Investment activity returned to Louisville as two high-profile office assets traded hands to end the year, reaffirming investor confidence in the market. The downtown office market notched another significant win as Computershare announced a ten year, 1,100 job hiring increase that will result in an expansion of 100,000 square feet in Meidinger tower. As newly delivered Class A product is be absorbed within the market, Class B space continues to lag behind as asking rates are decreasing.

1. Office investment activity
Source: JLL Research
CBD historical vacancy and absorption
Source: JLL Research
Suburban Class B vs Class A asking rates
Source: JLL Research
2012 2013 2014 2015 2016
$10.00
$13.00
$16.00
$19.00
$22.00
$25.00 Class B Class A
Investment activity ramps up to end year
The second half of 2016 saw significant investment activity after a slow start to
the year. Tier REIT, the largest suburban office landlord sold two Hurstbourne
office assets totaling 336,472 square feet to out-of-town Viking Partners for $30.4
million. In addition, a transaction totaling $20.6 million traded hands between two
local investors for the 208,906 square foot Spring River Business Park. The
trades were a further indicator of the stability in Louisville’s Class A office market
as both buildings were sold for greater than $90 per square foot. As newly
delivered Class A product is absorbed, the market should continue to provide
attractive opportunities for local and national investors.
CBD tallies another employment win
Final approval for $13.2 million in tax incentives was awarded to Computershare
in the fourth quarter for a ten year plan with projected job totals of 1,100 people.
The announcement was a major win as the company committed to another three
floors in Meidinger Tower, bringing their total footprint to approximately 100,000
square feet. As the Aetna-Humana merger looms over the Louisville office
market, positive announcements such as Computershare and Conifer Health
Solutions’ 65,000-square-foot lease signed in the third quarter are vital to the
downtown office market. As lower grade office product is repurposed for other
uses, organic growth is projected to curb rising vacancy.
Class B product continues to lag Class A
With the recent success of newly delivered speculative buildings and large build-
to-suit projects, as well as organic growth within the market, vacancy rates
across Louisville’s Class A office market are declining. The organic growth
coupled with rising tenant demand for Class A product and amenities has led to
tenants upgrading from Class B to Class A space, leaving behind a glut of Class
B space. This trend has led to an increase in Class B vacancy as well as a
decrease in asking rates as landlords try to become more competitive. Landlords
are also upgrading amenities and tenant improvement packages to attract
tenants. As Class A rates continue to rise to historic levels, demand should shift
back to Class B space.
Steady leasing activity finishes year on positive note
2,257
Office Insight
Louisville | Q4 2016
0
2
4
6
8
10
12
$0
$50
$100
$150
$200
$250
2012 2013 2014 2015 2016
Total acquisition cost ($M) Number of transactions
0.0%
6.0%
12.0%
18.0%
2012 2013 2014 2015 2016
-150,000.00
0.00
150,000.00
300,000.00
Net Absorption Vacancy Rate
2013 2014 2015 2016
21,492,373
Total inventory (s.f.)
111,903
Q4 2016 net absorption (s.f.)
$17.44
Direct average asking rent
0
Total under construction (s.f.)
12.2%
Total vacancy
361,812
YTD net absorption (s.f.)
-0.4%
12-month rent growth
0.0%
Total preleased

2. Current conditions – submarket Historical leasing activity (s.f.)
Source: JLL Research Source: JLL Research
Total net absorption (s.f.)
Source: JLL Research
Total vacancy rate (%)
Source: JLL Research
Direct average asking rent ($ p.s.f.)
Source: JLL Research
517,690
-148,020
-77,885
86,194
462,281
313,754
426,281
204,612
304,088
361,812
-200,000
0
200,000
400,000
600,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$16.59 $16.60
$16.93
$17.24
$16.97
$16.31
$17.11
$17.23
$17.50 $17.44
$15.50
$16.00
$16.50
$17.00
$17.50
$18.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
11.0%
12.5%
14.2%
15.9%
15.3% 14.8%
13.6% 13.1% 12.8%
12.2%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
959,766
1,067,415
938,552
738,564
991,426
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2012 2013 2014 2015 2016
©2016 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Ross Bratcher | ross.bratcher@am.jll.com
Landlordleverage
Tenantleverage
Peaking
market
Falling
market
Bottoming
market
Rising
market
Plainview/Middletown
CBD
South Central
Hurstbourne/Lyndon
St. Matthews
Westport Road/Brownsboro Rd

3. Class Inventory (s.f.)
Total net
absorption
(s.f.)
YTD total net
absorption
(s.f.)
YTD total net
absorption (%
ofstock)
Directvacancy
(%)
Total vacancy
(%)
Average direct
asking rent($
p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
CBD Totals 10,293,175 14,968 32,112 0.3% 11.2% 11.6% $16.54 0 0
Urban Totals 10,293,175 14,968 32,112 0.3% 11.2% 11.6% $16.54 0 0
Hurstbourne/Lyndon Totals 4,808,195 17,519 89,887 1.9% 13.1% 13.3% $21.74 245,000 0
Plainview/Middletown Totals 2,888,204 311 77,715 2.7% 13.5% 13.5% $15.74 38,400 0
South Central Totals 1,493,851 53,410 79,841 5.3% 9.1% 15.3% $13.24 0 0
St. Matthews Totals 1,079,692 23,372 33,897 3.1% 8.4% 8.4% $17.61 45,000 0
WestportRoad/Brownsboro Rd Totals 929,256 2,323 48,360 5.2% 8.5% 9.1% $21.62 0 0
Suburbs Totals 11,199,198 96,935 329,700 2.9% 11.8% 12.8% $18.21 328,400 0
Louisville Totals 21,492,373 111,903 361,812 1.7% 11.5% 12.2% $17.44 328,400 0
CBD A 4,295,069 8,426 35,426 0.8% 11.0% 11.8% $19.42 0 0
Urban A 4,295,069 8,426 35,426 0.8% 11.0% 11.8% $19.42 0 0
Hurstbourne/Lyndon A 3,835,708 24,353 95,432 2.5% 13.6% 13.8% $22.63 245,000 0
Plainview/Middletown A 1,027,506 4,256 54,763 5.3% 6.2% 5.9% $18.47 38,400 0
St. Matthews A 459,453 13,750 33,723 7.3% 7.1% 7.1% $22.45 45,000 0
WestportRoad/Brownsboro Rd A 783,477 2,323 52,571 6.7% 8.8% 9.6% $22.31 0 0
Suburbs A 6,106,144 44,682 236,489 3.9% 11.2% 11.4% $22.12 328,400 0
Louisville A 10,401,213 53,108 271,915 2.6% 11.1% 11.6% $20.98 328,400 0
CBD B 5,998,106 6,542 -3,314 -0.1% 11.3% 11.4% $14.65 0 0
Urban B 5,998,106 6,542 -3,314 -0.1% 11.3% 11.4% $14.65 0 0
Hurstbourne/Lyndon B 972,487 -6,834 -5,545 -0.6% 11.4% 11.4% $16.24 0 0
Plainview/Middletown B 1,860,698 -3,945 22,952 1.2% 17.5% 17.8% $15.35 0 0
South Central B 1,493,851 53,410 79,841 5.3% 9.1% 15.3% $13.24 0 0
St. Matthews B 620,239 9,622 174 0.0% 9.3% 9.3% $15.26 0 0
WestportRoad/Brownsboro Rd B 145,779 0 -4,211 -2.9% 6.8% 6.8% $15.95 0 0
Suburbs B 5,093,054 52,253 93,211 1.8% 12.6% 14.5% $14.89 0 0
Louisville B 11,091,160 58,795 89,897 0.8% 11.9% 12.8% $14.68 0 0
2,257
Office Statistics
Louisville | Q4 2016
©2016 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Ross Bratcher | ross.bratcher@am.jll.com