CONFERENCE A look at office markets in Canadas gateway cities May - PowerPoint PPT Presentation

LAND AND DEVELOPMENT CONFERENCE A look at office markets in Canada’s gateway cities May 10, 2016

LAND AND DEVELOPMENT CONFERENCE A look at office markets in Canada’s gateway cities May 10, 2016

LAND AND DEVELOPMENT CONFERENCE A look at office markets LAND AND DEVELOPMENT in Canada’s gateway cities CONFERENCE A look at office markets in Canada’s gateway cities May 10, 2016 May 10, 2016

CANADIAN OFFICE INVENTORY Dominant markets driving growth 503 MSF St. John's 301 MSF Halifax New Brunswick Montreal CALGARY 14% (69 MSF) Vancouver, Calgary TORONTO and Toronto 35% 60% (175 MSF) VANCOUVER 11% (57 MSF) Ottawa Kitchener-Waterloo Winnipeg Edmonton

NATIONAL CENTRAL AREA AVAILABILITIES Softening demand beginning Q1 2013 Availability Rate vs. Rolling Average Absorption (Central Area, All Classes) Absorption Availability (000’s SF) Rate 2000 11.2% 10% 9.1% 8.9% 1500 1000 5% 4.1% 500 0% 0 -500 -5% -1000 Average Absorption Availability Rate -1500 -10% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

WHERE AVAILABILITIES STAND Toronto remains remarkably stable (DT premium) 16.2% 15-yr 4.0% 3.5% 7.2% 5.9% 7.5% avg. 11.5% 10.3% 10.0% 9.0% 9.0% 7.0% 5.9% 5.6% 4.8% 5.3% 5.1% [VALUE] 2.0% [VALUE] Edmonton Toronto Vancouver Calgary Montreal Q2 12 Q4 14 Q1 16

SUPPLY SIDE DRIVES VACANCY UPWARD Impact of development activity on DT markets (2014-2019) Inventory Growth 19.5% 16.0% 16.5% 5.9% 15.5% 8.2 M 4.7 M 2.3M 2.9 1.7 M 1.6 M 1.4 0.8 0.7 Vancouver Calgary Edmonton Montreal Toronto Completed Under construction/preleasing underway

VANCOUVER

VANCOUVER OFFICE MARKET Modest growth Availability Rate vs. Rolling Average Absorption (Central Area, All Classes) Absorption Availability (000’s SF) Rate 300 15% 12.9% 9.1% 200 10% 100 5% 5.1% 2.3% 0 0% -100 -5% -200 -10% Average Absorption Availability Rate -300 -15% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

RECENT OFFICE DEVELOPMENTS Downtown Vancouver

CALGARY

CALGARY CENTRAL AREA OFFICE MARKET Feeling the pressure of low oil Availability Rate vs. Rolling Average Absorption (Central Area, All Classes) Absorption Availability (000’s SF) Rate 1000 20% 17.2% 800 15% 12.1% 11.4% 600 11.0% 10% 8.4% 400 4.6% 5% 200 5.3% 0 0% -200 -5% -400 -10% -600 -15% -800 Average Absorption Availability Rate -1000 -20% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

CALGARY DT OFFICE MARKET HIT HARD Suburban market follows suit Downtown all classes vs. suburban class A availability (2007-Q1 2016) Availability Rate 25.0% 21.2% 20.0% 17.7% 16.7% 15.0% 11.3% 10.0% 6.6% 5.0% 2.5% 0.0% Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 DT Office all classes availability Suburban Office A Class availability

MAP OF NEW DEVELOPMENTS Downtown Calgary (2009 onwards)

TORONTO

DEMAND DOLDRUMS Toronto’s suburban market challenges mirror others in Canada 12-quarter rolling average (Q1 1995-Q1 2016) (000’s sf ) Availability Rate 650 19% 17.6% 17% 550 15% 450 12.5% 13% 12.2% 350 11% 9% 250 7% 150 6.7% 6.2% 5% 50 3% -50 1% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Absorption Availability Rate

SUPER CYCLE Availabilities remain low against strong development, driven by strong demand 2 MSF/YEAR 162,000 SF/YEAR 1.1 MSF/YEAR 1980-1992 1993-2008 2009-2019 5 24% 20% 18.6% 4 16% 3 11.8% 11.40% 12% 2 4.6% 8% 1 4% 1.8% 3.1% 0 0% 80 84 88 92 96 00 04 08 12 16 New Supply Availability Rate (All Classes) Future New Supply

CONTRIBUTING TO GROWTH Migrations and new entrants transform the office landscape (2009-Q1 2016) GTA EAST 633,000 GTA NORTH 160,000 MIDTOWN 562,000 TOTAL MIGRATION AND ENTRANTS 1.9 M + NEW ENTRANTS 449,000

OUTLOOK Balancing act between supply and demand continues 5.5 million sf of premium future space ( 000’s sf) Availability Rate 2,000 14% 12.8% 12.1% 1,800 12% 11.3% 1,600 10.1% 9.8% 10% 1,400 8.9% 9.0% 8.0% 8.1% 1,200 7.7% 8% 1,000 7.3% 6.3% 6% 800 5.1% 600 4% 400 2% 200 0 0% 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 16 16 17 17 18 18 19 19 20 20 Class A Class AAA New Inventory Medium Demand Low Demand High Demand