 1.9 2.5

U.S. 1.6 2.2 2.7

MENA 3.2 2.5 3.7

Europe 2.0 2.2 1.9

France 1.1 1.6 1.7

Germany 1.8 2.0 1.6

UK 1.8 1.7 1.5

Source: Oxford Economics, July 2017



Global Real Estate Health Monitor

Economy Real Estate Investment Markets Real Estate Occupier Markets

Metro

Area

GDP

City

Investment

Volumes

City

Investment

Volumes

Change

Capital

Value

Change

Prime

Yield

Yield

Gap

Rental

Change

Net

Absorption

Vacancy

Rate

Supply

Pipeline

Beijing 7.1% 7.1 10% 0.5% 6.3% 267 -0.7% 6.7% 6.3% 15.5%

Boston 2.7% 12.6 3% -5.7% 4.1% 180 1.7% 0.8% 13.3% 2.1%

Brussels 1.6% 2.2 11% 15.2% 4.5% 370 9.1% 2.2% 8.8% 2.2%

Chicago 1.6% 8.4 -28% -3.3% 5.2% 290 9.4% 0.6% 15.0% 1.7%

Dubai 2.2% 1.0 23% 0.0% 7.5% na 0.0% na 14.0% 4.4%

Frankfurt 2.1% 5.6 29% 20.2% 3.5% 303 1.4% -0.8% 8.6% 2.0%

Hong Kong 2.8% 10.4 -15% 21.9% 2.9% 138 8.3% -0.4% 4.4% 4.3%

London 1.9% 28.6 -13% -8.3% 3.5% 231 -8.3% 0.5% 5.0% 4.7%

Los Angeles 2.5% 21.8 -1% -1.8% 4.3% 200 3.0% 0.5% 14.9% 1.3%

Madrid 3.6% 5.6 121% 15.3% 3.8% 222 8.1% -2.7% 11.3% 1.3%

Mexico City 2.9% 0.1 -88% -3.7% 7.6% 82 -1.1% 3.5% 14.0% 18.2%

Milan 1.6% 2.6 -21% 20.2% 3.8% 164 5.0% 0.5% 13.3% 2.0%

Moscow 1.2% 3.6 36% -6.3% 10.5% 281 -6.3% 2.1% 15.0% 5.7%

Mumbai 7.1% 0.2 -75% 2.3% 9.6% 246 1.2% 5.9% 16.8% 13.6%

New York 1.4% 26.9 -43% -4.9% 3.6% 130 3.8% 0.1% 10.6% 1.6%

Paris 1.5% 16.5 -32% 8.3% 3.0% 218 0.0% 1.0% 6.7% 2.7%

San Francisco 4.0% 8.7 32% -7.1% 3.8% 150 0.9% 0.1% 8.6% 6.6%

Sao Paulo -0.7% 0.6 131% -5.9% 10.3% 572 -1.0% 1.6% 25.3% 7.1%

Seoul 2.0% 14.1 59% -5.6% 4.4% 222 -7.5% 4.3% 11.2% 4.1%

Shanghai 6.6% 17.9 54% 0.0% 5.7% 210 -0.7% 11.9% 18.4% 36.4%

Singapore 2.7% 9.3 12% -0.9% 3.6% 149 -3.9% 2.0% 6.8% 10.1%

Stockholm 2.8% 3.6 -30% 25.6% 3.5% 285 17.2% 1.3% 7.6% 1.5%

Sydney 2.8% 7.3 -4% 22.8% 4.9% 234 32.4% 0.7% 7.0% 1.9%

Tokyo 1.1% 14.5 17% 3.1% 2.9% 282 1.4% 2.3% 2.9% 10.4%

Toronto 3.4% 7.2 -5% 17.4% 4.3% 254 9.8% 1.6% 9.7% 1.4%

Washington DC 1.9% 12.7 6% -2.7% 4.5% 220 4.2% 0.0% 16.8% 2.8%

Real estate data as at end Q2 2017. See page 50 for definitions and sources.



Real Estate Capital Markets

Investment Volumes

Despite an elongated cycle, real estate remains attractive to global capital

Global transactional volumes remained stable in the second quarter of 2017, coming in at US$153

billion, unchanged from the levels recorded in Q2 2016. This brings H1 2017 volumes to US$297

billion, up 2% from the first half of last year. The second quarter saw a continuation of some of the

political tension which has dominated the headlines for much of the year, particularly in France,

the U.S. and the UK. However, the positive election results in France reassured investors that the

European Union was not in danger of further turmoil. Global markets were largely unaffected, as

Q2 2017 volumes are 22% above the 10-year average for this period of the year.

U.S. market continues to cool

The only region to post year-on-year declines, the Americas saw Q2 investment activity slide by 7%

to US$64 billion compared to a year ago, bringing first half volumes down by 6% to US$122 billion.

Driving the downward movement was the U.S., where second quarter volumes fell by 7% to US$59

billion, resulting in H1 volumes decreasing by 10% to US$110 billion. Q2 volumes in Canada rose

by 5% compared to a year ago and while the Latin American markets are mixed compared to Q2

2016, all markets in the Americas outside the U.S. are up over the first half of 2017.

Germany and the Netherlands push Europe ahead

A strong second quarter saw European investment volumes edge up 4% compared to this time last

year to US$58 billion. Combined with a similarly positive start to the first quarter, activity in H1

2017 is up 7% from H1 2016 at US$114 billion. Volumes in Germany jumped by 25% to their second

highest recorded level in the first half of the year, while a robust Q2 helped volumes in the

Netherlands climb by 53% to reach their third highest first half. H1 gains in Spain (+51%), Russia

(+31%) and Finland (+20%) were balanced by dips in France (-16%) and Sweden (-7%). In the UK,

markets continued to shrug off political uncertainty as H1 2017 investment activity rose by 18% to

its third highest level on record in local currency terms.

China leads the charge in Asia Pacific

After a muted start to the year, Q2 investment volumes in Asia Pacific rose by 10% year-on-year to

US$31 billion, bringing first half volumes 13% higher than last year to US$61 billion. Robust

investment in China boosted quarterly volumes by 33% to US$8 billion, leading to a first half

increase of 36%. In Japan, a strong Q1 helped lift H1 volumes by 15%, with Q2 volumes increasing

by 10%. By contrast, Singapore recorded a 3% drop in H1 2017 volumes, with activity not able to

keep up with the vigorous first half of 2016. Australia is up on last quarter (+94%) but down on the

first half of last year (-5%).



Investment growth expected to be flat in 2017

Geopolitics will continue to play a major role in determining investor sentiment and market

activity in 2017. While the recent French elections passed without too much turmoil, the

continuation of the Brexit process coupled with a newfound tension in relations between the U.S.

and many of its allies across the world has given investors cause for concern. Alongside the

geopolitics, central bankers in many developed economies continue to give strong signals that

policy normalisation is around the corner. Discussions of a possible slowdown in quantitative

easing by the ECB rattled markets, while the Federal Reserve has discussed unwinding its stimulus

programme in ever clearer terms. With tapering likely to start at the end of 2017 or early 2018, the

prospects of tighter monetary policy will play an increasingly important role in determining

investment decisions.

Despite these challenges, global real estate investment continues to be accretive; even though

yields are at their cyclical low, the weight of capital seeking access to the sector continues to grow.

And while concerns about oversupply have begun to affect occupier fundamentals in certain

global markets, global rental growth and capital value growth are expected to remain positive in

2017. Given this, we anticipate that 2017 transactional volumes will be more or less in line with the

US$650 billion recorded in 2016.

Direct Commercial Real Estate Investment, 2006 - 2017


0

100

200

300

400

500

600

700

800

Americas EMEA Asia Pacific Global

US

$ b

illio

ns

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (F)

-0-5%~0%

~0%

~0%



Direct Commercial Real Estate Investment – Regional Volumes, 2016 - 2017


Direct Commercial Real Estate Investment – Largest Markets, 2016 - 2017


US$ billions Q1 2017 Q2 2017

% change

Q1 17-Q2 17 Q2 2016

% change

Q2 16-Q2 17 H1 2016 H1 2017

% change

H1 16-H1 17

Americas 58 64 10% 69 -7% 130 122 -6%

EMEA 56 58 3% 56 4% 106 114 7%

Asia Pacific 29 31 6% 28 10% 54 61 13%

Total 144 153 7% 153 0% 290 297 2%

US$ billions Q1 2017 Q2 2017

% change

Q1 17-Q2 17 Q2 2016

% change

Q2 16-Q2 17 H1 2016 H1 2017

% change

H1 16-H1 17

U.S. 51.2 58.8 15% 63.5 -7% 122.0 110.0 -10%

UK 15.4 17.7 15% 15.0 18% 31.9 33.1 4%

Germany 12.3 11.3 -8% 10.5 8% 18.9 23.6 25%

Japan 11.3 8.2 -28% 7.4 10% 17.0 19.5 15%

China 4.4 8.0 82% 6.0 33% 9.1 12.4 36%

Australia 2.5 4.9 94% 4.4 10% 7.8 7.4 -5%

Netherlands 2.1 4.6 118% 2.8 62% 4.4 6.7 53%

Canada 5.3 4.2 -21% 4.0 5% 6.6 9.6 44%

France 5.1 3.9 -24% 7.1 -45% 10.7 9.0 -16%

South Korea 4.9 3.4 -30% 3.1 10% 5.8 8.3 43%

Italy 1.9 3.4 74% 2.4 41% 4.7 5.3 13%

Spain 2.9 3.0 4% 1.7 75% 3.9 5.9 51%

Singapore 2.0 3.0 52% 4.4 -33% 5.1 4.9 -3%

Hong Kong 2.7 2.4 -11% 1.6 54% 5.1 5.2 1%

Sweden 2.7 2.3 -13% 2.5 -9% 5.4 5.0 -7%

Norway 1.8 2.0 7% 1.6 20% 3.4 3.8 12%



Regions in focus

Americas’ investment activity slows but steady finish for 2017 expected

Regional investment in Americas’ real estate reached US$122 billion in H1 2017, down 6% from the

same period in 2016. Within the U.S., transaction volumes also declined, falling 10% year-on-year

to US$110 billion in the first half of 2017. Contributing factors behind activity slipping from the

cyclical high of 2015 include greater discipline in asset selection by domestic U.S. investors, together

with a relative shortage of available product for sale in some primary markets.

Elsewhere in the Americas, Canada experienced healthy investment levels in the second quarter,

with transactional activity 5% above Q2 2016 at US$4.2 billion. With the economic outlook

brightening and a transition to stronger property market fundamentals underway, the Canadian

investment market may be especially well-positioned in the broader North American context.

In Latin America, investment volumes remained relatively subdued in the second quarter;

however, the two largest markets have year-to-date volume totals that are at least double those in

H1 2016. In Brazil, the office sector dominated trading in the second quarter, while hotel

investment was the driver behind transactional activity in Mexico during the period. Both

countries appear poised for increased investment levels in the second half of 2017.

A continued healthy investment market is expected for the rest of 2017 in the region. The

dominant U.S. market is projected to remain down moderately in transaction levels due to greater

selectivity by domestic institutions and relatively tight product supply in some markets. However,

global investors are anticipated to carry on prioritising the U.S. market for capital deployment in

the property asset class, which is still well positioned for strong returns in relation to other asset

classes. Somewhat more robust investment activity growth may be found outside the U.S., as

Canada and Latin America’s economic prospects have improved or stabilised, and transaction

volumes for the Americas are forecast to finish the year only slightly lower than in 2016, with a

decrease of up to 5%.

EMEA investment volumes on the rise in Q2 2017

EMEA investment volumes reached US$58 billion in a very active Q2 2017, edging up 4% compared

to the same quarter last year. Weaker second quarter investment activity in France (-45% year-on-

year) was compensated for by a solid performance from Europe’s growth engine Germany, which

reported an 8% annual increase. The UK market performed quite well, registering volumes of

nearly US$18 billion in Q2, a rise of 18% year-on-year in dollar terms, and 33% in local currency.

Southern Europe outperforms, while Russia capitalises on higher yields

Southern Europe saw investment levels jump 58% year-on-year, supported by significant increases

in Spain (+75%) and Italy (+41%). Greece, which has witnessed more investment flowing in, posted

investment volumes of nearly US$400 million in the quarter (compared to only US$38 million in Q2

2016), spread over a growing number of deals and sectors.



Overall investment activity across Central and Eastern Europe (CEE) was down by 5% year-on-year

(to US$3.4 billion). This was mainly due to the weaker performance of the Polish market (-28%).

Russia, on the other hand, saw a healthy nearly US$1 billion increase in volumes compared to Q2

2016, in what amounted to a 285% spike in investment activity.

Elsewhere in Europe, the Nordics saw transactional activity increase 6% year-on-year in Q2 2017,

with growth in Finland (+111%) and Norway (+20%) balancing declines in Sweden (-7%) and

Denmark (-28%).

London maintains position at top of global rankings

Investment volumes in London rebounded by 32% year-on-year in Q2 2017, helping push first half

volumes 33% higher as it maintained its position as the top global investment destination for a

second quarter. New York remained in second place, despite transactional activity declining by

54% in H1. North American markets accounted for the majority of leading cities with several

recording robust growth, including Vancouver, Boston, San Francisco, Atlanta and Dallas. In Asia

Pacific, Shanghai posted its strongest first half on record as volumes increased by 86% over the

same period last year.

Direct Commercial Real Estate Investment, Top 20 Cities, H1 2017


Transactional activity stronger in the Asia Pacific region

Investment volumes across Asia Pacific’s commercial real estate markets came in at US$60.7

billion during H1 2017, up 13% from the same period a year ago, and are looking on track to

reach our full-year forecast of US$130 billion. China led performance during the first half of the

year, but transactional activity was also higher in South Korea and Japan and largely stable in

Australia, Hong Kong and Singapore.

Cross-border investment volumes remained firm during H1 2017, accounting for 30% of total

transaction volumes. Inter-regional purchasers were active, particularly in India, China and

Australia, representing nearly one-half of all cross-border purchaser activity.

0 2 4 6 8 10 12 14 16 18

Vancouver

San Francisco

Atlanta

Toronto

Seattle

Yokohama

Dallas

Sydney

Silicon Valley

Paris

Singapore

Hong Kong

Seoul

Washington DC

Shanghai

Tokyo

Boston

Los Angeles

New York

London

Americas

EMEA

Asia Pacific

US$ billions



Domestic buyers dominate in Japan

Japan recorded US$19.5 billion worth of transaction volumes in the first half of 2017, up 15%

year-on-year. Domestic buyers dominated the market with J-REITs comprising close to 30% of

total activity, but some offshore investors became more active in non-core locations.

Transaction volumes for the full-year 2017 (in yen terms) are likely to be similar to last year’s

level. Although there are still limited opportunities, particularly for new entrants, more owners

seem willing to sell instead of refinancing their assets.

Cross-border capital maintains interest in Australia

Investment volumes in Australia came to US$7.4 billion in H1 2017, down slightly by 5% year-on-

year. A significant proportion of demand was from offshore capital sources, with cross-border

buyer activity making up one-third of total transactional activity and outpacing cross-border

sellers by almost two to one. We expect transaction levels to remain elevated over the

remainder of 2017.

Strong start to 2017 for foreign buyers in China

China registered US$12.4 billion worth of transaction volumes in the first half of 2017, up 36%

year-on-year. Foreign buyers have had a strong start to 2017, accounting for one-third of total

transactional activity in Q2. Looking ahead, the investment market is likely to remain stable as

domestic money will aim to invest locally following the introduction of capital outflow

restrictions. Domestic developers, in particular, are expected to become a new pool of buyers

for existing assets as they seek to deploy excess capital.

Direct Commercial Real Estate Investment – Quarterly Trends, 2007 - 2017




Capital Values and Yields

Bounce back in capital value appreciation

Capital value growth for prime assets in 26 major office markets bounced back to 4.5% in the year

to Q2 2017, reversing a deceleration since early 2016. The improvement was largely due to income

growth. Capital value growth is expected to increase further to around 6% for the full year.

Several office markets have registered exceptional capital appreciation over the past year, notably

Stockholm (+26%), Sydney (+23%), Hong Kong (+22%), Milan (+20%) and Frankfurt (+20%).

By contrast, prime notional capital values are correcting in some U.S. markets (as prime yields

shifted slightly in late 2016 into early 2017), as evident in San Francisco (-7%), Boston (-6%) and

New York (-5%).

Further yield compression

Further prime office yield compression has been recorded in Brussels (25 bps), Stockholm (25 bps),

Hong Kong (25 bps), Sydney (20 bps) and Milan (15 bps). Yields are largely flat in the U.S. gateways.

Only Mexico City and Boston have seen yields move outwards over the past quarter.

Prime Office Yield Shift, Q2 2016 – Q2 2017


-90 -70 -50 -30 -10 10 30 50 70

TokyoSydney

SingaporeShanghai

SeoulMumbai

Hong KongBeijing

Mexico CitySao Paulo

Washington DCToronto

San FranciscoNew York

Los AngelesChicagoBoston

StockholmParis

MoscowMilan

MadridLondon

FrankfurtBrussels Q1 2017 - Q2 2017

Q2 2016 - Q1 2017

Basis point change

Am

eri

cas

Eu

rop

eA

sia

Pacif

ic



Prime Office Yields, 2007 - 2017

*Across 21 major office markets Source: JLL, July 2017

Mean Prime Office Yields*

Yield Compression (bps)

%

bps

4.6

5.1

5.6

6.1

6.6

7.1

-30

-10

10

30

50

70

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

Q3'08

Q4'08

Q1'09

Q2'09

Q3'09

Q4'09

Q1'10

Q2'10

Q3'10

Q4'10

Q1'11

Q2'11

Q3'11

Q4'11

Q1'12

Q2'12

Q3'12

Q4'12

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Q2'14

Q3'14

Q4'14

Q1'15

Q2'15

Q3'15

Q4'15

Q1'16

Q2'16

Q3'16

Q4'16

Q1'17

Q2'17

6.87%

5.49%



Corporate Occupiers

Occupier activity remains robust

Corporate occupier activity has remained robust across key global markets. In Asia Pacific overall

leasing activity is relatively stable as Delhi continued to be the regional leader in total volume

leased, while Melbourne, Singapore and China’s Tier 1 cities have also seen strong growth in

leasing over the first half of 2017.

In the U.S., continued economic and business expansion is evident despite political headwinds,

and an unprecedented focus on talent attraction and retention are key themes shaping occupier

activity. Leasing activity and net absorption during Q2 increased from the previous quarter,

although were below the levels seen in 2015 and 2016.

An improving economic environment and corporate sentiment in Europe pushed office take-up to

3.0 million square metres in Q2 2017, the highest second quarter since 2006.

Human experience driving corporate real estate strategy

An increased focus on talent and productivity within corporate strategy has contributed to a

growing emphasis on employee experience.

In response to this shift, JLL has carried out a unique global research project to decode the

workplace experience, understand its specific impact on business performance and work out how

real estate can help achieve strategic performance objectives.

The results of our research project have pinpointed three priorities to drive human experience for

corporate occupiers. Key recommendations include:

■ Engagement

Introducing innovative workspaces will drive engagement

Use workspace to foster an entrepreneurial spirit to attract and retain employees

Consider adjusting workplace density to improve employee effectiveness

Formalize human experience in the organizational structure

■ Empowerment

Trust, kindness and taking initiatives — the top three work philosophies — will

empower employees

Agility — the choice to work elsewhere will improve performance and quality of life

Employees appreciate space for concentration, regeneration and movement

■ Fulfilment

Happiness is the number one priority for a positive workplace experience

Companies must consider spaces dedicated to health and well-being

Managerial approaches linked to recognition and personal learning and

development also impact employee fulfilment



Global Office Market Conditions Matrix*, 2017 - 2019

*Relates to conditions in the overall office market of a city. Conditions for prime CBD space may differ from the above. Source: JLL, July 2017

Brussels Beijing

Frankfurt Hong Kong

London (West End)

Mumbai

Madrid Shanghai

Moscow Singapore(CBD Overall)

Paris Sydney

Stockholm

Dubai

2017 2018 2019 2017 2018 2019

Tokyo(CBD 5-kus)

Neutral Market

Landlord Favourable

Tenant Favourable

Chicago

Los Angeles

New York

San Francisco

Toronto

Washington DC

Mexico City

Sao Paulo

2017 2018 2019



Office Markets

Office Demand Dynamics

Global office leasing activity is steady

Office leasing activity has been remarkably stable during the first half of 2017, with global volumes

virtually unchanged on the same period of 2016. Western Europe (+8% year-on-date), where

employment prospects and corporate sentiment have improved, has taken the lead in driving

growth in leasing activity during 2017.

At a sub-regional / country level:

■ Activity has strengthened in China’s Tier 1 Cities (+57% year-to-date), Southern Europe

(+35%) and South East Asia (+17%). There were also signs of improvement in the UK

market (+16%).

■ Volumes remain firm in Core Europe (+3%) and Australia (0%), but have moderated slightly

in the United States (-3%) and India (-3%).

■ Of the major economies, only Japan has seen notably lower volumes in 2017 (-58%), in

part due to supply shortages in existing buildings in Tokyo.

For the full-year 2017 we expect global leasing volumes to remain steady, matching the levels

recorded in 2016. Volumes are projected to be somewhat higher than in 2016 in the United States,

stable in Europe and slightly lower in Asia Pacific.

Western Europe take-up highest Q2 since 2006

After a strong first quarter, robust occupier demand pushed European office take-up to 3.0 million

square metres in Q2 2017. Total take-up across Europe in H1 2017 is now 4% higher than a year

ago, and is 8% higher in Western Europe. By contrast, take-up in Central and Eastern Europe has

fallen by 14%:

■ Germany has seen volumes increase a further 5% (year-to-date) on the record levels of

2016. Berlin is the most active leasing market, while Hamburg has registered the strongest

growth in take-up so far in 2017. Take-up in Germany is expected to remain healthy for the

remainder of the year, although a repeat of the record 2016 outcome is unlikely.

■ The vigorous momentum recorded in Paris in Q1 slowed somewhat in Q2 2017, but

uncertainty ahead of the French presidential elections may explain some of this

deceleration. Nonetheless, volumes in H1 are still 4% higher than a year ago and we

predict the continued strengthening of employment growth and corporate sentiment to

push take-up to around 2.3 million square metres for the full-year 2017.

■ Volumes in London in H1 are 11% higher than a year ago. The serviced office sector has

accounted for around 35% of London’s take-up in response to increasing requirements for

flexible space.



■ The Dutch cities have posted strong leasing market activity, with volumes up 41% in H1.

While Amsterdam has taken the lead, activity is now expanding in other Dutch cities such

as The Hague and Rotterdam.

■ Other European cities registering vigorous growth in leasing volumes in 2017 to date

include Edinburgh (+70%), Dublin (+64%), Barcelona (+47%), Madrid (+35%) and Milan

(+26%).

Leasing activity bounces back in the United States

After a slow start to the year, the U.S. office market rebounded during the second quarter on the

back of sustained tenant demand, consistent economic fundamentals and a raft of new supply

coming to the market. Office leasing activity saw a modest bump of 4% over the quarter, with a

diverse set of geographic and industry contributors.

Although tech remained the largest industry by volume, its share of transactions (17.4%) fell below

previous quarters as hiring constraints, uncertainty over immigration and visa policies, and a

broader cooling throughout the sector limited its dominance during Q2. A bevy of large leases

from financial firms points to strength in an industry that is heavily exposed to rightsizing and

automation.

Despite a return to healthier levels during the second quarter, net absorption has become

increasingly unstable at the market level:

■ 55% of occupancy growth so far this year has come from two markets – Seattle and Dallas – powered by organic tech and corporate expansion that continues apace.

■ Secondary markets such as Austin, Raleigh-Durham, Oakland-East Bay, Denver and

Charlotte have also made further strides this year. Notably, absorption continues in these

metro areas, despite significant tightening and rental growth, as their talent pools and relative cost advantages compared to gateway markets make them attractive for occupiers in knowledge-intensive and creative industries.

■ By contrast, year-to-date absorption has been negative in certain key markets, including

Silicon Valley and San Francisco which previously led much of the recovery and were

consistently among the top contributors to national net absorption.

Supply and demand dynamics balanced across most Asia Pacific markets

Although leasing activity declined by 13% year-on-year in Asia Pacific in Q2, volumes were down

only 2% in the first half of the year, indicating stable leasing levels across the region. Delhi has

continued to be the regional leader for leasing volumes, while Bengaluru, Manila and Guangzhou

have also seen strong new leasing so far in 2017. However, sluggish tenant demand has impacted

leasing activity in Seoul and Taipei.

■ Aggregate gross leasing for the four India Tier 1 cities registered a small 3% decline in H1

2017. Traditional sectors remained the primary demand drivers; however, co-working

operators have started to be major contributors of space take-up. Uncertainty

surrounding U.S. offshoring policy and automation has seen ITES firms exercise caution.



■ Leasing activity was higher in all three China Tier 1 cities. Domestic financials, insurance,

real estate and tech firms drove leasing activity across these markets. At the same time,

Hong Kong has witnessed strong demand from financial firms from the PRC.

■ A lack of available space in existing buildings and upcoming supply in Japan’s core areas

continued to impact leasing activity in the Grade A segment in the first half of the year.

■ Gross leasing volumes in H1 2017 in Singapore were notably higher than a year earlier,

bolstered by large deals on recently completed or upcoming buildings as tenants take

advantage of lower rents to lease high-quality space.

■ Aggregate gross leasing volumes in Australia during H1 2017 were flat on a year ago.

Demand is strong and broadly-based in Melbourne (up 78% in H1), with centralisation a

key theme. In Sydney, however, gross leasing was 33% lower than a year earlier due to a

high base effect as leasing levels in H1 2016 were bolstered by pre-leasing in new

developments.

Asia Pacific leasing volumes this year are likely to be marginally lower (0% to -5%) than in 2016, with

upside potential for improved activity by year-end.

Global Office Demand – Gross Leasing Volumes Change, H1 2016 – H1 2017

Based on 6 cities in Australia; 3 cities in China; 2 cities in France; 5 cities in Germany; 4 cities in India; 1 city (Tokyo) in Japan; 50 cities in the United States; 2 cities in the UK Source: JLL, July 2017

Pro

jecti

on

-60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60

France

Germany

UK

China

% change

Americas

EMEA

Asia Pacific

Australia

United States

India

Japan



Global Office Demand – Annual Gross Leasing Volumes, 2007 - 2017

24 markets in Europe; 50 markets in the U.S.; 22 markets in Asia Pacific Source: JLL, July 2017

Global Office Demand – Quarterly Gross Leasing Volumes, 2012 - 2017

24 markets in Europe; 50 markets in the U.S.; 22 markets in Asia Pacific Source: JLL, July 2017

30

33

36

39

42

45

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

mill

ions

sq

m

Pro

jec

tio

n

7

8

9

10

11

Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217

mill

ions

sq

m



Office Supply Trends

Global office vacancy rate stable at 11.9%, but trending upwards

The global office vacancy rate is stable at 11.9%, where it has remained for much of the past year.

Nonetheless, supply is expected to trend upwards during the rest of 2017, with both the Americas

(14.7%) and Asia Pacific (11.1%) already seeing an uptick in supply in Q2. By contrast, Europe has

seen a further fall in vacancy to 7.8%, and is likely to stay below 8% for the remainder of 2017.

European vacancy edges down to 7.8%

European office vacancy, at 7.8%, is at its lowest since Q4 2008. Robust leasing activity is offsetting

higher development completions and vacancy has fallen in the majority of markets:

■ Some of the largest falls over the past year have been recorded in the Dutch cities. Amsterdam has seen vacancy fall by one-third over the past year and, at 8.3%, vacancy is at its lowest since 2002.

■ The German cities of Berlin, Munich and Hamburg continue to register reductions in

supply. In fact, Berlin and Munich, at 4.1% and 4.0% respectively, command Europe’s lowest vacancy rates. With development activity set to increase across the ‘Big 5’ German

cities, vacancy rates are likely to stabilise towards the end of 2017.

■ In London and Dublin, vacancy is trending upwards as new space comes on stream. In

London the vacancy rate now sits at 5%, the highest rate since 2014 but still below the long-run average.

Total 2017 completions in Europe are expected to reach 5.1 million square metres, which is around

25% ahead of the five-year average. At 5.2 million square metres, the 2018 development pipeline

will be just as significant, with the majority of completions concentrated in Paris, London, Moscow,

Luxembourg and Munich.

European office vacancy is projected to remain stable at 7.8% in 2017, as higher completions are

balanced by solid leasing activity. Expansionary demand will keep vacancy rates on a downward

trajectory across most of Western Europe.

Supply volumes mixed; Asia Pacific vacancy rate rises slightly to 11.1%

Vacancy rates continued to decline in about half of Asia Pacific markets during Q2 2017; at the

same time a fifth of them saw even higher vacancy, with those in Beijing having increased the most

over the quarter.

The Asia Pacific regional vacancy rate is forecast to push up to around 12% by the end of 2017,

with Jakarta, Singapore and Ho Chi Minh City all expected to register a notable increase in

vacancy.



U.S. construction altering the market landscape

The surge of ground-breakings that began in 2014 and 2015 is now beginning to provide some

relief in a number of U.S. markets, which will help to spur leasing activity that has been hindered

by a lack of options and cost concerns.

Due to rising new deliveries and more muted net absorption the national vacancy increased for the

third consecutive quarter in Q2 2017, registering a 10 bps rise to 14.8%. The rise in vacancy has

been particularly noticeable in tech hubs: Sunnyvale in Silicon Valley, for instance, has seen

vacancy rise from 8.9% to 14%.

With nearly 8 million square metres of deliveries expected over the next six quarters, of which about

half is currently available, dynamics will change markedly in terms of landlord/tenant leverage,

paving the way for a more balanced and competitive marketplace.

Canada’s office market steady with stronger demand ahead

The Canadian office market loosened marginally in the second quarter, with total vacancy

increasing 10 bps to 12.2%. The national market continues to be sharply divided in performance

between the robust leasing markets in Vancouver and Toronto, and the challenged energy-focused

markets of Edmonton and Calgary. Montreal is beginning to show increasingly positive signs with

its single strongest quarter of net absorption in well over a decade.

Mexico City stable as construction wave to crest in second half of 2017

Mexico City has seen its vacancy rate remain steady at 14% in Q2 2017 as demand continues to be

resilient in the face of heavy supply additions. Rental rates have kept largely stable, declining only

very modestly over the course of Q2. With deliveries continuing to ramp up, the vacancy rate is

poised to increase into 2018, with downward pressure on rental rates anticipated.

New supply winding down and demand outlook brighter in Brazil

As the development pipeline empties and economic growth returns, it’s likely that in 12-18 months

the leasing market in Sao Paulo will be in substantially greater balance than it is today. Rental

rates are already close to the cyclical trough in the market, and broad stabilisation is approaching.

Dubai vacancy trends downwards

With limited levels of new supply entering the Dubai market, vacancies have generally trended

down to 14% in the CBD, 2% lower than the same period last year and the lowest level since before

the Global Financial Crisis.



Global Office Completions, 2000 - 2019

24 markets in Europe; 25 markets in Asia Pacific; 50 markets in the U.S. Asia relates to Grade A only. Source: JLL, July 2017

Office Supply Pipeline – Major Markets, 2017 - 2018

Covers all office submarkets in each city. Tokyo – CBD - 5 kus Source: JLL, July 2017

0

5

10

15

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(F)

2018(F)

2019(F)

U.S. Europe Asia Pacific

mill

ion

s s

qm

Average

0 5 10 15 20 25 30 35 40

Los AngelesMadrid

TorontoStockholmNew York

ChicagoSydney

MilanFrankfurt

BostonBrussels

ParisWashington DC

SeoulHong Kong

DubaiLondon

MoscowSan Francisco

Sao PauloSingapore

TokyoMumbaiBeijing

Mexico CityShanghai

Completions as % of existing stock

2017 2018



Office Vacancy Rates in Major Markets, Q2 2017

Regional vacancy rates based on 62 markets in the Americas, 24 markets in Europe and 25 markets in Asia Pacific.

Covers all office submarkets in each city. All grades except Asia and Latin America (Grade A only). Tokyo relates to CBD – 5 kus. Source: JLL, July 2017

Global and Regional Office Vacancy Rates, 2009 - 2017

62 markets in the Americas, 24 markets in Europe, 25 markets in Asia Pacific. All grades except Asia and Latin America (Grade A only). Source: JLL, July 2017

0%

5%

10%

15%

20%

25%

30%

San

Fra

ncis

co

To

ron

to

New

Yo

rk

Bo

sto

n

Mexic

o C

ity

Lo

s A

ng

ele

s

Ch

icag

o

Wash

ing

ton

DC

Sao

Pau

lo

Lo

nd

on

Pari

s

Sto

ckh

olm

Fra

nkfu

rt

Bru

ssels

Mad

rid

Milan

Mo

sco

w

To

kyo

Ho

ng

Ko

ng

Beijin

g

Sin

gap

ore

Syd

ney

Seo

ul

Mu

mb

ai

Sh

an

gh

ai

Quarterly movement

Increased

Decreased

Stable

Americas

14.7%

Europe

7.8%

Asia Pacific

11.1%

Global

11.9%

7

9

11

13

15

17

19

Q4 2

00

9

Q1 2

01

0

Q2 2

01

0

Q3 2

01

0

Q4 2

01

0

Q1 2

01

1

Q2 2

01

1

Q3 2

01

1

Q4 2

01

1

Q1 2

01

2

Q2 2

01

2

Q3 2

01

2

Q4 2

01

2

Q1 2

01

3

Q2 2

01

3

Q3 2

01

3

Q4 2

01

3

Q1 2

01

4

Q2 2

01

4

Q3 2

014

Q4 2

01

4

Q1 2

01

5

Q2 2

01

5

Q3 2

01

5

Q4 2

015

Q1 2

01

6

Q2 2

01

6

Q3 2

01

6

Q4 2

01

6

Q1 2

01

7

Q2 2

01

7

Va

ca

ncy R

ate

(%

)

Americas

Asia Pacific

Europe

GLOBAL

17.9%

14.7%14.4%

11.9%11.9%

11.1%

10.3%

7.8%



Office Rental Trends

Rental growth surprises on the upside

Rental growth has quickened in recent months, with annual growth for prime offices (across 26

major markets) accelerating in Q2 2017 to 3.4% (from 2.7% in Q4 2016).

Several major markets are witnessing particularly vigorous growth, with double-digit uplifts in

Sydney (+32% year-on-year), Stockholm (+17%) and Toronto (+10%). Meanwhile, Chicago (+9%)

and Washington DC (+4%) continue to register solid growth in asking rents; Hong Kong Central has

again seen a further uplift (+8%); and rents are gathering pace in Brussels (+9%), Madrid (+8%) and

Milan (+5%).

Significantly, Singapore and Sao Paulo have recorded their first quarter-on-quarter rental growth

since Q1 2015 and Q1 2012 respectively, pointing to a turning point in their rental cycles.

We have upgraded overall rental growth expectations for 2017 from 2% to 3%. Sydney, Stockholm

and Brussels are anticipated to top the global ranks for rental growth for the full year.

New supply driving up asking rents in the United States

New high-quality offices in the U.S., that are commanding a premium compared to existing space,

have placed significant upward pressure on rents, which have risen by 3.2% over the year and by

4.9% for CBD Class A space. Moving into the second half of 2017 and into 2018, the wave of new

supply to deliver over the next six quarters will markedly alter the office landscape, increasing

competition among landlords for tenants and stabilising rents in the process.

Rental growth maintains its momentum across mainland Europe

The European Office Rental Index rose by 2.1% in the year to Q2 2017, nearly double the 10-year

average of 1.2%. Excluding the UK, annual rental growth reached 3.6%, highlighting the continued

momentum across mainland Europe.

Rental uplifts have been recorded across a broad range of European markets. Stockholm is

catching the headlines as the standout market, but solid growth is also a feature of the Benelux

(Brussels, Amsterdam and Utrecht), Southern Europe (Rome, Barcelona, Madrid and Milan) and

Germany (Stuttgart, Hamburg and Munich).

In London, prime rents remained unchanged in Q2 2017. However, the 8.3% drop in prime rents

since the Brexit vote highlights the ongoing uncertainty in the market. Rents are predicted to fall

further by year-end as robust completions apply upward pressure on vacancy.



Looking ahead, solid occupier activity and limited development will continue to restrict the

availability of high-quality space, driving up rents across Europe as a result. Prime office rental

growth is expected to total around 2% per year in 2017 and 2018 with Barcelona, Stockholm and

Amsterdam projected to record the strongest uplifts.

Overall rental growth edges up in Asia Pacific, albeit at a slower rate

Asia Pacific rents increased 3.3% year-on-year in Q2 2017. The most vigorous annual rental growth

was recorded in Sydney and Melbourne, contributed to by declining incentives and increasing face

rents. While supply pressure held Shanghai rents relatively stable, demand from Chinese

companies contributed to robust growth in Hong Kong. Elsewhere, Singapore returned to growth

with rents edging higher.

Prime Offices – Rental Change, Q2 2016 – Q2 2017

Based on rents for Grade A space in CBD or equivalent. In local currency. Source: JLL, July 2017

-10 -5 0 5 10 15 20 25 30 35

ParisDubai

San FranciscoMumbai

FrankfurtTokyo

BostonLos Angeles

New YorkWashington DC

MilanMadrid

Hong KongBrusselsChicagoToronto

StockholmSydney

% change

Americas

EMEA

Asia Pacific

ShanghaiBeijingSao PauloMexico CitySingaporeMoscowSeoulLondon



Prime Offices – Rental Change, 2010 - 2017

Prime office rental growth: unweighted average of 26 major markets.


Prime Offices – Projected Changes in Values, 2017

*New York – Midtown, London – West End, Paris – CBD, Dubai – DIFC. Nominal rates in local currency. Source: JLL, July 2017

8.0%8.3%

1.5%0.8%

3.7% 4.0%

2.7%3.0%

0

2

4

6

8

10

2010 2011 2012 2013 2014 2015 2016 2017F

Re

nta

l ch

an

ge

(y-o

-y %

)

10 - 20%

20 - 30%

Capital ValuesRental Values

Stockholm, Brussels, Toronto, Washington DCMilan, Hong Kong

Milan, Stockholm, SydneyBrussels, Frankfurt, Moscow

Toronto, Singapore

Madrid, Mumbai, Tokyo, Dubai*, Boston, Chicago Los Angeles, San Francisco, New York*Washington DC, Paris*, Shanghai, Beijing

Shanghai, Beijing, Sao Paulo Mexico City, Seoul, London*

Madrid, Frankfurt, Dubai*, Boston, Chicago Los Angeles, New York*, San Francisco Singapore, Mumbai, Paris*, Tokyo, Moscow

Sydney Hong Kong

5 - 10%

0 - 5%

0 - 5%Sao Paulo, Mexico CityLondon*, Seoul



Prime Offices – Rental Clock, Q2 2017

Based on rents for Grade A space in CBD or equivalent. U.S. positions relate to the overall market. Source: JLL, July 2017

Rental Values

Bottoming Out

Rental Growth

Slowing

Rental Values

Falling

Rental Growth

Accelerating

Americas EMEA Asia Pacific

Moscow, Johannesburg, Dubai, Zurich, Singapore

Stockholm, Los Angeles

Paris, Sydney

Milan, Amsterdam

Madrid, Berlin

London

Istanbul, Seoul, Houston

Frankfurt

Brussels

Prague, Boston, Toronto

Warsaw, Sao Paulo

Beijing, Washington, DC

Tokyo, Hong Kong, San Francisco

Delhi

Mumbai

Shanghai

New York

Mexico City

Chicago, Dallas



Retail Markets

U.S. retail market approaching cyclical peak

The U.S. retail sector may be reaching its zenith for the cycle. Major markets are approaching their

peak, with retail performance expected to slow this year as same-store growth stagnates for many

retailers, and store closures rise. Closure announcements have been accelerating in recent

months, with department stores closures topping the headlines. Macy’s and Sears are forecast to

return approximately 18 million square feet of mall space to the market over the next year. While

the upcoming vacancies will pose opportunities for strong malls to upgrade to a more productive

tenant or refresh the space with an entertainment destination, weaker malls could experience a

ripple effect to their in-line occupancy.

Although construction activity has ramped up since the end of the recession, developers and their

lenders are keeping the reins close on supply and current levels are well below what they were 10

years ago. Much of the major retail construction currently underway is for mixed-use

development. Increasing population densities in urban centres are driving this trend and helping

to justify soaring land costs.

Structural change becoming more prominent across Europe’s retail markets

The continued growth of online sales, omni-channel retailing and technical innovations are forcing

many retailers across Europe to review business models in order to achieve profitable growth and

protect margins. As a result, major retailers are investing in their distribution networks and those

with larger store portfolios are rightsizing, although demand for quality retail space remains

strong.

Prime retail rents remained predominantly stable during the second quarter of 2017 across all

asset classes, with notable prime rental growth for retail warehouse park space in Berlin, Hamburg

and Stuttgart, which rose 5.9%, 2.7% and 2.7% respectively over the quarter. Looking forward,

prime high street rents in Stockholm, Copenhagen, Prague, Dublin, Madrid and Barcelona are

forecast to see the most robust uplifts in the medium term. Prime shopping centre rents are

expected to record the strongest growth in Hungary, the Czech Republic, Russia and Spain.

F&B operators lead activity in Asia

F&B operators continue to be the most active segment in Asia Pacific, which saw mixed rental

trends across the region. In Shanghai, rental growth was led by malls with experienced operators

in areas such as Huaihai Road and Huamu Road. High street shop rentals in Hong Kong remained

under pressure, albeit with the pace of decline moderating. The Marina submarket in Singapore

continued to see the most pronounced decline, in part due to supply pressures. Rents were stable

in Sydney and Melbourne, where demand from F&B operators has provided support for rents;

however, negative rental reversion is still being reported by many institutional landlords.



Prime Retail – Rental Clock, Q2 2017

Prime Industrial – Rental Clock, Q2 2017

Relates to prime space. U.S. positions relate to the overall market. Source: JLL, July 2017


Rental Values

Bottoming Out

Rental Growth

Slowing

Rental Values

Falling

Rental Growth

Accelerating

Dubai, Berlin

London

Milan, Shanghai, Chicago

Los Angeles, Madrid

Washington DC, Beijing, Paris

Hong Kong

Moscow, Sydney

Mumbai

Delhi

Singapore

Boston, Houston

New York, San Francisco

Tokyo


Rental Values

Bottoming Out

Rental Growth

Slowing

Rental Values

Falling

Rental Growth

Accelerating

Paris, Warsaw, Istanbul

Madrid Moscow

Sydney, FrankfurtSingapore

Boston, London, Stockholm

Shanghai

Houston, Atlanta

Philadelphia

Chicago, Los Angeles

New York, Dallas

Tokyo

Beijing

San Francisco

Amsterdam, Hong Kong

Milan



Industrial Markets

U.S. industrial rents surge on tight supply and structural tailwinds

Total net absorption in the U.S. warehouse and distribution market as a percent of total inventory

trailed new deliveries for the first time in over seven years during Q2 2017. This lower level is not a

sign of weakening market conditions however, and is largely attributable to the lack of quality

vacant space left in the market to absorb, coupled with a decline in average size of transactions.

National vacancy declined again in Q2 2017 and is now at 5.2%. Nationally, rents increased by

nearly 6.5% on an annualised basis to reach US$5.35 per square foot, an all-time high. We

anticipate that rents will continue on their strong upward track through the rest of 2017.

The construction pipeline continues to expand, increasing in more than half of U.S. markets

compared to Q1. Pre-leasing rates for both speculative and build-to-suit buildings were more

robust in Q2 than the previous quarter. In particular, e-commerce and logistics distribution

companies have signed more leases for buildings under construction (including proposed

projects), an indication of a growing sector with a need for new functional warehouse space.

European warehousing markets expected to maintain record occupier activity in 2017

Responding to continued strong online retail sales growth coupled with automation, digital

alignment of distribution processes and the need for new city logistics networks, JLL's latest

Supply Chain Activity Index suggests that the upward trajectory in European occupational demand

will continue through 2017 with total take-up likely to exceed last years' record.

As new warehousing demand continues to outpace construction and with the majority of new

supply remaining firmly build-to-suit driven, the European vacancy rate is expected to edge down

further through the rest of 2017 to reach around 5% at the end of the year overall. Meanwhile, high

levels of occupational demand, particularly in and around major cities, should push immediately-

available supply in these locations down even further. As a result, we see rising upward pressure

on rents with the majority of European markets anticipated to record rent increases over 2017.

Demand in Asia Pacific continues to stem from 3PLs and e-commerce firms

Leasing activity in Asia Pacific mainly involved 3PLs and e-commerce firms during Q2 2017. Take-

up accelerated in Shanghai as space completed in the previous quarter was leased, while retailers

and manufacturers expanded their warehousing space in Hong Kong. Leasing activity also picked

up in Singapore, supported by the recent uplift in manufacturing and trade figures. Occupier

demand in Sydney and Melbourne was robust with broad-based demand from 3PLs,

manufacturing, retail goods and wholesale goods traders.

Rents edged up in most markets across the region. Melbourne recorded the strongest increase

following a period of little growth, while Singapore’s logistics rents eased further on continued

supply pressure, but at a slower pace following the pick-up in leasing momentum.



Prime Logistics Yields in Major Markets, Q2 2017

Based on Class A Industrial yields in the Americas; Prime logistics yields in Europe; Indicative prime transactional yields in Asia Pacific; Average prime equivalent yield in Sydney. *Sydney – Outer Central West; Tokyo – Greater Tokyo; Hong Kong relates to Warehouses


4.75% 4.75% 4.75%

4.50%

4.00% 3.90%

6.50%6.30%

4.90%

4.60%

4.00%3.80%

6.75%

5.75%

5.20%

4.90%

4.50%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

Chicago Atlanta EasternPennsylvania

Dallas New JerseySouthernCalifornia

Singapore Sydney* Beijing Shangai Hong Kong* Tokyo* Warsaw Barcelona Paris Frankfurt London

EuropeAsia PacificUnited States



Hotel Markets

Hospitality sector performance resilient

Despite ongoing geopolitical and economic uncertainty, the travel and tourism industry continues

to flourish. The latest hotel performance data have posted encouraging results with most regions

recording positive RevPAR growth over the May 2017 year-to-date period.

In Europe, Spain continues to deliver impressive performance with Barcelona and Madrid

registering double-digit RevPAR increases driven by a record level of tourist arrivals. In Paris,

RevPAR grew nearly 10% year-on-year; however, it has not yet bounced back to previous levels.

In North America Canada is posting especially strong growth in hotel revenue, while the strength of

the U.S. economy has extended the hotel performance growth cycle. May 2017 was the 87th

consecutive month of RevPAR growth, up 3.4% year-on-year.

In Asia Pacific, Sydney and Tokyo were the top performers as RevPAR rose 13.1% and 5.9% year-

on-year respectively, thanks to strong tourism demand which outstripped hotel supply.

Hotel transaction volumes muted, but expected to pick up in H2

Overall investor sentiment is positive, due to improving economic indicators in key countries

together with optimistic hotel performance forecasts. Nevertheless, geopolitical issues such as the

French and UK elections, terrorist attacks and low oil prices resulted in investors adopting a more

cautious approach in the first half of 2017. Global hotel transactional activity was therefore

muted, totalling US$23 billion, 12% behind the same period last year.

The Americas accounted for nearly half of global hotel transaction volumes in H1 2017 with deal

activity on par with the previous year at US$11.5 billion. The U.S. was the most liquid market

globally with US$9.3 billion worth of hotel transactions, supported by a notable increase in

purchases by REITs, whose buying activity rose 91% year-on-year.

Global Hotel Investment Volumes, H1 2016 - H1 2017


In EMEA, Germany took the top spot for transaction volumes, recording US$1.9 billion worth of

hotel deals in H1 2017, albeit this was 14% lower than last year. The country has the highest level

of acquisition activity from banks and institutional investors in the region at 25%, primarily

attributable to the large number of lease agreement opportunities available in the German hotel

sector, which represented around 73% of total deals in H1.

US$ billions H1 2016 H1 2017

% change

H1 16-H1 17

Americas 11.4 11.5 1%

EMEA 9.4 8.0 -15%

Asia Pacific 5.2 3.5 -33%

Total 26.1 23.0 -12%



The UK came in second with transactions totalling US$1.8 billion. Though year-to-date UK

investment volumes are still 30% behind H1 2016, there has been a higher level of deal activities in

key cities. London registered a 7% year-on-year uplift in H1 2017, while regional cities such as

Manchester, Bristol and Edinburgh all observed increasing activity as well, with combined

investment volumes in these three cities nearly twice that of the same period last year.

The Netherlands and Spain were the two Western European countries that witnessed a year-on-

year increase in volumes in the first half of the year, up 77% and 44% respectively. This suggests

that investors are starting to branch out to other countries that have the potential to offer better

returns.

Asia Pacific saw a 33% decline in transaction volumes in H1 due to a dearth in quality stock on the

open market. Hong Kong, Japan and Australia were the star performers in terms of inbound

investment, thanks to long-term positive tourism fundamentals and trading performance. Hong

Kong recorded eight individual deals amounting to almost 2,000 rooms that sold for a combined

total of US$1.2 billion, which was twenty times more than its full-year 2016 volumes. Three of the

transactions were development plays and the former hotels or serviced apartment buildings

recently acquired will be converted to residential.

International capital continues to play a key role in the global hotel investment market,

accounting for around 25% of all transactions in H1 2017. North America is the largest recipient of

offshore capital with around 21% of U.S. hotel transactions involving international buyers, of

which more than half were from Asian countries including mainland China. European buyers have

also emerged as a major acquirer.

Hotel Transactions: Capital Outflows and Inflows, H1 2017

*Excludes multijurisdictional portfolio transactions Source: JLL, July 2017

-2.5 -1.5 -0.5 0.5 1.5 2.5 3.5

South America

Australasia

Middle East

Europe

Asia

North America

Mainland China

Outflows Inflows

US$ billions



Institutional investors checking in

Institutional investors have been steadily increasingly their capital allocation to the hotel sector,

with transactional activity totalling approximately US$2 billion in the first six months of 2017

compared to under US$1 billion five years ago. Deka Immobilien Investment GmbH, Union

Investment and Standard Life were some of the early pioneers who invested in the sector.

Since then, more companies have started to dip their toes into the sector as they look for better

yields and investment diversification. Investment destinations have expanded from Germany to

the U.S, the U.K, Ireland, Spain, Netherlands and Denmark. Hotel property is now being seen as a

viable asset class and we expect more deal activity from institutional investors in the coming

years.

Chinese outbound travel boom

Chinese travellers have been the largest source market in the world for international travel since

2012. The number of Chinese outbound travellers has jumped 300% from 34 million in 2006 to 135

million in 2016 and the UNWTO forecasts this number will grow to 220 million by 2025. Top

destinations include Thailand, South Korea and Japan due to their proximity to China; however,

Chinese travellers are starting to venture out to more distant locations such as the U.S., Germany,

France and the UK.

Increased disposable income, simpler visa regulations and the adoption of the Approved

Destination Status system in many countries are the major drivers behind the Chinese outbound

travel boom. The rise of the Chinese traveller is also prompting Chinese companies to expand

overseas to capture a share of this growing market. Jin Jiang International is now the fifth largest

hotel company in the world after its merger with Plateno in 2015 and 7 Days Inn, a budget brand

under the Plateno group, is opening hotels in locations such as Berlin, Munich, Leipzig and Venice.

While the capital restrictions imposed by the Chinese government on outbound investment have

slowed down deal flow, buying activity has continued with investors moving to smaller deal sizes

in regional cities. The primary effect has been on those SOEs trying to get cash out of mainland

China, but many Chinese players who have funds already in offshore accounts are still active.



Residential Markets

Growth decelerates in U.S. rental apartments on supply wave

The U.S. rental apartment market has slowed over the beginning of 2017 with national annual

rental growth softening 180 bps year-on-year to 2.9% in the first quarter. This was the first quarter

since year-end 2010 where rental growth has dipped below 3%.

In spite of the overall declines in the pace of rental growth, eight markets saw gains in excess of 5%

on the quarter, while an additional seven markets maintained rental growth in excess of 4%. Nine

markets in the West region comprised the majority of market leaders on the quarter, ranging from

Portland’s 4.2% to Sacramento’s 10.8%. Sunbelt markets made up the remaining rental growth

leaders, ranging from Raleigh-Durham’s 4.3% to Atlanta’s 5.2%.

Select markets saw declines in effective rents on the quarter, led by Houston’s -2.7% fall. New York, San Francisco and Silicon Valley each experienced declines in annual effective rents of less

than 1% as well. After consistent rental gains over the course of the decade, rents are showing some signs of fatigue. Yet with the current unemployment rate at 4.4%, average hourly earnings

increasing 2.5% year-on-year and a domestic economy operating in a stable range of measured

growth, multifamily rents appear set to expand in a similar range of consistent growth.

UK institutional investment market continues rapid expansion

The UK housing market has slowed over the past year with major indices suggesting annualised

house price growth of circa 3% in the year to June 2017. Transaction levels have also fallen, to 1.19

million in the year to May 2017 from 1.3 million in the previous year. Prices in Central London have

picked up a little during the first half of 2017 but remain subdued and are expected to be broadly

flat for the rest of the year.

The investment market, in contrast, has continued its remarkable growth rate and the total

pipeline of institutional-grade residential stock is now over 100,000 units. In London this

represents between 10% and 15% of current delivery volumes and has now become established as

a credible alternative exit for many ‘for sale’ schemes that have been caught out by the softer

market conditions. Investors continue to chase stock outside London to improve expected yields,

pushing the proportion of non-London delivery above 50% of all build-to-rent activity. Housing

policy continues to evolve in ways that are supportive of further expansion in the asset class.

Transactional activity remains robust in Germany

The German residential investment market remained in robust shape during the first half of 2017

with total transaction volumes of €6.2 billion, a 40% rise on the same period in 2016. As in the

previous few quarters, market activity was driven by small-scale transactions and the trade in

project developments.



The wider Berlin region continues to be the capital of the residential property investment market,

with transaction volumes of almost €1.8 billion in the first six months of the year. This was 30% of

the total for the whole of Germany and was attributable to an extraordinarily high proportion of

international investors (35%).

The lively deal flow is expected to carry on in the second half of the year, dominated by project

developments, and in some cases, high-volume sub-portfolios as a result of portfolio

rationalisations. Transactional activity of €15-17 billion is expected for the full-year 2017, which is

50%-70% above the 10-year average.

Investor demand pushes yields to historic lows in the Netherlands

The investment market experienced a strong first half of 2017 in the Netherlands, although a lack

of suitable large-scale product weighed on total investment volumes for residential space.

Nevertheless, demand remains high with investor interest spreading across the country due to

limited supply in the major markets, where pricing sharpened further in H1 with prime net initial

yields standing at historical low levels.

The owner-occupier market also witnessed robust performance. As a result of the ongoing

elevated levels of demand, prices have risen strongly with the average transaction price up by 9%

on last year and standing 2% above the level achieved in 2008. The number of available premises

for sale has fallen to its lowest point in 13 years, with the shortage of supply potentially leading to

further price increases. Current price levels may be touching the boundaries of affordability once

interest rates start to increase.

Housing market confidence continues to improve in Spain

The housing market in Spain is continuing to benefit from strong economic fundamentals with

total investment volumes (for residential and land) in H1 2017 of €888 million. A significant supply

of new developments is coming on stream during 2017 and more developments are being sold off-

plan in Madrid, Barcelona and Malaga, boosting confidence in the market. Residential capital

values and rents are continuing their upward trend.

Developers are betting strongly on residential development with a significant volume of land sales

evident in Q2, and the market is continuing its process of ‘professionalisation’ with Aedas,

Castlelake’s Spanish development arm, preparing to follow Neinor with an IPO in Q4 2017.

Strong price growth in Portuguese residential market

The Portuguese residential market continued to see robust price growth in Q2 2017. With supply

of newly-available housing being taken up at a fast rate, there is a shortage of product at the

medium to high end of the supply spectrum. Demand in the upper segment of the market and in

city centre locations is being driven primarily by international capital, due to affordability

constraints on domestic buyers.



Policy restrictions continue in China; sentiment improves in Singapore

Tightening measures remained in the spotlight in Greater China with new policy measures rolled

out and existing restrictions adjusted in many cities during the quarter. In Hong Kong, the 15%

stamp duty levy was extended to first-time buyers of multiple properties and some financing

criteria for developers and select homebuyers were tightened.

Despite policy restrictions the market upswing in Hong Kong continued, with strong demand for

new mass residential launches. By contrast, sales volumes in Shanghai remained low due to the

tight policy stance and limited supply. In Singapore, sales transactions in the prime districts are

likely to show further gains from last year, reflecting healthier levels of demand.

Rental growth was limited in most Asian markets. Modest quarterly rental gains were recorded in

China’s Tier 1 cities against steady leasing demand while Hong Kong’s luxury rents rose for the first

time in seven quarters, supported by an uptick in leasing in large part due to seasonal factors.

Rental declines in Singapore’s prime areas eased, supported by improved demand as attractive

rents enticed tenants from outside districts.



Key Investment Transactions in Q2 2017

Europe, Middle East and Africa

Country City Property Sector

Sales

price

US$m Comments

Denmark Copenhagen AC Hotel

Bella Sky

Copenhagen

Hotel 245 Norwegian investor Wenaasgruppen has purchased

the property, the largest hotel in Denmark, on a sale-

and-leaseback basis.

Denmark Copenhagen Copenhagen

Portfolio

(four hotels)

Hotel 114 Property company Fastighets AB Balder has acquired

the properties, which are all located next to the central

train station in Copenhagen.

France Paris Vivacity Office 404 Blackstone has sold the 23,250 sq m complex to

Amundi Real Estate. The sale represented a net yield of

3.4%.

Germany Munich Pullman

Hotel

Munich

Hotel 119 The property has been purchased by Singapore REIT

CDL Hospitality Trust.

Germany Various Corestate

Retail

Portfolio

Retail 757 Universal Investment, a fund manager of Bayerische

Versorgungskammer has acquired the portfolio,

comprising 90 properties with a total lettable area of

approximately 290,000 sq m, located across 74 German

cities.

Germany Various Geneba

Properties

Portfolio

Industrial 474 Frasers Centrepoint has acquired an 86.56% stake in

Geneba Properties, an Amsterdam-based listed real

estate investment company specialising in German

and Dutch logistics and industrial assets from Catalyst

RE Coöperatief.

Italy Various Centraline

telefoniche

Alternatives 683 Crédit Agricole Assurances and EDF Invest have

purchased the telecom portfolio of 150 assets spread

across Italy from the property company Beni Stabili.

Netherlands Amsterdam DoubleTree

by Hilton

Amsterdam

Centraal

Station

Hotel 394 Blackstone has sold the property to Asian investor

Anbang Capital.

Netherlands Amsterdam Atrium Office 572 Amundi Real Estate has purchased the 60,000 sq m

property in the largest ever transaction in the Dutch

office sector. Tenants include CMS, Hogan Lovells,

Optiver, Vistra, Celanese and JLL, with rents ranging

between €365 and €400 per sq m per year.

Netherlands Various Q-Park

Portfolio

Alternatives 527 The portfolio, comprising nine assets of Q-Park's car

park portfolio located in Amsterdam, Rotterdam,

Maastricht and The Hague and offering a combined

300,000 sq m of space, has been sold to private equity

firm Kohlberg Kravis Roberts (KKR).




Sales

price

US$m Comments

Spain Playa del

Ingles, Gran

Canaria

IFA Portfolio Hotel 119 HI Partners has bought the portfolio of three budget

hotels from hotel operator Lopesan Hotels & Resorts,

which will continue to manage the hotels.

UK London Grosvenor

House Hotel

Hotel 768 GH Equity UK has purchased the iconic hotel, currently

managed by Marriott and comprising of 420 rooms, 74

suites and 27 conference rooms.

UK London Cannon

Place

Office 621 Deka Immobilien has purchased the landmark City of

London building, offering 38,851 sq m of grade A office

as well as 754 sq m of retail space. The sale

represented a net yield of 4.4%.

Asia Pacific


Sales

price US$m Comments

Australia Melbourne Victoria Police HQ

Office 261 Australia Postal Corporation has sold a 50% interest in

the property with a total acquired floor area of 65,000

sq m to Keppel REIT in a deal worth A$348 million.

Australia Sydney Home Hub Castle Hill

Retail 252 Aventus Property Group has purchased the home and

lifestyle centre from LaSalle Investment Management

in a deal worth A$336 million. The site features a total of 52,004 sq m and was transacted at a yield of 5.5%.

Australia Sydney MLC Centre Office 543 DEXUS Wholesale Property Fund has purchased a 50%

interest in the building in a A$723 million deal. The 62-

storey property has potential for redevelopment with a number of underutilised floors.

Australia Sydney Exchange Centre

Office 252 Kumpulan Wang Persaraan (KWAP) has sold off 17,872

sq m of fully-let space to Early Light International

Group in a deal worth A$335 million. The transaction was completed on an estimated initial yield of 3.9%.

Australia Sydney Four Points

by Sheraton

Sydney, Central Park

Hotel 142 The 297-room hotel has been sold to investment fund

Impact Investment Group by Frasers Hospitality.

China Beijing Taohui

Xintian

Shopping Mall

Retail 321 A private Hong Kong Investor has bought a 75% stake

in the mall in a JV with Nan Fung Group from InfraRed Capital Partners. The deal was worth RMB 2.2 billion.




Sales

price US$m Comments

China Guangzhou Metropolitan

Plaza

Retail 592 Link REIT has acquired the five-storey mega mall with

approximately 88,000 sq m GFA of retail space from

Gaw Capital Partners for approximately RMB 4.07

billion. The transaction was completed on a gross

yield of 4.7%.

China Shanghai Hongkou

SOHO

Office 521 Keppel Land China and Alpha Investment Partners,

both of which are subsidiaries of Keppel Group, have

purchased the property in a JV for RMB 3.57 billion.

The building has a total GFA of 90,000 sq m which includes an estimated 70,000 sq m of leasable area.

China Shanghai Guozheng Centre

Office 385 CapitaLand has purchased the building from

Shanghai Baohua Group for RMB 2.64 billion, based

on a total GFA of 80,701 sq m. The total occupancy rate stood at 29% in April 2017.

China Shanghai H88 Tower Office 277 SEA Group has acquired the 55,879 sq m building from

Everbright Ashmore in a deal worth RMB 1.9 billion, at a unit price of RMB 35,000 per sq m.

Hong Kong

Hong Kong Rosedale Hotel

Hotel 193 The Bank of China has sold off its 100% stake in the hotel to a private investor.

Hong

Kong Hong Kong The

Wellington

Office 385 Nan Fung Group has sold the property to a local

investor for HK$3 billion. The site features a total floor

area of 9,290 sq m and the deal was completed on a net yield of 2.1%.

Hong

Kong Hong Kong Butterfly on

Hollywood

Hotel 111 UK company Travelodge has bought the budget hotel

from Alpha Investment Partners.

India Mumbai /

Delhi

Industrial JV Industrial 500 CPPIB has entered into a JV with IndoSpace focused

on acquiring completed modern industrial and

logistics assets in India with an initial acquisition of

nine assets, measuring 9 million sq ft. CPPIB will

commit a further US$700 million on IndoSpace Core

acquiring an additional 11 million sq ft within the next two years.

Japan Osaka Dojima Hotel

Hotel 90 Japanese investment fund GK Falcon has sold the 76-bedroom hotel.

Japan Tokyo Shinagawa

Seaside TS Tower

Office 270 Takeda Pharmaceutical Co. has sold the 23-storey

office building to EGW Asset Management for JPY 30

billion. The building has a total floor area of 43,892 sq

m and was purchased with Korean investor funds.

Japan Yokohama TOC Minato Mirai

Mixed 530 Hulic Co., Ltd. and a minority listed real estate

company have acquired the office and retail portion of

the property, with a total floor area of 90,564 sq m, in

a joint venture.




Sales

price US$m Comments

Japan Yokohama Concurred

Yokohama

Office 343 Daiwa Office REIT SPC has acquired a 75% stake in the

property from Yokohama TMK for JPY 38 billion. The

20-storey property has a GFA of approximately 52,773

sq m and the purchase was completed on a net yield

of 4.6%.

Americas

Country City Property Sector Sales

price

US$m

Comments

Brazil Belo

Horizonte

Bouvelard

Corporate

Tower

Office 86 Aliansce Shopping Centers S.A. has acquired the 20,400

sq m tower at a reported 8% initial yield from fund

manager CTBH Fundo de Investimento Imobiliário – FII.

Brazil Multiple Centenario

Plaza

Office 135 BR Properties has purchased the two-building portfolio

from pension fund Caixa de Previdencia dos

Funcionarios do Banco do Brasil - Previ.

Canada Montreal SNC-Lavalin

HQ

Office 128 GWL Realty Advisors has acquired the more than 33,000

sq m property from SNC-Lavalin.

Canada Toronto Ontario

Power

Building

Office 322 KingSett Capital has purchased the approximately

111,000 sq m CBD asset from Ontario Power Generation.

Canada Toronto 8875

Torbram

Road

Industrial 118 Carttera has sold the nearly 83,000 sq m warehouse

asset, located in Brampton, to Concert.

Canada Vancouver 4190 Still

Creek Drive

Office 83 Fortinet has purchased the nearly 27,000 sq m suburban

property from Holdings 1504 Enterprises.

Mexico Monterrey Saqqara

Edificio I

Office 37 Mexican REIT Fibra Uno has acquired the 11,200 sq m

asset, located in San Pedro Garza Garcia, from IDEI.

U.S. Dallas 3000

Cantrell

Sansom Rd

Industrial 75 Transpacific Development Company has purchased the

66,200 sq m warehouse asset from Deutsche Post AG.

U.S. Detroit Troy

Officentre

Office 55 Hayman Co. has acquired the 67,700 sq m asset from

Osprey Management.

U.S. Hampton

Roads

Two

Commercial

Place

Office 57 The RMR Group has purchased the 26,800 sq m

downtown Norfolk property from Marathon

Development Group at a reported 7% initial yield.

U.S. Honolulu -

Oahu

Pacific

Beach Hotel

Hotel 515 Highgate Holdings has sold the 837-room, 4-star resort

to German investor Commerz Real

Investmentgesellschaft mbH (CRI).



Country City Property Sector Sales

price

US$m

Comments

U.S. Houston Ikea

Distribution

Center

Industrial 64 Clay Development has sold the approximately 92,600 sq

m distribution centre to Pure Industrial REIT.

U.S. Las Vegas The

Gramercy

Office 62 The Koll Company has acquired the 17,400 sq m asset,

located in suburban Spring Valley, at a reported 6.9%

initial yield from The Krausz Companies, Inc.

U.S. Los Angeles One

California

Plaza

Office 459 A JV of Rising Realty Partners and Colony NorthStar has

purchased the nearly 90,500 sq m CBD tower from

Beacon Capital Partners and Madison International.

U.S. Los Angeles Riverside

Plaza

Retail 166 Vestar Development has sold the 37,500 sq m shopping

centre to AEW.

U.S. New York 245 Park

Avenue

Office 2,210 China's HNA has acquired the approximately 160,200 sq

m tower from Brookfield Asset Management and Clarion

Partners at a reported 5.2% initial yield.

U.S. New York Dumont NYC

- an Affinia

Hotel

Hotel 118 Pebblebrook Hotel Trust has sold the hotel to LeFrak

Organization, marking Pebblebrook’s exit from New

York City. The majority of its assets are now on the West

Coast, with multiple properties in Los Angeles, San

Francisco and Portland.



Illustrative Office Occupational Transactions in Q2 2017

Europe

Country City Property Tenant Industry Sector

Floorspace sq m

France Paris Centre Marine Pépinière Gide Legal Services 18,000

France Paris Opus 12 Deloitte Business Services 9,500

France Paris Docks en Seine Régime Social des

Indépendants

Public

Administration

8,700

France Paris Coeur Défense Nextdoor Business Services 4,500

Germany Cologne Von-Gablenz-Strasse 2-6,

Messe/Deutz

Federal Office of Family

and Civic Affairs

Public

Administration

18,600

Germany Cologne Strabag HQ, Messe/Deutz Strabag AG Construction 17,000

Germany Frankfurt Junghof Plaza Clifford Chance

Deutschland

Legal Services 11,800

Germany Hamburg Olympus Corporate Center Olympus Manufacturing 34,500

Russia Moscow White Stone TH Solpro Manufacturing 3,018

Russia Moscow LeFort DPD Business Services 2,821

Russia Moscow 7 Alexander Solzhenitsyn st. FGUP VO Bezopasnost Energy 2,428

Russia Moscow Krasnaya Roza - Demidov Shire Manufacturing 2,402

UK London 2 Southbank Place, SE1 WeWork Business Services 26,333

UK London LSQ London, SW1 Hearst Magazines Media 6,661

UK London London Fruit and Wool

Exchange, Brushfield Street,

E1

NEX Group Banking & Financial

Services

11,170

UK London Angel Court, EC2 BUPA Healthcare 5,202

Asia Pacific


Floorspace

sq m

Australia Brisbane 180 Brisbane, 180 Ann Street Origin Energy Utilities 16,329

Australia Sydney Wynyard Green, 11-31 York

Street

Property NSW Public Administration 17,244




Floorspace

sq m

Australia Sydney International Towers Sydney

– Tower 1, 100 Barangaroo

Avenue

Baker McKenzie Business Services 7,000

China Beijing Sinotrans Building ZTE ITES 9,500

China Shanghai HKRI Centre One EA ITES 6,400

China Shanghai Bund Finance Center, N2 Bank of Hangzhou Banking & Financial

Services

8,800

Hong

Kong

Hong Kong Lincoln House BNP Banking & Financial

Services

7,988

Hong

Kong

Hong Kong Two Pacific Place Huarong Banking & Financial

Services

3,479

India Delhi DLF Building 6 Optum Global

Solutions

ITES 699

India Mumbai Adani Inspire Apex Entertainment Media 3,623

Japan Tokyo* Nishi Shinagawa 1-Chome

District Redevelopment

Project

Sega Sammy Group Manufacturing 44,000

Japan Tokyo* Shibuya Hikarie Adastria Retail 11,000

Malaysia Kuala

Lumpur

Menara Prestige American Express Banking & Financial

Services

8,361

Singapore Singapore Republic Plaza II PartnerRe Business Services 900

Singapore Singapore Chevron House CIT Aerospace Business Services 396

South

Korea

Seoul Samsung HQ Bank of Korea Banking & Financial

Services

30,000

*JLL estimate

Americas


Floorspace

sq m

Brazil Rio de

Janeiro

L'Oréal L'Oréal Consumer Goods 15,489

Brazil Rio de

Janeiro

Torre Almirante WeWork Business Services 7,284

Brazil São Paulo Avenida Brigadeiro Faria

Lima, 4100

Cosan Energy 7,668

Canada Calgary Intact Place Intact Insurance Banking & Financial

Services

15,583




Floorspace

sq m

Canada Toronto 81 Bay Street CIBC Banking & Financial

Services

162,579

Canada Toronto 2650 Yonge Street CIBC Banking & Financial

Services

9,290

Canada Toronto 33 Bloor St E Omnicom Media 9,290

Canada Vancouver The Exchange Executive Exchange

Hotel Limited

Partnership

Travel and Tourism 10,229

Mexico Mexico City The Tower Park Plaza WeWork Business Services 9,200

U.S. Boston The Innovation and Design

Building

Reebok Consumer Goods 20,439

U.S. Dallas Plano Parkway @ Parker Road AmerisourceBergen ITES 27,871

U.S. Indianapolis One West Ascension Healthcare 13,750

U.S. New York 375 Pearl Street New York City Human

Resources

Administration

Public Administration 19,881

U.S. Phoenix RIO2100 Freedom Financial Banking & Financial

Services

27,871

U.S. Raleigh-

Durham

MetLife III MetLife Banking & Financial

Services

20,346

U.S. San

Francisco

1 Front Street First Republic Banking & Financial

Services

16,630

U.S. Seattle-

Bellevue

The Mark F5 ITES 47,893

U.S. Washington

DC

Portals Phase II U.S. Pension Benefit

Guaranty Corporation

Public Administration 40,041

Global Real Estate Health Monitor

Definitions and Sources Metro Area GDP: Change in Real GDP. Metropolitan Area Projection, 2017. Source: Oxford Economics City Investment Volumes: Direct Commercial Real Estate Volumes. Metro Area Data. Rolling Annual Total in USD Billion. Source: JLL City Investment Volumes Change: Direct Commercial Real Estate Volumes. Metro Area Data. Rolling Annual Change. Source: JLL Capital Value Change: Notional Prime Office Capital Values. Year-on-Year Change. Latest Quarter. Source: JLL Prime Yield: Indicative Yield on Prime/Grade-A Offices. Latest Quarter. Source: JLL Yield Gap: Basis Points that Prime Office Yields are above or below 10-year Government Bond Yields. Latest Quarter. Source: JLL, Datastream Rental Change: Prime Office Rents. Year-on-Year Change. Latest Quarter. Source: JLL Net Absorption: Annual Net Absorption as % of Occupied Office Stock. Rolling Annual. Source: JLL Vacancy Rate: Metro Area Office Vacancy Rate. Latest Quarter. Source: JLL Supply Pipeline: Metro Area Office Completions (2017-2018) as % of Existing Stock. Source: JLL


Jeremy Kelly

Director

Global Research

[email protected]

Matthew McAuley

Senior Analyst

Global Research

[email protected]

About JLL

JLL (NYSE: JLL) is a leading professional services firm that

specialises in real estate and investment management. A

Fortune 500 company, JLL helps real estate owners,

occupiers and investors achieve their business ambitions.

In 2016, JLL had revenue of $6.8 billion and fee revenue of

$5.8 billion and, on behalf of clients, managed 4.4 billion

square feet, or 409 million square meters, and completed

sales acquisitions and finance transactions of

approximately $136 billion. At year-end 2016, JLL had

nearly 300 corporate offices, operations in over 80

countries and a global workforce of more than 77,000. As

of December31, 2016, LaSalle Investment Management

has $60.1 billion of real estate under asset management.

JLL is the brand name, and a registered trademark, of

Jones Lang LaSalle Incorporated. For further information,

visit www.jll.com.

About JLL Research

JLL’s research team delivers intelligence, analysis and

insight through market-leading reports and services that

illuminate today’s commercial real estate dynamics and

identify tomorrow’s challenges and opportunities. Our

more than 450 global research professionals track and

analyse economic and property trends and forecast future

conditions in over 60 countries, producing unrivalled local

and global perspectives. Our research and expertise,

fuelled by real-time information and innovative thinking

around the world, creates a competitive advantage for our

clients and drives successful strategies and optimal real

estate decisions.

Chicago

200 East Randolph Street

Chicago, IL 60601

+1 312 782 5800

London

30 Warwick Street

London, W1B 5NH

+44 (0)20 3147 6040

Singapore

9 Raffles Place

#39-00 Republic Plaza

Singapore 048619

+65 6220 3888

Our regional offices

For further information contact:

http://www.jll.com/

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