Commercial Real Estate Blog

A little less than a week ago we reported that the rumours of Jones Lang LaSalle (NYSE: JLL) merging with Staubach were true, or so we had heard. Today, Property Week News out of the UK is providing additional credence by publishing a price for the acquisition, $735M.

Property Week’s article indicates that the acquisition price represents a 10x multiple on Staubach’s EBITDA, and a 1.8x multiple on revenues.

No formal announcement has been made, but it seems imminent from what we heard. And from what Property Week is publishing, it will be announced as early as next week. Jones Lang LaSalle and Staubach have refused to provide any comment on the merger rumours.

The deal would represent a smaller acquisition for JLL than the Trammell Crow deal it had chased, but lost to lose it to CBRE.

It seems that the rumors swirling around a possible merger between Jones Lang LaSalle (NYSE: JLL) and Staubach are true. We’ve heard from a reputable source that the deal is essentially done.

The transaction would create a corporate real estate giant to better take on CBRE, the largest corporate real estate provider. The merger however could be potentially difficult to reconcile as Staubach has most of its business on the tenant side, and JLL, while strong on the tenant side, has a lot of its business on the landlord side of the equation.

According to research put out by CBRE’s research team, overall vacancy rates in the Bay Area increased from 8.6% to 9.7% in the fourth quarter. The peninsula and San Francisco have remained strong while the East Bay has suffered some.

In the south bay the lowest vacancy rates were in Mountain View, Palo Alto, and Cupertino, and Sunnyvale had the highest at 17%. Sunnyvale’s number is somewhat skewed however by the large deliveries of new office space which are occurring.

In Sunnyvale, there is roughly 3M square feet of Class A office being planned or currently under construction. The largest project is Moffett Towers, with other projects at Almanor, Sunnyvale Town Center, and on Java Drive.

While the overall economy remains healthy in Silicon Valley, factors influencing residential real estate, commercial and residential lending, and the general psychological affect a looming recession might have will likely continue into the near future may cause some companies to possibly temper their future growth forecasts.