Press Release: September 19, 2001

Firm Says Well Over 20 Million Square Feet of Commercial Office Space Impacted Over Next Year

London, New York and Singapore, September 19, 2001 - Jones Lang LaSalle (NYSE: JLL), the world's leading real estate services and investment management firm, today announced its estimates of the impact on New York's real estate market, as well as its views of the effects on global real estate, stemming from last week's attack on the World Trade Center.

Among its preliminary findings, the firm said that the direct losses attributable to real estate alone could range up to $10 billion, including total damage to surrounding buildings in the World Trade Center/World Financial Center sub market. In Manhattan, the immediate reduction of commercial office space is approximately 25 million square feet, with the net loss over the next 12 months expected to be more than 20 million square feet, representing approximately 18.5 percent of the downtown office market.

"Jones Lang LaSalle is deeply saddened by the unprecedented tragedies in America. Although it will be some time before we understand the full scope of this tragedy, we will continue to focus on all of our clients' needs, particularly those most directly impacted by this disaster," said Stuart L. Scott, Chairman and Chief Executive Officer of Jones Lang LaSalle. "In addition, we will work diligently with our investment clients to provide informed perspectives on the impact of last week's events on global real estate."

New York Real Estate Impacts

• The total immediate loss is roughly 15 million square feet of property in lower Manhattan
  -- approximately 12.7 million square feet, or 11.6 percent, was destroyed.
  -- another 2.3 million square feet has been damaged or declared structurally unsound as a result of fires, falling debris and building collapses.
• More than 10.7 million square feet of property sustained damage, including
  -- 5 million square feet that will be taken out of the market for at least one year to complete extensive repairs and reconstruction.
  -- 5.7 million square feet that should be ready for occupancy in less than 12 months.
• Prior to September 11, Manhattan had approximately 26 million square feet, or 7.5 percent, of vacant space for lease or sublease. The firm expects that nearly all of the sublet space and a significant amount of the direct space will be filled in the weeks ahead in order to accommodate office space needs of dislocated firms.
• The World Trade Center/World Financial Center sub market totaled 40 million square feet before the incident and has been reduced by half for at least the next year. In the months and years ahead, the firm expects rebuilding and renovation work to restore the lost inventory.

To put these figures into context:

• After last week's loss, the total Manhattan real estate market now stands at 328 million square feet--still the second largest office market in the world after Tokyo--or 59 percent of the metropolitan New York market.
• The total lower Manhattan sub market totals 89 million square feet following the loss of 20 million square feet.

“In New York, Jones Lang LaSalle continues to help find office space for clients displaced by this horrible tragedy," said Ken Siegel, Managing Director in the firm's Tenant Representation group. "Since short-term demand for temporary office space is very high, our teams are working closely with our clients to define and secure their short- and long-term space requirements."

Global Real Estate Impacts

Jones Lang LaSalle also provided its broad viewpoints on both the short- and long-term global real estate impacts of the attack.

"From the global economic perspective, we predict that the most likely scenario will be back to business with fear and caution," said Jacques N. Gordon, International Director and Co-chair of Global Research for Jones Lang LaSalle. "In particular, we foresee a delay in the U.S. economic recovery of six to nine months, with Q3 and Q4 likely tipping the economy into a short, shallow recession. The firm does not foresee a flight of occupiers and capital from central business districts, however, new demand will be stronger in suburban markets than in CBDs. For example, even after many terrorist bombings, the City of London remained a preferred location; however suburban locations were also treated more seriously as occupancy alternatives."

Potential Global Impacts for Occupiers/Users

Short-term

• In the face of uncertainty, corporations may delay real estate decisions.
• Companies will be more likely to renew leases than move as they shepherd capital.
• Premiums paid for the most prestigious buildings and the highest floors may decline.
• International firms considering downsizing are likely to take this action faster now.

Long-term

• Major firms may adopt a multi-premises strategy (facilitated by technology) and favor decentralization.
• Some global firms may consider a greater regional or even international dispersal of headquarters activities to avoid damage to their businesses.

Potential Global Impacts for Investors/Developers

Short-term

• Demand will accelerate for teleconference facilities and broadband connections as a substitute for business travel.
• Building management costs will increase due to enhanced security measures and higher insurance premiums.
• Some projects under development may be reviewed in terms of building specification, volume and configuration.

Long-term

·      The firm does not foresee a flight of occupiers and capital from central business districts, however new demand will be stronger in suburban markets than in CBDs.

• Security will become a differentiating factor for prime versus sub-prime space.
• The firm expects U.S. buildings to follow the extensive security practices currently in place in major European and Asian cities.
• Some cities might review building codes, complicating application processes and increasing construction costs. Stand-alone high-rise buildings will be more difficult to finance and stricter zoning requirements will be implemented.