First 400 Days of Trump Administration:

Interactive Analysis of Impact on Your

Firm and

Real Estate

Presented by

Benjamin Breslau

Elizabeth Cooper, J.D.

LI22

5/4/2018

2:15 PM

The handout(s) and presentation(s) attached are copyright and trademark protected and provided for individual use only.

1

First 468 Days of TrumpLegal and real estate impactElizabeth Cooper

International Director and Co-Chair, Law Firm Group, JLL

May 4, 2018

Benjamin Breslau

International Director, Americas Research, JLL

Political backdrop

Economic & property outlook

Big trends to watch

Implications & Q&A

2

2

Poll question…

How has your firm’s performance changed since Trump was elected?

a. Worse b. Same c. Better

3

A look back: Trump presidency after 468 days

2016 Our prediction at the time…

Likely to occur Some taxes cuts / tax reform

Somewhat likely to occurInfrastructure spending

Deregulation

Defense spending

Who knows?Healthcare reform

Immigration reform

Trade and foreign policy

4

3

The reality: Trump presidency vs. expectations

2018 What actually got done…

Likely to occur Some taxes cuts / tax reform

Somewhat likely to occurInfrastructure spending

Deregulation

Defense spending

Who knows?Healthcare reform

Immigration reform

Trade and foreign policy

5

Trump presidency…by the numbers

Here’s what’s happened since inauguration day:

167Bills passes

2.8Million jobs added

2.6% Average GDP growth

18% change in S&P 500

39%Approval rating

8.6MSFLaw firm leasing since January 2017

(-5.6% vs. 2016 rate)

6

4

Policy implications for law firms

Sustained economic

growth

Taxreform

DeregulationSector-specific activity

Policy uncertainty

Continued activity across sectors

driving demand

Less direct benefit due to partnership

status, but increased demand from clients

adapting to new legislation

Robust demand for legal services as

corporates adjust to changing regulatory

environment

Changing policy surrounding finance, anti-trust, trade and

energy industries and regulation

Will weigh on firms’ abilities to create

long-term strategic plans

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Economic and property cycle

5

The cycle that keeps on giving?

Second-longest expansion on record

24

36

37

39

45

58

67

73

92

106

106

120

April 1958 - April 1960

November 1970 - November 1973

October 1945 - November 1948

May 1954 - August 1957

October 1949 - July 1953

March 1975 - January 1980

Average

November 2001 - December 2007

December 1982 - July 1990

February 1961 - December 1969

June 2009 - Current

March 1991 - March 2001

Months

10Source: JLL Research

Revenue growth accelerated to fastest post-recession level

5.5% increase driven by the top tier of firms

$31.1$35.1

$38.1$41.7

$46.0

$50.9

$56.8

$64.5$67.3

$64.4$67.4

$71.4$73.4

$77.4$80.9

$83.1$86.7

$91.4

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Am

Law

100

gro

ss r

even

ue

($ b

illio

ns)

Source: JLL Research, American Lawyer 11

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$1,375,747

$1,402,392

$1,463,875 $1,466,809

$1,548,901

$1,613,439

$1,661,772

$1,767,054

2010 2011 2012 2013 2014 2015 2016 2017

Profitability up due to improved efficiency and productivity

Source: JLL Research, American Lawyer 11

Profit per partner Revenue per lawyer

$804,651

$820,235

$842,130 $838,775

$871,002

$894,253

$907,765

$936,655

2010 2011 2012 2013 2014 2015 2016 2017

M&A activity is likely to increase even more

0

20

40

60

80

100

120

140

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (F)

Nu

mb

er o

f m

erge

rs

13Source: JLL Research, Altman Weil

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Poll question…

When do you think this economic cycle will peak?

a. 2018 b. 2019 c. 2020 d. 2021+

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Growth looks solid this year and into next

Economic growth continues to rebound

2.5

1.6

2.2

1.7

2.62.9

1.5

2.32.7

2.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Seasonally adjusted (%) Forecast

14Source: JLL Research, Bureau of Economic Analysis

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Cumulative 5-year probability distribution for recession

Highest risk is in 2020 and 2021

6%

17%

32%

26%

19%

0%

5%

10%

15%

20%

25%

30%

35%

2018 2019 2020 2021 2022

Pro

bab

ility

Typical causes of recessions

1. Asset bubbles

2. Monetary tightening

3. Geopolitical crisis

15Source: JLL Research

Office clock: market is approaching its cyclical peak

Source: JLL Research 16

Peakingphase

Fallingphase

Risingphase

Bottomingphase

Atlanta, Austin, Orange County, Portland

Chicago, New York

Baltimore, Cleveland, Fairfield County, Hampton Roads, Suburban Maryland

SF Peninsula, Silicon Valley

Detroit, Fort Worth, Long Island, Oakland-East Bay, Sacramento Houston

Columbus, Fort Lauderdale, Indianapolis, Louisville, North Bay

Miami, Milwaukee, Orlando, Philadelphia

Jacksonville, Phoenix, Richmond, San Antonio

Boston, Salt Lake City, Tampa, United States

Los Angeles, Pittsburgh

New Jersey

Dallas, Nashville, San Francisco

Raleigh-Durham, San Diego

Charlotte, Minneapolis, Seattle-Bellevue, St. Louis

Washington, DC

Cincinnati, Northern Virginia

Grand Rapids

Denver

Hartford, West Palm Beach, Westchester County

9

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

2018 2019 2020 2021 2022

CB

D C

lass

A c

om

ple

tio

ns

(s.f

.)

Preleased Available

Core space under construction remains available, improving firms’ prospects

Source: JLL Research 17

Availability rate (%)

32.4%2018

30.4%2019

53.3%2020

54.8%2021

91.1%2022

$38$42

$49

$44

$63

$74

$49

$56

$66 $67

$92

$110

$0

$20

$40

$60

$80

$100

$120

Los Angeles San Francisco Boston Chicago New York Washington, DC

CB

D C

lass

A T

I allo

wan

ce (

$ p

.s.f

.)

Q1 2016 Q1 2018

Concession packages are rising across law firm-heavy markets

Source: JLL Research 18

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Poll question…

Which of the following do you expect to benefit your firm?a. New supply increasing options

b. Rising concessions

c. Improved efficiency

d. Workplace experience

e. Harnessing technology

f. Other

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Big secular trends to watch

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Human experience and operational changes to shift law firm behavior

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Future of Work

Urbanization

Technology

Capital Cross border flows

Comsumer-ization of

Real Estate

Increasing real estate allocations

Global savings and the

search for yield

Active vs passive

strategies

Millennial generation

impact

Regeneration of fringe locations

Innovation clusters

Regulatory and planning

New tenant expectations (amenities & walkability)

Procurement &

Outsourcing

Everything as a

ServiceHuman

Experience

Productivity & Performance

Ecommerce Blockchain

Sharing economy

AI and Automation SMART

buildings

Autonomous vehicles

Infrastructure Challenges

Human experience and operational changes to shift law firm behavior

Human ExperienceEnhance user experience through engagement,

empowerment and fulfillment.

Digital DriveHarness digitization and rich data to enhance people and enterprise performance.

Continuous InnovationCombine new thinking, solutions and processes to drive value creation and accelerate transformation.

Operational ExcellenceOptimize enterprise resources and service delivery to increase productivity, mitigate risks and ensure high performance.

Financial PerformanceManage spending to enable growth and enhance return on

investment (ROI).

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Poll question…

What trend will have the biggest impact on your business and real estate?a. Economic cycle

b. Political and policy environment

c. Tech and innovation

d. Changing demographics

e. Other

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Implications & Q&A

Your opinion matters!

Please take a moment now to complete the evaluation.

Thank You!