CBRE DOWNTOWN MARKET OVERVIEW Presented by: Angus Fraser Senior - PowerPoint PPT Presentation

CBRE DOWNTOWN MARKET OVERVIEW Presented by: Angus Fraser Senior Vice President direct: (403) 750-0508 angus.fraser@cbre.com October 23, 2008

2008 DOWNTOWN OFFICE MARKET HIGHLIGHTS � Overall Inventory – 33 million square feet � Overall Vacancy – 4.1% � Class “A” and “AA” Vacancy – 2.1% � Under Construction – 5.3 million square feet � Absorption YTD 2008 – (84,013) square feet CB Richard Ellis | Page 2

2008 YTD � Oilsands work strengthened office market � $12 natural gas, $130 oil rekindled demand – both now lagging � No options over 100,000 square feet until 2010. � Current options over 25,000 square feet few/ problematic � Capital Expenditure Programs boosted drilling � Rents stable � Leaseholds offer value $80 per square foot replacement cost � Spot premium holding � M&A activity limited CB Richard Ellis | Page 3

SIGNIFICANT LEASE TRANSACTIONS TENANT / LANDLORD AREA LEASED BUILDING Petro Canada/Brookfield & ARCI 974,000 Petro Canada Centre Vermilion Energy Trust / Oxford 100,000 Centennial Place Penn West Energy Trust / DEGI 380,000 Homburg Harris II Baytex Energy Trust / Oxford 108,000 Centennial Place Petrobank Energy & Resources / 80,000 Petro Canada Centre Brookfield & ARCI CB Richard Ellis | Page 4

OCCUPIER BUSINESS TYPE DOWNTOWN CALGARY OCCUPANCY BY SECTOR (million sf) Energy Trusts, 2.2 Financial, 3.2 Professional, 4.5 Oil & Gas, 9.2 Other, 5.3 Pipeline & Integrated Oil , O & G Services , E nergy Trading, 4.2 2.4 1.3 CB Richard Ellis | Page 5

DOWNTOWN CALGARY OCCUPANCY VS. CAPEX $60 40 $50 35 $40 CAPEX (MM) SF (MM) $30 30 $20 25 $10 $0 20 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 est est est O & G CAPEX Oilsands CAPEX Inventory Occupancy CB Richard Ellis | Page 6

DOWNTOWN DEVELOPMENTS UNDER CONSTRUCTION AVAILABLE BUILDING SIZE (SF) OCCUPANCY (SF) Bankers Court 275,000 0 Q1 2009 8West 120,000 75,000 Q1 2009 Le Germain 90,000 50,000 Q4 2009 800,000 120,000 Centennial Place Q1/Q2 2010 430,000 430,000 Jamieson Place 780,000 350,000 Q1 2010 8 th Avenue Place 1,070,000 1,024,000 Q1 2011 (E) CB Richard Ellis | Page 7

DOWNTOWN PROJECTION – UPCOMING PRODUCT DOWNTOWN CALGARY OFFICE SUPPLY PROJECTION (NO ABSORPTION) 6,000,000 NEW PRODUCT VACANT SQUARE FEET 5,000,000 VACATED PRODUCT EX ISTING VACANCY 4,000,000 3,000,000 2,000,000 1,000,000 0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 OCCUPANCY DATE CB Richard Ellis | Page 8

RECENT M & A ACTIVITY M&A IMPACT ON OFFICE SPACE (May 07-Oct 08) 4,000,000 3,623,431 S Q U A R E FE E T . 3,500,000 3,113,738 3,000,000 Pre-M&A Premises Additionally Acquired 2,500,000 Excess Premises 2,000,000 Post M&A Premises 1,500,000 1,000,000 643,347 500,000 224,100 0 CB Richard Ellis | Page 9

DOWNTOWN OFFICE – CONTINUED GROWTH 15% 12% 9% 6% 3% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 *2008 *2009 *2010 *2011 *2012 *2013 New Supply - % of existing Supply Overall Vacancy Rate Year Inventory Projected Absorption Vac. Rate 2007 32,746,000 560,000 sq.ft. 3.4% 2008 32,886,000 0 sq.ft. 3.8% 2009 33,526,000 0 sq.ft. 4.2% 2010 35,499,000 1,000,000 sq.ft. 6.6% 2011 38,369,000 1,000,000 sq.ft. 11.0% 2012 38,369,000 600,000 sq.ft. 9.7% 2013 38,369,000 600,000 sq.ft. 8.1% CB Richard Ellis | Page 10

DOWNTOWN OFFICE – MODERATE GROWTH 18% 15% 12% 9% 6% 3% 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 *2008 *2009 *2010 *2011 *2012 *2013 New Supply - % of existing Supply Overall Vacancy Rate Year Inventory Projected Absorption Vac. Rate 2007 32,746,000 560,000 sq.ft. 3.4% 2008 32,886,000 0 sq.ft. 3.8% 2009 33,526,000 -500,000 sq.ft. 7.4% 2010 35,499,000 500,000 sq.ft. 11.1% 2011 38,369,000 500,000 sq.ft. 16.5% 2012 38,369,000 500,000 sq.ft. 15.2% 2013 38,369,000 500,000 sq.ft. 13.9% CB Richard Ellis | Page 11

FORWARD PERSPECTIVE � Expansion plans shelved � Consolidation to gather steam: trusts, juniors, majors? � Increase in available sublease product � Leasing velocity will significantly decline � Near Term: Few deals, marginal declines in rent � Sublease product will eventually lead rents down � Continued lack of blocks of quality space = stable rent quality product CB Richard Ellis | Page 12