An overview capturing the latest economic and office-oriented market intel for Denver, Salt Lake City and Phoenix

1. Denver, Phoenix and Salt Lake City
economic and office overview
Q3 2016

2. Economy

3. Employment growth
-300.0
-250.0
-200.0
-150.0
-100.0
-50.0
0.0
50.0
100.0
150.0
200.0
12-monthnetchange(thousands)
Phoenix Denver Salt Lake City
Most recent annual growth slightly slower than cyclical average, but trend remains one of stability
Source: JLL Research, Bureau of Labor Statistics
+101,800
current cycle
average growth
+115,500
previous cycle
average growth
2

4. 3.2%
3.1%
2.3%
1.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Denver Salt Lake City Phoenix United States
12-month%changeEmployment growth and unemployment
Rapid job growth is occurring throughout the region, but minimal slack may slow down future gains
Source: JLL Research, Bureau of Labor Statistics
3.2% 3.2%
5.0% 5.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Denver Salt Lake City Phoenix United States
Unemploymentrate(%)
Employment growth Unemployment
3

5. Employment growth
-5 0 5 10 15 20 25
Information
Manufacturing
Other services
Government
Trade, transportation and utilities
Financial activities
Leisure and hospitality
Professional and business services
Construction and mining
Education and health
12-month net change (thousands)
Phoenix Denver Salt Lake City
Job growth balanced across health, construction, professional services and leisure
Source: JLL Research, Bureau of Labor Statistics
4

6. Housing starts
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Authorizedunits
Phoenix Denver Salt Lake City
Regional markets on track to surpass 2015 starts, but still well below previous peak
Source: JLL Research, U.S. Census Bureau
5

7. Office

8. Market Inventory (s.f.)
YTD 2016 net
absorption (s.f.)
Total vacancy
(%)
Average asking
rent
($ p.s.f.)
Under
construction
(s.f.)
Denver 108,018,472 -20,603 13.8% $26.56 3,649,889
Phoenix 84,035,044 2,611,611 19.7% $24.22 1,692,140
Salt Lake City 49,442,083 1,247,276 7.3% $22.50 2,122,795
Region 241,495,599 3,838,284 14.5% $25.03 7,464,824
Regional office overview
Even as occupancy growth stalls in Denver, vacancy is falling regionally
Source: JLL Research
Comparison to U.S. office market
+70bp
Net absorption (% of inventory)
7.1%
Share of national construction
6.0%
Share of national inventory
+0bp
Total vacancy
+50bp
U/C as % of inventory
-$7.32 (-22.6%)
Average asking rent
7

9. Net absorption
-4,000,000
-2,000,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016
Netabsorption(s.f.)
Denver Phoenix Salt Lake City
More than 1.0 m.s.f. of absorption in both Phoenix and SLC keeping annualized growth stable
Source: JLL Research
5.1 m.s.f.
2016 annualized
absorption
8

10. 1,384,779
625,814
413,118
246,778 239,670 224,516
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Tempe (Phoenix) Utah County (Salt
Lake City)
Draper (Salt Lake
City)
Chandler (Phoenix) Scottsdale Airpark
(Phoenix)
Midtown Suburbs
(Denver)
YTDnetabsorption(s.f.)Net absorption
Large user-heavy suburban submarkets are driving regional occupancy growth
Source: JLL Research
9

11. 7.9%
8.2%
8.5%
9.7%
10.8% 10.8%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
Salt Lake City CBD Cottonwood (SLC) Tempe (Phoenix) Boulder (Denver) LoDo (Denver) South Scottsdale
(Phoenix)
ClassAtotalvacancy(%)Total vacancy
Amenitized and in-demand submarkets have vacancy well below market and regional average
Source: JLL Research
10

12. Rent growth
44.8%
23.3%
20.8%
20.0%
13.8%
13.0%
10.9%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Draper (SLC) Boulder (Denver) Tempe (Phoenix) Sandy South
Towne (SLC)
Utah County (SLC) South Scottsdale
(Phoenix)
Paradise Valley
(Phoenix)
ClassAyear-over-yearrentgrowth(%)
Outside of Denver (except Boulder), double-digit rent growth unabated in many submarkets
Source: JLL Research
11

13. Rent growth
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013 2014 2015 Q2 2016
Rentgrowthsince2010(%)
All regional markets are experiencing rent growth on the back of both new supply and tightening
Source: JLL Research
+26.5%
Denver
+11.5%
Phoenix
+20.3%
Salt Lake City
12

14. Under construction
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016
Underconstruction(s.f.)
Denver Phoenix Salt Lake City
As developments deliver, the construction pipeline will slow in response to market softening
Source: JLL Research
13

15. COPYRIGHT © JONES LANG LASALLE IP, INC. 2016
TJ Jaroszewski
Director – Rocky Mountains Research
+1 303 260 6523
Thomas.Jaroszewski@am.jll.com
Phil Ryan
Senior Research Analyst – U.S. Office
+1 202 719 6295
Phil.Ryan@am.jll.com