Seven key commercial real estate investment themes for 2016U.S. Investment Outlook Q1 2016

Sectors at a glanceEffects of recent capital markets volatility were felt in early 2016

3

1.After a bumpy January and February spur heightened caution in markets, signs of stability emerged late in Q1

4

Volatility in the public markets drops after a bumpy six months

Source: JLL Research, CBOE, Bloomberg (data as of 4/6/16)

5

2.CMBS pricing follows the wave of market volatility with recent signs of needed stability

6

CMBS issuance takes a hit with market volatility

Source: JLL Research, Bloomberg, Commercial Mortgage Alert (through 3/31/16)

Equity market volatility causes gradual increase in CMBS spreads

Source: JLL Research, Commercial Mortgage Alert (through 4/1/16)

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3.Capital deployment pressures heighten with increased caution, decline in deal flow and continued discipline

8

Following three elevated years, fundraising slowing in 2016

Source: JLL Research, Preqin (Data includes North American closed funds as of 4/12/16)

Record levels of global dry powder in the markets

Source: JLL Research, Preqin (Global data is an aggregate of historic closed funds as of 4/1/16)

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4.Slow start to 2016 in debt and equity markets parallels cautious investor sentiment

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Heightened sensitivity to risk spurs early slowdown in 2016

Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m; Includes portfolio, entity-level transactions)

Excluding multifamily, slow start felt across sectors

Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m; Includes portfolio, entity-level transactions)

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5.Meeting the gap: REIT performance pressures benefitting dry powder in markets

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REIT disposition efforts benefitting dry powder in markets

Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m; Excludes hotels)

Hote

ls

Mul

tifam

ily

Offic

e

Reta

il

Indu

strial

Over

all

81.3%

57.8%

34.5%

15.2% 10.7%

38.0%

14.5%

21.0%20.9%

21.6%

20.3% 20.5%

4.2%15.1%

13.6%30.7% 14.4%

17.6%

6.0%

25.3%

31.6%47.1%

21.3%

5.7% 7.6%

Other

Public

Private

Institutional investors / SWFs

Private equity / Investment funds

Acqu

irers

of R

EIT

prod

uct,

2015

– Q

1 20

16

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6.Cross-border investment is down, but far from diminished

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Cross-border investment normalizing in 2016

Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m)

Where is the capital focused? Q1 sees a shift from industrial back to office product

Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m)

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7.Fear factor remains despite market rebound and lower volatility

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Fear Barometer reflecting concern of a market sell off

Source: JLL Research, Credit Suisse, CBOE, Bloomberg (data as of April 12, 2016)

Jan-

15

Feb-

15

Mar

-15

Apr-1

5

May

-15

Jun-

15

Jul-1

5

Aug-

15

Sep-

15

Oct-1

5

Nov-

15

Dec-

15

Jan-

16

Feb-

16

Mar

-16

Apr-1

610

15

20

25

30

35

40

45

50

55

60

Fear Barometer Volatility Index

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U.S. investment themes Learn more about these Q1 2016 trends, plus read sector-specific takeaways for office, industrial, lodging and others.

Download JLL’s latest U.S. Investment Outlook

www.us.jll.com/investment-outlook