1. Multifamily Outlook
United States . Summer 2012
Strong fundamentals fuel
robust transaction velocity
Strong occupancy and rent growth continued across the country during
the first half of 2012 as economic headwinds moved in support of
rentership versus homeownership.
Sales transaction velocity kept pace with 2005 levels, totaling $23
billion at mid-year.
We anticipate the apartment sectors strong performance to continue
over the next 24 months. Competition will push investors into
secondary and tertiary markets and entrepreneurial, value-add
strategies will resurface.

2. Jones Lang LaSalle • United States Multifamily Outlook • Summer 2012 2
United States Multifamily
Q2 2012 performance overview
Fundamentals restored to pre-financial crisis levels, recording 50 basis points below
The U.S. economic recovery moved at an anemic pace during the the 10-year average. Effective rent growth followed suit, reaching well
second quarter of 2012 with job growth flat, GDP slowing and another above the peak levels of 2007-2008 to a 10-year high. Rent growth
round of economic stimulus in the works. The resulting challenges and occurred in all markets tracked and averaged 1.7 percent across the
uncertainty kept the “would be” homeowner population opting to rent. country. Houston and Dallas, in particular, kept up their impressive pace
Deep in the hangover of the financial crisis, the nation’s mortgage of rent growth, while absorbing a heavy pipeline of new deliveries.
delinquency and home foreclosure rate continued to climb, forcing more Overall, gateway markets in the Northeast and California are leading
homeowners into the renter pool. Even as the U.S. housing sector is the country with vacancy below 6.0 percent and San Francisco is out
showing signs of improvement with prices easing upward, for-sale ahead of the pack with vacancy at 3.0 percent (3.4 percent below the
inventory low and home affordability bottoming, home buying decisions national average) and year-over-year rent growth at 11.4 percent (7.0
were put on hold in favor of renting, causing a continued imbalance in percent above the national average).
housing fundamentals.
While occupancy gains were realized in most markets, it is interesting
% loss of net worth and decline in homeownership by age to note that the hardest-hit housing markets continued to show the most
significant absorption of units over the last three months. Markets like
South Florida, Phoenix, Atlanta and Orlando and Los Angeles saw 20-
basis-point vacancy reductions at a minimum and year-over-year
employment growth greater than 2.0 percent. Keep in mind that many of
these metro’s saw deep employment losses during the downturn and
much of this growth could be considered stabilization rather than
advancement as unemployment in most markets remains a significant
distance (between 5.4 to 8.2 percent) from the peak levels of 2006.
Historical housing fundamentals
12.0% Homeownership Rate 70.0%
Multifamily Vacancy
Foreclosure Rate
Vacancy, Foreclosure and Unemployment Rate
10.0% Unemployment Rate
68.0%
The second quarter highlighted the impact that the financial crisis has
8.0%
had on our population ages 44 and under (a key home-buying Homeownership Rate
demographic) since the housing market collapse. A recent U.S. Census 6.0% 66.0%
study pointed out the group’s 58.8 percent decline in total net worth due
4.0%
to declining home values, high-unemployment, lower wages and high
64.0%
debt-burdens. This segment of the population, returning to the renter
2.0%
pool out of necessity, has been a key driver for multifamily occupancy
growth in recent months. With housing challenges far from being 0.0% 62.0%
resolved, the apartment development pipeline has amplified and investor
appetite for core multifamily properties has pushed towards peak levels.
Performance As job growth within the overall economy struggles to regain footing,
Nationwide, strong performance in terms of unit absorption and rent tech-heavy markets are setting the pace for employment, occupancy
growth continued during the second quarter of 2012 with vacancy and rent growth. As a result, developers began pursuing opportunities
for new development across these markets throughout the country.

3. Jones Lang LaSalle • United States Multifamily Outlook • Summer 2012 3
United States Multifamily
Q2 2012 performance overview cont.
According to a recent study by MPF Research, 162,000 units are With treasury yields at historic lows and uncertainty on the forefront
currently under construction across the nation, with future inventory globally, Institutions and REITS have been parking money in core
growth exceeding 10.0 percent in some submarkets. Leading the pack is assets often with the expectations of a minimal yield in exchange for
the North San Jose / Milpitas submarket with over 4,000 units under the safety of a quality asset in a prime location. This “flight-to-safety”
construction, which will equate to 45.6 percent inventory growth. The theme continued during the second quarter; however, in an effort to
second highest would be North Irvine, CA and North Charlotte, NC. Both avoid the saturation and competition that has been compressing
areas will see 18.3 percent inventory growth in the near future. From a yields, investor demand for secondary and tertiary assets / markets
metro-level, Austin leads the country with 3.9 percent of new inventory in began to strengthen.
the pipeline, followed by San Jose, Raleigh/Durham, Nashville, Dallas,
Seattle and Washington, DC. While there is much concern about A key driver that is keeping multifamily transaction velocity high is the
overbuilding, it is important to note that the amount of construction in our fluidity and availability of financing compared to other property sectors
top U.S. markets is still 10.0 percent to 30.0 percent below the average (office, industrial and retail). This fact is largely supported and fueled by
annual rate of construction that occurred during the last two decades. the GSEs; who generally exceed other capital sources in terms of
Metros with their economic fundamentals intact are expected to fare well overall proceeds. During the second quarter, Freddie Mac was
even with this substantial pipeline of new inventory. reportedly lending up to an 80.0 percent loan-to-value ratio (based on
the purchase price) for Class A assets in primary locations and a loan-
Transaction velocity to-value ratio of up to 75.0 percent for secondary assets and locations.
Investor demand for multifamily product continued to surge through the In certain instances, borrowers successfully executed 10-year loans,
first half of 2012 with transaction velocity on pace with 2005 levels; with generous interest-only periods, while capturing interest rates below
reaching $23 billion at mid-year. National bulk portfolio sales (totaling 4.0 percent. Along with Fannie Mae and Freddie Mac, CMBS shops are
$4.0 billion through H1 2012) were a huge driver behind activity, offering very attractive financing relative to historical standards, but, like
increasing 320.0 percent compared to the first half of 2011. Baltimore, the agencies, their ability to out-quote other financing sources in terms
San Diego, Jacksonville and Raleigh experienced the largest year-over- of proceeds and rates hinges on their favorable evaluation of both an
year increases with total transaction dollar volume exceeding 100.0 asset and a borrower. Borrowers looking for financing on more
percent from H1 2011. Despite this competitive buying environment, cap. complicated or lower leverage deals will find life companies and
rates have remained relatively stable at the national level over the last balance sheet lenders to be as, or more, competitive than agencies and
12 months; averaging 5.9 percent. However, according to a recent CMBS shops.
survey of investor yield requirements, buyer expectations for levered
IRR’s have significantly compressed in core markets. Looking ahead
We anticipate that apartment occupancy will continue to climb as
Historical multifamily sales volume and cap rates
population growth from two key renter age segments, Echo-Boomers
Total $ Volume Average Cap Rate (%)
and Empty-Nesters, will aid in the absorption of units through 2020.
$40 8.0
Despite the development fever that has hit the multifamily sector
$35 7.0
nationwide, at the current levels, we don’t feel as though it will
$30 6.0
Average cap rate (%)
negatively affect most markets, particularly markets with strong
$ volume in billions
$25 5.0
fundamentals such as the Northeast, Northwest and the Texas metros.
$20 4.0
Overbuilding does however have the potential to threaten fundamentals
$15 3.0
in areas that have significant housing and employment challenges
$10 2.0
ahead, primarily in the Sunbelt markets, where home affordability is
$5 1.0
rapidly decreasing and rent growth is compounding. While our overall
$0 0.0
Qtr1 Qtr1 Qtr1 Qtr1 Qtr1 Qtr1 Qtr1 Qtr1 Qtr1 outlook is optimistic, we do anticipate that the compounding occupancy
2004 2005 2006 2007 2008 2009 2010 2011 2012 and rent growth will begin to slow over the next 24 months as lenders

4. Jones Lang LaSalle • United States Multifamily Outlook • Summer 2012 4
United States Multifamily
Q2 2012 performance overview cont.
loosen residential lending restrictions and home affordability decreases
Year-over-year % change in transaction dollar volume
to levels that sway some renters to pursue homeownership.
In particular, there are two areas to watch (“wildcards”) in the coming Baltimore
months that could significantly impact housing fundamentals across the Bulk Portfolio
nation. First, the government refinance programs for underwater
San Diego
borrowers, such as the HARP 2.0 program, will reduce borrower’s
interest rates and allow “stuck” homeowners to feasibly rent their homes Jacksonville (Florida)
and relocate. Second, we anticipate that an increase in for-sale housing Raleigh/Durham
inventory will place continued downward pressure on home prices as New York City
foreclosures make their way through the pipeline and lenders release
Orange County (California)
shadow REO inventory to the market.
Tampa/St Petersburg
Overall, low interest rates and strong multifamily fundamentals will Seattle/Puget Sound
continue to fuel investor demand over the next 24 months. We anticipate
Houston
that secondary and tertiary asset classes and locales will see a spike in
transaction volume as the sentiment toward risk aversion fades, Nashville
investors pursue higher yields and entrepreneurial value-add Charlotte
strategies reemerge.
South Florida
Top 10 YTD $ volume Total U.S.
Atlanta
Metro YTD $ volume
Orlando
Bulk portfolio $3.96B Las Vegas
Chicago
New York $2.95B
Phoenix
Washington, DC $1.18B Richmond VA
Boston
Atlanta $1.04B
Los Angeles
Phoenix $776M
Inland Empire (California)
Los Angeles $708M Dallas/Ft Worth
Washington, DC
South Florida $702M Northern New Jersey
Seattle $701M San Francisco
Chicago $669M
Houston $526M YOY % change in sales volume ($)

5. Jones Lang LaSalle • United States Multifamily Outlook • Summer 2012 5
United States – Multifamily clock
Boston, New York, San Francisco, Washington, DC Peaking market Falling market
Baltimore, Chicago, Northern New Jersey, Philadelphia
Austin, San Jose, Seattle Rising market Bottoming market
Charlotte, Dallas, Houston, Los Angeles,
Nashville, Richmond, San Diego
Atlanta, Inland Empire, Orange County, Phoenix
South Florida,
Charlotte, Las Vegas, Orlando,
Raleigh-Durham, Tampa Bay
Jacksonville, Memphis
Clock description Q2 2012 positions
• This diagram illustrates where Jones Lang LaSalle estimates each prime multifamily • All markets experienced rent growth in the second quarter, averaging 1.9 percent
market is within its individual rental cycle at the end of the quarter. across the country
• Markets can move around the clock at different speeds and directions. • Boston led with 3.5 percent growth.
• The diagram is a convenient method of comparing the relative position of markets in • San Francisco and Boston are the nation’s tightest markets in terms of occupancy
their rental cycle. • Q2 vacancy was 3.0 and 4.0 percent respectively.
• The position is not necessarily representative of investment or development • Houston and Dallas led markets in new deliveries with over 1,500 units delivered in Q2.
market prospects.
• Houston, ranked third in the country in terms of rent growth, recording some of the
• The position refers to prime face rental values. highest occupancy gains nationwide.
• South Florida, Phoenix, Atlanta and Orlando and Los Angeles saw 20-basis-point
vacancy reductions, at a minimum, and employment growth higher than 2.0 percent
year-over-year.
• Gateway markets in Southern California and the Northeastern U.S. remained stable
with vacancy below 6.0 percent.

6. Jones Lang LaSalle • United States Multifamily Outlook • Summer 2012 6
Q2 2012 vacancy across the U.S. Multifamily sector
Seattle
Boston
New York
Northern N.J
Philadelphia
San Francisco Chicago
Baltimore
Washington DC
San Jose Las Vegas
Richmond-Tidewater
I.E.
Los Angeles Raleigh
Memphis
Orange County Charlotte
Phoenix Atlanta
San Diego Dallas Nashville
Houston Jacksonville
Orlando
Vacancy meter
Tampa
10.0% +
South FL
8.0% to 9.9%
6.0% to 7.9%
Top YOY rent growth
5.0% to 5.9%
Metro % change
< 5.0%
San Fran. 11.2%
L.A. 7.2%
Charlotte 6.5%
New York 6.4%
Chicago 6.0%
Houston 5.9%
Boston 5.7%
Dallas-FTW 5.4%
Source: PPR, Jones Lang LaSalle Research

7. Jones Lang LaSalle • United States Multifamily Outlook • Summer 2012 7
United States Multifamily performance statistics
Q2 YTD Total Q2 net YTD net % Quarterly YOY Q2 Quarterly YOY %
Q2
Market completions completions inventory absorption absorption absorbed vacancy vacancy effective % rent rent
vacancy
(units) (units) (units) (units) (units) YTD change change rents growth growth
Atlanta 116 309 391,428 883 1,514 0.4% 10.0% -0.2% -0.5% $678.39 1.3% 4.3%
Baltimore 510 1,055 183,003 470 587 0.3% 5.8% 0.0% 0.4% $1,231.44 0.8% 1.9%
Boston 560 705 344,393 352 179 0.1% 4.0% 0.1% 0.4% $1,740.92 3.5% 5.7%
Charlotte 410 710 118,774 387 714 0.6% 9.0% 0.0% -1.0% $619.37 2.0% 6.5%
Chicago - 27 666,161 (226) 832 0.1% 5.5% 0.1% -0.5% $1,124.68 1.7% 6.0%
Dallas - Fort Worth 1,311 2,160 596,003 4,136 5,533 0.9% 6.3% -0.5% -0.8% $804.90 2.0% 5.4%
Houston 1,068 1,608 502,019 3,971 6,385 1.3% 11.0% -0.6% -1.7% $813.18 2.8% 5.9%
Inland Empire 100 292 153,159 373 504 0.3% 6.7% -0.1% 0.4% $1,058.35 0.9% 2.5%
Jacksonville - 264 83,463 78 279 0.3% 12.6% -0.1% 0.2% $728.36 1.2% 1.9%
Las Vegas 200 352 149,910 208 409 0.3% 7.3% 0.0% 0.0% $725.41 0.9% -1.3%
Los Angeles 198 462 1,051,301 1,921 3,094 0.3% 5.6% -0.2% -0.8% $1,681.76 1.8% 7.2%
Memphis 24 159 85,533 149 389 0.5% 10.8% -0.1% -0.5% $500.27 0.9% 1.3%
Nashville - 456 107,516 175 530 0.5% 6.5% -0.2% -0.6% $591.83 2.8% 4.5%
New York 650 1,046 1,975,384 2,535 4,728 0.2% 4.7% -0.1% -0.4% $2,678.64 2.1% 6.4%
Northern New Jersey - - 153,703 255 301 0.2% 5.0% -0.2% -0.7% $1,282.41 0.4% 3.2%
Orange County 352 614 220,998 190 454 0.2% 6.0% 0.0% 0.5% $1,617.62 0.9% 4.5%
Orlando 200 240 151,834 513 700 0.5% 8.0% -0.2% -1.1% $819.22 2.2% 3.9%
Philadelphia - 236 327,465 403 292 0.1% 5.3% -0.1% 0.2% $1,163.21 1.6% 1.8%
Phoenix 320 320 275,574 726 1,010 0.4% 7.3% -0.2% -0.1% $853.67 0.9% 2.2%
Raleigh 570 1,005 77,521 456 731 0.9% 9.6% 0.1% -0.1% $722.88 1.8% 4.6%
Richmond 335 335 76,069 372 492 0.6% 7.9% -0.1% -0.7% $794.21 1.0% 1.8%
San Diego 717 717 267,598 343 (620) -0.2% 5.4% -0.2% 0.1% $1,471.45 1.5% 1.5%
San Francisco - 187 219,682 250 1,169 0.5% 3.0% -0.1% -1.4% $2,312.01 1.6% 11.2%
San Jose 222 330 136,457 236 235 0.2% 5.0% 0.0% 0.0% $1,858.70 2.0% 5.4%
Seattle 808 1,596 220,088 1,028 1,760 0.8% 5.1% -0.1% -0.3% $1,021.97 1.5% 4.4%
South Florida 26 26 356,135 649 1,553 0.4% 6.1% -0.2% -0.3% $1,167.79 2.2% 4.8%
Tampa Bay 515 1,367 183,975 651 1,752 1.0% 9.6% -0.1% -0.3% $819.87 1.1% 3.6%
Washington - NoVA - MD 3,059 3,004 531,369 2,162 1,809 0.3% 6.2% 0.2% 0.1% $1,516.98 1.2% 1.2%
United States 17,365 26,900 12,926,294 33,368 51,352 0.4% 6.4% -0.1% -0.3% $1,228.13 1.9% 4.2%

8. Jones Lang LaSalle • United States Multifamily Outlook • Summer 2012 8
United States Multifamily transaction statistics
Q2 YTD % change from
Total Q2 YTD % change YOY Average recorded
Market transactions transactions previous quarter
$ volume $ volume $ volume cap rate (%)
(#) (#) $ volume
Atlanta 14 29 $479,400,000 $1,039,635,195 -14.4% 14.2% 5.34%
Baltimore 1 3 $64,700,000 $176,740,000 -42.3% 579.8% 5.70%
Boston 11 15 $377,985,482 $505,260,482 197.0% -35.3% 5.70%
Charlotte 6 11 $239,395,000 $376,495,000 74.6% 33.0% 5.49%
Chicago 6 13 $296,240,654 $669,640,654 -20.7% -23.4% 6.50%
Dallas - Fort Worth 3 9 $66,800,000 $204,310,000 -51.4% -46.8% 7.20%
Houston 11 17 $365,256,000 $525,956,000 127.3% 45.2% 6.27%
Inland Empire 1 2 $18,000,000 $187,000,000 -89.3% -45.7% 5.20%
Jacksonville 1 2 $362,000,000 $379,000,000 2029.4% 148.9% 8.00%
Las Vegas 4 8 $123,691,453 $195,837,170 71.4% -7.6% 6.43%
Los Angeles 7 21 $205,800,000 $708,036,859 -59.0% -43.9% 5.55%
Memphis 8 9 $203,203,759 $229,203,759 681.6% 126.3% 9.20%
Nashville 4 5 $116,900,000 $150,850,000 244.3% 39.6% 6.95%
New York 15 35 $975,979,206 $2,956,264,744 -50.7% 103.0% 4.33%
Northern New Jersey - 3 - $182,440,000 -100.0% -59.7% N/A
Orange County 3 4 $169,160,000 $189,560,000 729.2% 65.3% 4.20%
Orlando 5 6 $132,750,000 $194,300,000 115.7% 0.8% 5.58%
Philadelphia 3 8 $95,850,000 $297,097,000 -52.4% -7.9% 5.60%
Phoenix 13 22 $432,591,500 $776,541,500 25.8% -25.1% 5.97%
Raleigh 5 13 $217,600,000 $470,100,000 -13.8% 111.3% 6.50%
Richmond 2 2 $56,850,000 $56,850,000 100.0% -26.4% 5.67%
San Diego 4 9 $200,000,000 $295,500,000 109.4% 158.6% 5.17%
San Francisco 3 6 $223,022,000 $314,368,000 144.2% -70.7% 5.40%
San Jose 8 17 $310,173,750 $701,122,950 -20.7% 48.2% 5.18%
Seattle 4 10 $185,020,000 $469,550,000 -35.0% 60.2% 5.67%
South Florida 6 14 $236,090,100 $702,891,100 -49.4% 25.5% 5.35%
Tampa 4 12 $146,580,000 $398,715,400 -41.9% 50.1% 6.40%
Washington - NoVA - MD 10 17 $753,900,678 $1,180,942,668 76.5% -48.0% 5.45%
United States 238 465 $12,754,259,096 $22,707,640,409 28.1% 9.7% 5.94%

9. About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered
by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6
billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an
industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle
Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47
billion of assets under management. For further information, please visit www.joneslanglasalle.com.
About Jones Lang LaSalle Research
Jones Lang LaSalle’s research team delivers intelligence, analysis, and insight through market-leading reports and services that illuminate today’s
commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our 300 professional researchers track and analyze
economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research
and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives
successful strategies and optimal real estate decisions.
Jubeen Vaghefi
International Director,
National Multifamily Practice Leader
Jubeen.Vaghefi@am.jll.com
+1 305 789 6519
David Young
Managing Director
West Coast Leader
David.Young@am.jll.com
+1 206 607 1719
Brady Titcomb
Research Manager
United States Multifamily
Brady.Titcomb@am.jll.com
+1 954 232 7931
www.us.joneslanglasalle.com
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