Toronto in a National Context May 20, 2015 Presented by: Ross Moore, Director of Research Presented to: Toronto Economic Development and Culture CBRE Limited, Real Estate Brokerage
3mma % change CANADIAN LABOUR MARKET 3.00% Recovering Growing/Accelerating 2.00% Toronto Winnipeg Calgary 1.00% Edmonton Montréal 0.00% Ottawa London -1.00% Vancouver -2.00% Halifax Contracting K-C-W Slowing -3.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% y/y % change Source: Statistics Canada, April 2015. CB Richard Ellis Page 2 2
Annual GDP growth (%) GDP GROWTH BY CMA 5% 4% 3% 2% 1% 0% -1% -2% 2014 2015 F 2016 F 2014 2015 F 2016 F 2014 2015 F 2016 F 2014 2015 F 2016 F 2014 2015 F 2016 F 2014 2015 F 2016 F Vancouver Calgary GTA Ottawa Montreal Canada GDP at Basic Prices by Industry - All Industries (Annualized) F = Forecasted Source: Conference Board of Canada, March 31, 2015. 2014 2015 F 2016 F CB Richard Ellis Page 3 3
OFFICE CBRE Limited
CANADA OFFICE SPACE DISTRIBUTION Source: CBRE Limited Updated: Q1 2015 CB Richard Ellis Page 5 5
DOWNTOWN OFFICE RENTS ADDITIONAL RENTS VS. NET ASKING RENTS $70 $60 $50 $40 $30 $20 $10 $0 Vancouver Calgary Edmonton Winnipeg London Waterloo Region Additional Rent ($/sq. ft./annum) Source: CBRE Limited, Q1 2015. Toronto Ottawa Montreal Halifax National Net Asking Rent ($/sq. ft./annum) CB Richard Ellis Page 6 6
OFFICE MARKETS Q1 2015 YoY Vacancy Change (bps) Vacancy Rate (%) 300 15% 200 10% 100 5% 0 0% -100-5% -200-10% -300 Vancouver Calgary Edmonton Winnipeg London Waterloo Toronto Ottawa Montreal Halifax National Vacancy Change (bps) YoY growth Overall Vacancy Rate Q1 2015-15% Source: CBRE Limited, Q1 2015 CB Richard Ellis Page 7 7
DOWNTOWN OFFICE DEVELOPMENT PIPELINE SF (Millions) 7 % Of Inventory 14% 6 12.3% 12% 5 4 9.7% 9.9% Balanced 10% 8% 3 6% 2 1 4.2% 2.9% 3.2% 4% 2% 0 Calgary Toronto Vancouver Edmonton Montreal Halifax Under Construction (L) Anticipated Construction (L) Construction as a % of Inventory (R) Source: CBRE Research, Q1 2015. 0% CB Richard Ellis Page 8 8
DOWNTOWN TORONTO OFFICE New Developments 2013 2017 MaRS Discovery District 661 UNIVERSITY AVENUE Oxford Properties GWL Realty Advisors Allied Properties REIT Brookfield Properties HOOPP & Menkes First Gulf RBC WATERPARK PLACE BREMNER TOWER QRC WEST 134 PETER STREET BAY ADELAIDE CENTRE EAST ONE YORK STREET GLOBE & MAIL CENTRE Oxford Properties Group EY TOWER Office Size (sq. ft.) 740,000 933,020 652,083 285,581 1,017,826 794,358 462,000 905,720 Retail Size (sq. ft.) 30,000 100,000 29,889 13,637 8,000 200,000 18,000 0 Floors 20 31 31 17 44 35 17 40 Floor Plate (sq. ft.) 27,398 30,835 26,500 25,000 23,604 23,000 27,692 27,000 43,500 23,000 Completion December 2013 October 2014 November 2014 May 2015 Q1 2016 Q2 2016 Q4 2016 Q3 2017 Tenant Ontario Institute for Cancer Research (78,000 sq. ft.) Public Health Ontario (160,000 sq. ft.) MaRS (120,000 sq. ft.) Sigma Analysis & Management (2,500 sq. ft.) Synaptive Ryerson University (1/2 Floor) University Health Network (3 Floors) University of Toronto (4 floors) Undisclosed tenant Royal Bank of Canada (631,000 sq. ft.) Cisco (100,000 sq. ft.) CNW Group (22,000 sq. ft.) Regus (27,000 sq. ft.) Marsh & McLennan (257,000 sq. ft.) SNC-Lavalin (75,000 sq. ft.) Apple (50,000 sq. ft.) AIG (57,000 sq. ft.) Amazon (126,000 sq. ft.) Teknion (12,307 sq. ft.) Sapient Corporation (60,000 sq. ft.) Entertainment One (79,000 sq. ft.) Diageo (11,000 sq. ft.) Wirtz Beverage Canada Inc. (5,500 sq. ft.) Givex (15,000 sq. ft.) Deloitte (419,000 sq. ft.) Borden Ladner Gervais (166,000 sq. ft.) Gardiner Roberts (46,000 sq. ft.) Bell (46,000 sq. ft.) HOOPP (160,000 sq. ft.) Sun Life Financial (281,000 sq. ft.) Target (retail 145,000 sq. ft.) Globe & Mail (130,000 sq. ft.) AIR MILES LoyaltyOne (175,000 sq. ft.) Yellow Pages (112,000 sq. ft.) EY (255,000 sq. ft.) TMX Group (157,000 sq. ft.) OMERS (370,000 sq. ft.) COMPLETED 2,325,103 sq. ft. UNDER CONSTRUCTION 3,465,485 sq. ft. Source: CBRE Research CB Richard Ellis Page 9 9
HOW DOES THIS OFFICE SUPPLY CYCLE COMPARE TO PREVIOUS ONES? 45 5 Year % Change in Office Stock 40 35 30 25 20 15 10 5 0 Calgary Edmonton Halifax Montreal Ottawa Sum of Markets Toronto Vancouver Winnipeg 1992 2002 2009 2018 (Forecast) Source: CBRE EA Canada Office Outlook, Q1 2015. CB Richard Ellis Page 10 10
TORONTO DOWNTOWN Class A Major Building Ownership and Management* Brookfield/Cadillac Fairview/Oxford control 53% of Existing Class A space EXISTING CLASS A BUILDINGS TOTAL RENTABLE AREA 41.7 MILLION sq. ft. Cadillac Fairview 8.4 Million sq. ft. Brookfield Properties 8.3 Million sq. ft. Oxford Properties 8.1 Million sq. ft. GWL Realty Advisors 4.0 Million sq. ft. Dream Unlimited 3.3 Million sq. ft. Bentall Kennedy 2.3 Million sq. ft. H&R REIT 1.9 Million sq. ft. * Including new developments Source: CBRE, 2014. CB Richard Ellis Page 11 11
INDUSTRIAL CBRE Limited
CANADA INDUSTRIAL SPACE DISTRIBUTION Source: CBRE Limited Updated: Q1 201 CB Richard Ellis Page 13 13
Market as a % of National ENERGY MARKETS PUNCH ABOVE THEIR WEIGHT WITH RESPECT TO NEW CONSTRUCTION 50% 40% 30% 20% 10% 0% Vancouver Calgary Edmonton Winnipeg London Waterloo Region Toronto Ottawa Montreal Halifax Market Stock as a % of National Stock Market Construction as a % of National Construction Source: CBRE Research, Q1 2015. CB Richard Ellis Page 14 14
INDUSTRIAL AVAILABILITY RATE Q1 2015 14% 12% 10% 8% 6% 4% 2% 0% Vancouver Calgary Edmonton Winnipeg London Waterloo Region Q1 2015 Source: CBRE Limited, Q1 2015. Toronto Ottawa Montreal Halifax National 10-Yr Avg CB Richard Ellis Page 15 15
MULTIFAMILY CBRE Limited
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Migration IMMIGRATION: THE SILENT STIMULUS 125,000 Forecast 100,000 75,000 50,000 25,000 0 Vancouver Calgary Toronto Montreal Source: Conference Board of Canada, 2014 CB Richard Ellis Page 17 17
2005.01 2005.07 2006.01 2006.07 2007.01 2007.07 2008.01 2008.07 2009.01 2009.07 2010.01 2010.07 2011.01 2011.07 2012.01 2012.07 2013.01 2013.07 2014.01 2014.07 2015.01 Indexed to Jan 2005 CANADIAN HOUSING MARKET HOUSE PRICE INDEX 200 180 160 140 120 100 Vancouver Calgary Toronto Montreal Source: Brookfield RPS House Price Index Jan. 2015. CB Richard Ellis Page 18 18
AFFORDABILITY GAP CONTINUES TO WIDEN 300 Indexed to 1990 260 220 180 140 100 60 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Avg. Home Price Avg. 2-BR Monthly Rent Income Per Capita Source: CREA, CMHC, CBoC, Q4 2014. CB Richard Ellis Page 19 19
PURPOSE BUILT RENTAL CONSTRUCTION 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Units Started % of Inventory MTL VAN TOR EDM CAL OTT 2014 Starts Avg Starts (2009-2013) % of Inventory 2014 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Source: CMHC, Q4 2014 CB Richard Ellis Page 20 20
CANADIAN APARTMENT STARTS BY TYPE 100% 80% 60% 40% 20% 0% CAL TOR MTL VAN OTT EDM Condominium Rental Source: CMHC, Q4 2014 CB Richard Ellis Page 21 21
Urban* vs suburban 2009-2014 Population Change 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Vancouver Calgary Toronto Montreal Ottawa 2009-2014 Pop Change Urban 2009-2014 Pop Change Suburban * Urban defined as a 2 km radius from city centre. Source: 2014 Environics Analytics CB Richard Ellis Page 22
Ages 20 to 34 yrs as % of urban/suburban population Ages 20 to 34 yrs as % of urban/suburban population DEMOGRAPHIC CHANGE: PERCENTAGE OF POPULATION (AGES 20-34 YRS) 35.0% 2014 2006 40.0% 30.0% 31.6% 30.9% 31.7% 31.8% 35.0% 33.9% 25.0% 30.0% 31.1% 30.0% 31.1% 20.0% 15.0% 21.8% 22.6% 21.5% 20.2% Urban Suburban 25.0% 20.0% 15.0% 19.2% 21.5% 20.1% 19.1% Urban Suburban 10.0% 10.0% 5.0% 5.0% 0.0% Vancouver Calgary Toronto Montreal 0.0% Vancouver Calgary Toronto Montreal Source: Statistics Canada and Environics, 2014. CB Richard Ellis Page 23 23
For more information, please contact: Ross Moore Director of Research, Canada 604.662.5101 ross.moore@cbre.com www.cbre.ca/research CB Richard Ellis Page 24
DOWNTOWN MONTREAL OFFICE UNDER CONSTRUCTION Address Tour AIMIA Tour Deloitte L'Avenue Desjardins 450 De Maisonneuve Ouest Tour Manuvie 900 De Maisonneuve Ouest Class A A A A A Size (SF) 234,476 495,067 81,000 200,000 (Expansion) 462,400 Floors 10 26 4 27 Delivery date Q1 2014 Q3 2015 Q1 2017 Q4 2015 Q4 2017 Status Delivered Under Construction Under Construction Under Construction Under Construction Lead Tenant AIMIA Deloitte, Rio Tinto None Desjardins (275,000 SF) Manulife Source: CBRE Research, Q1 2015. CB Richard Ellis Page 25 25
DOWNTOWN CALGARY OFFICE New Developments, 2016 2018 City Centre Eau Claire Tower Brookfield Place East Tower Developer Cadillac Fairview Oxford Properties Brookfield Properties Manulife 707 Fifth Street TELUS Sky TELUS/Allied/ Westbank Size 820,000 SF 615,000 SF 1,400,000 SF 564,000 SF 430,000 SF % Pre-Leased 81.0% 77.0% 71.0% 44.3% 36.1% Occupancy Q4 2015 Q4 2016 Q4 2017 Q2 2017 Q4 2017 Source: CBRE Research, Q1 2015. CB Richard Ellis Page 26 26
EDMONTON OFFICE UPCOMING DEVELOPMENTS Federal Building Kelly-Ramsey Building EAD Tower Stantec Tower Enbridge RFP SIZE (SQ FT) 247,000 546,500 625,000 600,000 650,000 COMPLETION Q4 2014 Q1 2016 Q1 2017 Q1 2018 Proposed % PRE-LEASED 100% 82% 73% 75% TBD Source: CBRE Research, Q1 2015. CB Richard Ellis Page 27 27
New Supply & Absorption (000 s sq. ft.) Vacancy (%) DOWNTOWN VANCOUVER OFFICE SUPPLY AND DEMAND (ALL CLASSES) 1,600 1,200 800 400 0 (400) (800) 2002-2004 DEVELOPMENT CYCLE LIMITED SUPPLY NEW BUILD CYCLE 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 F 2016 F 2017F 16% 14% 12% 10% 8% 6% 4% 2% 0% (2%) (4%) (6%) (8%) Net Absorption New Supply Vacancy NEW OFFICE SUPPLY 2014 2015 2017 Source: CBRE Research, 89 W GEORGIA 105,000 SF MNP TOWER 270,000 SF 725 GRANVILLE 300,000 SF TELUS GARDEN 448,000 SF 980 HOWE 250,000 SF 745 THURLOW 365,000 SF THE EXCHANGE 369,000 SF CB Richard Ellis Page 28 28