Rents continue to recover. Global Office Index Q2 2014

Rents continue to recover Global Office Index Q2 2014

2 Global Office Index, Q2 2014 JLL Global Office Index Q2 2014 Rents continue to recover Steady improvement in both leasing activity and corporate sentiment is supporting a moderate uplift in prime office rents. The JLL Global Office Index, which tracks the performance of prime office space in 95 major markets, reveals that rents grew by 2.2% in the year to Q2 2014, representing the strongest annual growth for two years. Nearly 60% of markets have recorded rental uplifts over the past year. Momentum is expected to continue to build during 2014 and 2015 as shortages of quality office space in the world s dominant office markets intensify. The recent uptick in new construction marks the start of a new development cycle, but it will not translate into deliverable space until late 2015 and 2016, leaving a period of 15-18 months of Grade-A supply shortages and rental growth. Regional Overviews: The Americas Index grew by 0.8% in Q2 2014, easing slightly from 1.2% in Q1; however, a broad-based expansion continued across most U.S. markets. In Asia Pacific, quarterly rental growth was 0.9% and similar to Q1 with some encouraging signs in the occupier market, but large corporates still remain in cost-saving mode. Europe saw a quarterly rental increase of 0.4%, slower than the 1.1% rise recorded in Q1 2014, with growth led by just a few markets. The MENA Index was unchanged during the quarter; however, it was up by 3.5% year-on-year. Market Performance: Dublin again tops the global ranking with exceptional annual growth (+28.6%) driven by rapidly falling new supply and a rebound in demand. Other European and MENA markets among the top ranks include Lyon (+14.8% year-on-year), Dubai (+8.1%) and London (+7.7%). Other U.S. markets near the top of the rental growth league include Portland (+8.3%) Tampa (+7.9%) and Boston (+7.6%). In the Asia Pacific region, Singapore (+15.9% year-onyear) emerged as the region s top performer, followed by Taipei (+8.5%), Bangkok (+7.9%) and Jakarta (+7.4%). Mexico City (+11.1%) is Latin America s strongest rental market, but elsewhere in the region, burgeoning supply pipelines have pushed down rents in Sao Paulo (-11.3%) and Santiago (-2.4%) Weak net absorption in Australia contributed to Perth (-27.1%), Brisbane (-13.4%), Adelaide (-11.1%) and Canberra (-9.3%) all featuring among the weakest global performers. In Europe, Prague (-7.1%) and Milan (-6.3%) still show prime rental falls, but have now reached the bottom of their cycles, while Moscow s decline (-4.3%) reflects the impact of current political tensions, though conditions have recently stabilised. Demand is recovering in Paris, although rents were still lower year-on-year (-3.3%). The San Francisco Bay Area is again well-represented among the leading markets (on an annual basis) by Oakland-East Bay (+25.5%), San Francisco Peninsula (+13.7%) and San Francisco (+8.7%).

3 Global Office Index, Q2 2014 Global Office Index Prime Rents, 2000-2014 Rental Index (Q1 2000 = 100) 210 200 190 180 170 160 150 140 130 120 110 100 90 Q1 2000 Q2 2000 Asia Pacific Americas Europe GLOBAL Q4 2000 Q2 2011 Q4 2001 Q2 2002 Q4 2002 Q2 2003 Q4 2003 Q2 2004 Q4 2004 Q2 2005 Q4 2005 Q2 2006 Q4 2006 Q2 2007 Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Asia Pacific stock weighted average of 27 markets; Americas stock weighted average of 39 markets; Europe stock weighted average of 24 markets. Global Index based on GDP weighted average of the Asia Pacific, Americas, Europe and MENA indices. Source: JLL, August 2014. Steady rental growth in the Asia Pacific region In Asia Pacific, net effective rents grew in over half of markets in Q2 2014. The Asia Pacific Office Index increased by 0.9% quarter-on-quarter, similar to 0.8% in Q1; however, it is still below the post-gfc average growth of 1.1%. Singapore continued to see the most robust quarterly rental growth (+4.6%) in the region, closely followed by Auckland (+4.4%), while growth improved in Beijing (+2.5%), as vacancy edged lower in all these locations. Growth remained steady (+2%) in Tokyo, while small rental uplifts were witnessed in Hong Kong, Shanghai and some emerging Southeast Asian markets (at around +1%). Growth in Europe led by a few markets In Europe, prime office rents increased in only 3 out of the 24 Index markets in Q2 with Dublin again leading (+7.1%), driven by the rebound in demand and a severe lack of quality supply. Munich rents (+3.2%) rose to their highest levels since the early 1990s, while Madrid saw its first uplift (+1%) since Q3 2008. With occupier sentiment and economic activity improving, rental decreases have become the exception. However, there was a 2.5% decline in Prague due to high volumes of new supply. Prime rents elsewhere, including London, Paris and Moscow, remained unchanged. Rents in Jakarta fell in Q2 for the first time since Q3 2009 (-0.4%) due to occupier caution, with business expansion put on hold before the election in July. In Australia, effective rents were largely stable in Sydney and Melbourne with healthy levels of activity, but they declined in other cities by up to 9% quarter-on-quarter (mainly on higher incentives) due to limited demand.

4 Global Office Index, Q2 2014 Sustained momentum in the Americas The Americas Office Index grew by 0.8% in Q2 2014, slightly slowing from 1.2% in Q1; however, a broad-based expansion continued across most U.S. markets. Over the past year, the Americas Index has advanced by 3.2% and is now about 13% above the cyclical low reached in early 2010. 25 of the 39 Index markets recorded positive rental growth in Q2. U.S. cities accounted for 7 of the top 10 quarterly performers in the region, including the tech-heavy Oakland- East Bay (+7%) and San Francisco (+5.3%), energy-focused Houston (+4.2%) and several Sunbelt cities including Tampa (+2.9%), Dallas and San Diego (both up 2.8%). Among the non-u.s. cities, Rio de Janeiro (+3.6%), Bogota (+2.5%) and Buenos Aires (+2.2%) registered the strongest quarterly uplifts. At the opposite end of the spectrum, leasing market conditions remain soft in several U.S. markets such as Detroit and Orlando (both down by 5.5%), while in Latin America a large supply pipeline pushed rents down in Sao Paulo (-2.5%) in Q2 2014. MENA markets remain stable There was no change in prime rents in the major MENA markets during Q2 2014, but the MENA Office Index grew by 3.5% year-on-year. Dubai and Jeddah are in the early stages of their upturn, having recorded growth of 8.1% and 6.7% respectively over the year to Q2, while the other MENA markets have remained stable (Abu Dhabi) or recorded declines in prime rentals over the past year - Cairo (-12.5%) and Riyadh (-2.7%). Global Office Index Prime Rents, 2009-2014 Quarterly Movements 4 2 Rental change (% q-o-q) 0-2 -4-6 -8-10 -12-14 Americas Europe Asia Pacific Middle East and North Africa Global Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 Source: JLL, August 2014

5 Global Office Index, Q2 2014 Rental recovery to accelerate in 2015 In Asia Pacific, we are optimistic about a moderate improvement in 2014 leasing volumes as corporate confidence strengthens. Single-digit rental growth is anticipated this year and next (average growth of around 4% regionally, rising to over 5% in 2015). The biggest uplifts this year are forecast to take place in Singapore, followed by Tokyo, Beijing and Auckland, driven by low and falling vacancy. Rents in Jakarta are expected to be mostly flat due to occupier caution, but it is probable that Australia will continue to be the weakest market, with rental declines predicted for most of its CBDs over the short term. In Europe, prime rents on aggregate are forecast to increase further for the rest of 2014, given the low levels of quality space available in many markets. From 2015, expansionary demand should also support rental growth based on stronger economic and employment growth, although projections have been revised slightly downwards in recent weeks. Conditions will continue to vary across markets, with robust growth in London, Southern Europe and Dublin. In Central and Eastern Europe there will be further downward pressure in Warsaw, while Budapest and Prague are expected to bottom out and Moscow is likely to see stability following the correction in Q1. Regardless of economic factors, it is expected that a region-wide preference for quality space in good locations will widen the performance gap between quality space in well-connected areas and the rest. The recovery in prime office rents in the Americas should be maintained over the course of 2014, although the strongest annual growth yet in this cycle is likely to occur in early 2015 (4-5% range) and the Americas Office Index may surpass its prior peak recorded in 2008 by around mid-2015. Accelerating rental growth will be primarily driven by a broader U.S. expansion in terms of geographies and industry sectors as several Latin American markets are still adjusting to slower economic growth and/or significant development pipelines, and Canada is in the midst of a period of negative net absorption and rising vacancy rates. Prime rents are projected to increase across all major MENA markets (except Riyadh, which is facing a significant supply pipeline) over the next year, while rents in secondary locations or for older properties are likely to fall further in most markets given the expected supply levels. The prospects for rental growth in Cairo have been bolstered by the continued political transformation (with the election of a president with a strong reform mandate) which has resulted in renewed confidence in the real estate market.

6 Global Office Index, Q2 2014 Top 10 Global Performers in Q2 2014 Dublin Oakland-East Bay San Francisco Singapore Auckland Taipei Houston Rio de Janeiro Munich Wellington Americas Europe Asia Pacific MENA % change q-o-q 0 2 4 6 8 Based on rents for Grade A space. In local currency. Source: JLL, August 2014 Technical Note The JLL Global Office Index is derived from the weighted average of the rental movements of JLL s European, Asia Pacific, Americas and Middle East and North African (MENA) Regional Indexes that cover 95 office markets in total. They are weighted by real GDP (US dollar basis) for each region from Oxford Economics. Weights are adjusted annually. The latest weights are 30% - Europe; 28% - Asia Pacific; 36% - Americas; 6% - MENA (percentages are rounded). The European Office Index is calculated from the change in headline face rents for the highest-quality space in the premier office sub-market in 24 European cities, weighted on the basis of the total office stock (all grades) in each city s overall market. The Asia Pacific Office Index is calculated from the change in average Grade A rents (net effective) in the main sub-market in 27 Asia Pacific cities, weighted on the basis of Grade A stock in the main sub-market of each city. The Americas Office Index is calculated from the change in average Class A rents (gross asking in North America, triple net in Latin America) in the CBD, Downtown, central areas or primary investment market of 39 Americas cities, weighted on the basis of Class A stock (DC city for Washington, DC; Hudson Waterfront for New Jersey; Palo Alto for Silicon Valley; Midtown for New York; Westside for Los Angeles; Greenwich Overall and Stamford CBD/Railroad for Fairfield County; South County for San Francisco Peninsula; overall Downtown market for Seattle; Tampa CBD-only for Tampa The MENA Index is calculated from the change in headline face rents for the highest-quality space in the premier office sub-market in five cities, weighted on the basis of the total office stock in each city s overall market.

7 Global Office Index, Q2 2014 JLL Global Office Index Quarterly Rental Performance across 95 Cities Quarterly Change Q1 2014 vs Q2 2014 Global 0.7% Europe 0.4% Asia Pacific 0.9% Americas 0.8% MENA 0.0% 1 Dublin 7.1% 2 Oakland-East Bay 7.0% 3 San Francisco 5.3% 4 Singapore 4.6% 5 Auckland 4.4% 6 Taipei 4.3% 7 Houston 4.2% 8 Rio de Janeiro 3.6% 9 Munich 3.2% 10 Wellington 3.0% 11 Tampa 2.9% 12 Dallas 2.8% 12 San Diego 2.8% 14 Boston 2.6% 15 Bogota 2.5% 15 Beijing 2.5% 17 Buenos Aires 2.2% 18 Bangalore 2.1% 19 Tokyo 2.0% 20 Philadelphia 1.7% 20 Denver 1.7% 22 Manila 1.5% 22 Portland 1.5% 24 Bangkok 1.3% 24 Seattle 1.3% 26 Hong Kong 1.2% 27 Shanghai 1.1% 27 Austin 1.1% 29 Chennai 1.0% 29 Madrid 1.0% 31 New York 0.9% 32 Miami 0.8% 33 Los Angeles 0.6% 33 New Jersey 0.6% 33 Sydney 0.6% 36 Silicon Valley 0.5% 37 Kuala Lumpur 0.4% 37 Chicago 0.4% 39 San Francisco Peninsula 0.2% 39 St. Louis 0.2% 39 Seoul 0.2% 42 Osaka 0.1% 42 Atlanta 0.1% 42 Calgary 0.1% 45 Phoenix 0.0% 45 Amsterdam 0.0% 45 Barcelona 0.0% Quarterly Change Q1 2014 vs Q2 2014 45 Berlin 0.0% 45 Brussels 0.0% 45 Budapest 0.0% 45 Dusseldorf 0.0% 45 Edinburgh 0.0% 45 Frankfurt 0.0% 45 Hamburg 0.0% 45 London 0.0% 45 Luxembourg 0.0% 45 Lyon 0.0% 45 Milan 0.0% 45 Moscow 0.0% 45 Paris 0.0% 45 Rotterdam 0.0% 45 Stockholm 0.0% 45 The Hague 0.0% 45 Utrecht 0.0% 45 Warsaw 0.0% 45 Mumbai 0.0% 45 Delhi 0.0% 45 Toronto 0.0% 45 Mexico City 0.0% 45 Monterrey 0.0% 45 Dubai 0.0% 45 Abu Dhabi 0.0% 45 Jeddah 0.0% 45 Riyadh 0.0% 45 Cairo 0.0% 45 Ho Chi Minh City 0.0% 45 Santiago 0.0% 78 Melbourne -0.1% 78 Vancouver -0.1% 80 Charlotte -0.2% 81 Guangzhou -0.4% 81 Jakarta -0.4% 83 Fairfield County -0.5% 84 Washington, DC -1.1% 85 Baltimore -1.4% 85 Canberra -1.4% 87 Montreal -1.5% 88 Brisbane -1.6% 88 Hanoi -1.6% 90 Sao Paulo -2.5% 90 Prague -2.5% 92 Orlando -5.5% 92 Detroit -5.5% 94 Adelaide -6.8% 95 Perth -8.6%

8 Global Office Index, Q2 2014 Annual Rental Performance across 95 Cities Annual Change Q2 2013 vs Q2 2014 Global 2.2% Europe 1.0% Asia Pacific 1.8% Americas 3.2% MENA 3.5% 1 Dublin 28.6% 2 Oakland-East Bay 25.5% 3 Singapore 15.9% 4 Lyon 14.8% 5 San Francisco Peninsula 13.7% 6 Mexico City 11.1% 7 San Francisco 8.7% 8 Taipei 8.5% 9 Portland 8.3% 10 Dubai 8.1% 11 Tampa 7.9% 11 Bangkok 7.9% 13 London 7.7% 14 Boston 7.6% 15 Jakarta 7.4% 16 Jeddah 6.7% 17 Houston 6.4% 18 San Diego 6.1% 19 Seattle 5.9% 20 Philadelphia 5.8% 21 Wellington 5.7% 22 Austin 5.6% 23 Auckland 5.5% 24 Manila 5.4% 24 Tokyo 5.4% 26 Munich 4.8% 27 Los Angeles 4.6% 28 Toronto 4.0% 29 Chicago 3.8% 30 Shanghai 3.7% 31 Dallas 3.6% 31 New York 3.6% 33 Kuala Lumpur 3.5% 34 Denver 3.2% 34 Bangalore 3.2% 36 Frankfurt 2.9% 37 Budapest 2.6% 38 Rotterdam 2.4% 39 Stockholm 2.3% 40 St. Louis 2.1% 40 Monterrey 2.1% 40 Rio de Janeiro 2.1% 43 Chennai 2.0% 43 Fairfield County 2.0% 43 Phoenix 2.0% 46 Silicon Valley 1.9% 46 Sydney 1.9% Annual Change Q2 2013 vs Q2 2014 48 Bogota 1.8% 49 Charlotte 1.7% 49 Edinburgh 1.7% 51 Miami 1.4% 52 Madrid 1.0% 53 Hong Kong 0.4% 53 Beijing 0.4% 55 Guangzhou 0.2% 56 Amsterdam 0.0% 56 Berlin 0.0% 56 Brussels 0.0% 56 Dusseldorf 0.0% 56 Hamburg 0.0% 56 Luxembourg 0.0% 56 Utrecht 0.0% 56 Warsaw 0.0% 56 Mumbai 0.0% 56 Ho Chi Minh City 0.0% 56 Delhi 0.0% 56 Abu Dhabi 0.0% 68 Montreal -0.1% 69 Buenos Aires -0.2% 70 Washington, DC -0.7% 70 Calgary -0.7% 72 New Jersey -1.3% 73 Barcelona -1.4% 74 Melbourne -1.7% 75 Osaka -1.9% 76 Seoul -2.3% 76 Vancouver -2.3% 78 Santiago -2.4% 78 Detroit -2.4% 78 The Hague -2.4% 81 Riyadh -2.7% 82 Orlando -3.1% 83 Paris -3.3% 84 Moscow -4.3% 85 Baltimore -4.5% 86 Atlanta -5.7% 87 Milan -6.3% 88 Prague -7.1% 89 Canberra -9.3% 90 Hanoi -11.0% 91 Adelaide -11.1% 92 Sao Paulo -11.3% 93 Cairo -12.5% 94 Brisbane -13.4% 95 Perth -27.1%

9 Global Office Index, Q2 2014 About JLL JLL (NYSE:JLL) is a professional services and investment management firm offering specialised real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of US$4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed US$99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has US$48 billion of real estate assets under management. 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 350 professional researchers track and analyse economic and property trends, and forecast future conditions in over 70 countries, producing unrivalled local and global perspectives. Our research and expertise, fuelled by realtime information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions. For more information contact: Dr Jane Murray Head of Research, Asia Pacific + 852 2846 5274 jane.murray@ap.jll.com Ben Breslau Managing Director, Americas Research + 1 617 531 4233 benjamin.breslau@am.jll.com Dr Lee Elliott Head of Research, EMEA + 44 20 3147 1206 lee.elliott@eu.jll.com Jeremy Kelly Director, Global Research + 44 20 3147 1199 jeremy.kelly@eu.jll.com Contributing Authors: Myles Huang Director, Asia Pacific Research + 852 2846 5793 myles.huang@ap.jll.com Josh Gelormini Vice President, Americas Research + 1 312 228 2060 josh.gelormini@am.jll.com Craig Plumb Head of Research, MENA +971 4 436 2493 craig.plumb@eu.jll.com Oliver Kummerfeldt Associate Director, EMEA Research +44 20 3147 1170 oliver.kummerfeldt@eu.jll.com COPYRIGHT Jones Lang LaSalle IP, Inc. 2014 This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.