Edmonton Commercial Real Estate Market Report ~ 2010 Capital Region Market Overview ~

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1 Edmonton Commercial Real Estate Market Report ~ 2010 Capital Region Market Overview ~ Statistical Averages # of Transactions/Month Total Capital Exchanged/Month Edmonton 56* 48 $164,830,964* $122,274,974 *Note: Based on 10 months data. Year in Review The Capital Region, in 2010, experienced an increase in both real estate transaction volumes and total capital exchanged, although a slight decrease is noted towards the end of the year. Generally speaking, vacancy rates and rents for all types of investment properties have stabilized in 2010, with the office sectors still experiencing a softening in rents. Construction costs have also stabilized, and in some cases decreased, thus allowing the market to catch up to current levels. These are all positive factors for the market. Although investors are still adopting a wait and see strategy, there is a more optimistic outlook on the market.

2 Retail Strip Centre Market Activity Retail Strip Centre Sale Prices Retai Strip Centre Sales (Cap Rates) Price per Sq. Ft. of Building Area $ $ $ $ $ $ $0.00 Capitalization Rate 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sale Date Sale Date **Note: Gathered sales transactions include neighbourhood, community, and power center developments only. Notable Transactions: The highest priced sale on a per sq. ft. basis represents a 2-bay retail building that was constructed in 2008 within the Terwillegar Gardens Strip Centre at 142 nd Street and 23 rd Avenue. The development is fully occupied by 2 fast food franchise establishments. The sales evidence gathered also includes two major transactions: o A ½ interest in a multi tenant strip center located in South Edmonton Common at rd Avenue transferred in December 2009 for $39,242,500. Included in the transaction is the former Wal Mart Store, which has been redeveloped to accommodate Bed Bath & Beyond, and Wholesale Sports. o Located in Spruce Grove along Highway 16A is a retail center anchored by a Rona Store with adjacent multi tenant building that transferred in April 2010 for $22,275,000 and an estimated cap rate of 7.09% Of all Real Estate segments, the Retail Market faired the best during the 2009 recession. Overall market activity within the Retail Sector has remained steady in 2010 with anticipation of steady growth in the following years. Vacancy rates continue to be stable and has reportedly been in the overall 3.00% range. Sales of development land for major retail center development has been limited in the past 2 years. Overall prices for large retail center development land within Edmonton and surrounding regions has been on average between $15.00 and $25.00 per sq. ft. of site area. Market Rents: Neighbourhood Retail Strip Centers = Average of $10 to $18 per sq. ft., net Community Retail Strip Centers = Average of $18 to $28 per sq. ft., net Power Retail Centers = $25 per sq. ft., net and up.

3 Looking Forward: Ambleside SW Edmonton The Currents of Windermere power center within the new southwest subdivision of Ambleside will continue to see new development. Recent completion of the new London Drugs and Canadian Tire stores have added to the retail profile of the location. Construction continues on a 70,000 sq. ft. store that will be home to Cabela s, US based retailer specializing in outdoor sporting merchandise. This will be their first store in Alberta and second in Canada. It is projected to open by late summer Other retailers expected to open new stores at the Currents of Windermere include Safeway, Liquor Depot, and Second Cup. AMA Properties Ltd. recently purchased a 6.97-acre site in September 2010 for $22.40 per sq. ft. The Palisades NW Edmonton The north section of the Palisades Area Structure Plan is a new planned neighborhood situated at the northwest corner of 167 th Avenue and 127 th Street. A proposed new Wal Mart Store with a multi tenant retail strip center is to be developed on the corner site at the intersection of the two major roadways. Development of the Anthony Henday Drive North extension continues to the north. Northwest Urban Village Centre St. Albert Developed by Genstar Developments. The anticipated Northwest Urban Village Centre subdivision will accommodate new retail development within the Northwest quarter of the city as available commercial/retail development land along St. Albert Road has been mostly absorbed. Continued residential development within St. Albert is expected to grow primarily in the north and west sectors of the city. The Timberlea ASP is approved and ready for immediate development to the south. The Northwest Urban Village Centre will accommodate a mix of medium and high-density multi residential uses along with commercial/retail development. There is a 9.0-acre commercial site designated for a new retail center project that may be anchored by a major grocery store with adjacent multi tenant retail buildings. Emerald Hills Sherwood Park Developed by Genstar Developments. Proposed new subdivision situated at the southeast corner of Highway 16 and Sherwood Drive. Subdivision will feature mix of large retail/commercial sites and low-density residential housing. Development of a new catholic high school is already well underway. Two large parcels along Highway 16 are reportedly proposed for major retail development and may be anchored by a Wal Mart type store with surrounding CRU s. Future Strathcona Community Hospital is to be developed within the subdivision and has commenced preliminary construction.

4 Office Market Activity Both Downtown and Suburban office markets are experiencing higher vacancy levels and decreasing rental rates. According to Avison Young Market Reports, rd Quarter vacancy levels were reportedly 7.9% in the overall downtown market and 12.5% in the overall suburban market. Landlords have increased pressure to lease up vacant space and have resorted to reducing rents and / or providing attractive inducement packages that have ranged from $10 to $38 per sq. ft. for new tenants. **Asking rents are based on reported figures obtained from Colliers International Market Reports. Notable Transactions: Former 103 rd Street Building ( rd Street). Transferred April 2010 for $90,850,000 and reported 7.33% cap rate. Canadian Western Bank Tower (10303 Jasper Avenue) & Enbridge Tower (10201 Jasper Avenue), pending portfolio sale with combined projected 2011 NOI of $12,582,000. Pending agreement was reportedly to close this month. Looking Forward: Completion of EPCOR Tower will result in large vacancies in existing buildings. Large vacancies in GE Place (EPCOR Building) and BMO Building are currently marketed for availability by Additional large vacancies in existing buildings include Telus House (over 90,000 sq. ft. for sublease); TD Tower (up to 74,000 sq. ft. available); as well as, the Devonian Building, EPCOR Tower, and potential redevelopment of the Kelly Ramsey Block. Average asking rents in the suburban market are reportedly within the $13.00 to $23.00 per sq. ft., net range. Highest in Southside markets.

5 Apartment Market Activity Walk-Up Apartment Market Activity Statistical Averages # of Transactions Total Capital Exchanged Edmonton * (10-month) 35 $153,174,046* $93,647,138 o Total sales slightly higher in Most were smaller properties, although two large projects were sold. Notable transactions: Ashby and Brighton (305 units) at $190,164 per unit and Monticello (83 units) at $140,000 per unit. o CMHC Vacancy: Spring %; %. Average 2-BR Rent: Spring $994; Spring $1,059 per month. o However, market has somewhat changed since spring with vacancy decreasing towards the latter part of the year. o Property Management Companies In general, rents have stabilized, vacancy rates are lower and fewer incentives are being offered. o Cap rates over the year have remained relatively stable as well as Price Per Suite. o Cap rate levels back to that experienced in o Upcoming/New Projects Mayfield Village (Procura), Serenity, Aurora (Urban Landmarks), Meridian Plaza, Heritage Landing and Brownstones I (Tessco Inc.) o Overall, the apartment market is anticipated to remain stable. Sale transactions will be influenced by mortgage rates. Residential Condominium Market o ,734 units sold with average sale price at $238,544 and DOM of 51 days; units sold with average sale price of $237,424 and DOM of 55 days. o Condominium units remain in the rental pool; although sales for older converted projects have been less.

6 Industrial Market Activity Statistical Averages # of Transactions Total Capital Exchanged Edmonton (10-month) 199 $432,442,789* $382,273,840 Industrial Market Activity o Generally speaking, the industrial market has been relatively stable over the past year and is one of the more stable sectors in the market. o Avison Young reports vacancy at 4.4% in Fall Subleasing still a factor in the rental market, although some firms have reportedly withdrawn their space from the market. o Cap Rates relatively the same since 2009, within the 7% to 8% range. o Rents have remained leveled, with a slight decrease since the beginning of Landlords are providing more TIAs. Average rents for 10,000 sq. ft. to 20,000 sq. ft. properties in the city are reported at $7.50 sq. ft. to $9.75 per sq. ft., net. o Average sale price for industrial condominiums is within the $ to $ per sq. ft. range. o Slight increase in number of land sales in 2010, as compared to Average sale price for IM zoned serviced lands is approximately $594,000 per acre o Re-emergence of developers preparing sites for new construction. Notable projects under construction: City View Business Park at southeast Edmonton (348,700 sq. ft.); Northwest Business Park at northwest Edmonton (397,800 sq. ft.); and Yellowhead Industrial Park at northwest Edmonton (51,590 sq. ft.). o Overall, we expect the industrial market to remain stabilized with a slight increase in market activity.