Magazine article Mortgage Banking

JLL: Split between Investment; Leasing Markets Will Ease

Magazine article Mortgage Banking

JLL: Split between Investment; Leasing Markets Will Ease

Article excerpt

"We're seeing a tremendous weight of capital from a growing and diverse set of capital sources interested in a much wider range of U.S. real estate," said Ben Breslau, Jones Lang LaSalle Americas' research managing director. "Investors feel more comfortable with the economic outlook, and they've shown a greater appetite for risk that has led to a 21 percent global increase in year-over-year investment volumes," he said.

Unfortunately, the leasing market has not performed as well. "Global leasing volumes for the full year are expected to be flat, and in most markets and countries, 2013 is likely to turn out to be a weak year for rental growth," said John Sikaitis, JLL managing director of office research. But with corporate profitability high and improved occupier sentiment over the last quarter, JLL predicts that leasing volumes will increase 5 percent to 10 percent in 2014.

For example, central business district (CBD) locations have shifted to landlord-favorable conditions in most markets, JLL reported. And while new office development has steadily increased--especially in tech-rich and energy-heavy areas--overall construction levels will remain below trend until at least 2015.

JLL expects office rent growth to pick up in 2014, and not just for tech and energy markets. The firm forecasts office rents to grow at a 5.5 percent rate in 2014 with net effective rents climbing even higher due to shrinking concessions.

"The big takeaway that we are starting to see is that after two to three years of a very 'siloed' recovery in the energy and technology market, demand is starting to diversify," said Sikaitis. …

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