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

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

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

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SLIDE 1

LAND AND DEVELOPMENT CONFERENCE

May 10, 2016

A look at office markets in Canada’s gateway cities

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SLIDE 2

LAND AND DEVELOPMENT CONFERENCE

May 10, 2016

A look at office markets in Canada’s gateway cities

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SLIDE 3

LAND AND DEVELOPMENT CONFERENCE

May 10, 2016

A look at office markets in Canada’s gateway cities

LAND AND DEVELOPMENT CONFERENCE

May 10, 2016

A look at office markets in Canada’s gateway cities

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SLIDE 4

Edmonton Winnipeg Kitchener-Waterloo Ottawa Montreal New Brunswick Halifax

  • St. John's

VANCOUVER 11% (57 MSF) CALGARY 14% (69 MSF) TORONTO 35% (175 MSF) Vancouver, Calgary and Toronto 60%

301 MSF

Dominant markets driving growth

CANADIAN OFFICE INVENTORY

503 MSF

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SLIDE 5

Absorption (000’s SF) Availability Rate

8.9% 11.2% 4.1% 9.1%

  • 10%
  • 5%

0% 5% 10%

  • 1500
  • 1000
  • 500

500 1000 1500 2000 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Average Absorption Availability Rate

Availability Rate vs. Rolling Average Absorption (Central Area, All Classes)

Softening demand beginning Q1 2013

NATIONAL CENTRAL AREA AVAILABILITIES

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SLIDE 6

15-yr avg.

2.0% 5.6% 11.5% [VALUE] [VALUE] 16.2% 7.0% 9.0% 9.0% 4.8% 5.3% 5.1% 5.9% 10.3% 10.0% Calgary Edmonton Montreal Toronto Vancouver 4.0% 3.5% 7.2% 5.9% 7.5% Q2 12 Q4 14 Q1 16

Toronto remains remarkably stable (DT premium)

WHERE AVAILABILITIES STAND

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SLIDE 7

Inventory Growth

1.4 0.8 0.7 2.9 2.3M 4.7 M 1.7 M 1.6 M 8.2 M Vancouver Calgary Edmonton Montreal Toronto Completed Under construction/preleasing underway 19.5% 16.0% 16.5% 5.9% 15.5%

Impact of development activity on DT markets (2014-2019)

SUPPLY SIDE DRIVES VACANCY UPWARD

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SLIDE 8

VANCOUVER

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SLIDE 9

Availability Rate

5.1% 12.9% 2.3% 9.1%

  • 15%
  • 10%
  • 5%

0% 5% 10% 15%

  • 300
  • 200
  • 100

100 200 300 Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Average Absorption Availability Rate

Absorption (000’s SF)

Modest growth

VANCOUVER OFFICE MARKET

Availability Rate vs. Rolling Average Absorption (Central Area, All Classes)

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SLIDE 10

RECENT OFFICE DEVELOPMENTS

Downtown Vancouver

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SLIDE 11

CALGARY

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SLIDE 12

Availability Rate

4.6% 8.4% 12.1% 5.3% 11.4% 11.0% 17.2%

  • 20%
  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20%

  • 1000
  • 800
  • 600
  • 400
  • 200

200 400 600 800 1000 Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Average Absorption Availability Rate

Absorption (000’s SF)

CALGARY CENTRAL AREA OFFICE MARKET

Feeling the pressure of low oil

Availability Rate vs. Rolling Average Absorption (Central Area, All Classes)

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SLIDE 13

11.3% 2.5% 17.7% 16.7% 6.6% 21.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 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 Availability Rate

Downtown all classes vs. suburban class A availability (2007-Q1 2016)

CALGARY DT OFFICE MARKET HIT HARD

Suburban market follows suit

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SLIDE 14

MAP OF NEW DEVELOPMENTS

Downtown Calgary (2009 onwards)

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SLIDE 15

TORONTO

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SLIDE 16

17.6% 6.7% 12.5% 6.2% 12.2% 1% 3% 5% 7% 9% 11% 13% 15% 17% 19%

  • 50

50 150 250 350 450 550 650 Q1 95 Q1 96 Q1 97 Q1 98 Q1 99 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Absorption Availability Rate

12-quarter rolling average (Q1 1995-Q1 2016)

(000’s sf) Availability Rate

DEMAND DOLDRUMS

Toronto’s suburban market challenges mirror others in Canada

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SLIDE 17

1.8% 11.8% 18.6% 3.1% 11.40% 4.6% 0% 4% 8% 12% 16% 20% 24%

1 2 3 4 5 80 84 88 92 96 00 04 08 12 16 New Supply Availability Rate (All Classes)

Future New Supply 2 MSF/YEAR

1980-1992

162,000 SF/YEAR

1993-2008

1.1 MSF/YEAR

2009-2019

SUPER CYCLE

Availabilities remain low against strong development, driven by strong demand

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SLIDE 18

MIDTOWN

562,000

GTA EAST

633,000

GTA NORTH

160,000

TOTAL MIGRATION AND ENTRANTS

1.9 M +

NEW ENTRANTS

449,000

CONTRIBUTING TO GROWTH

Migrations and new entrants transform the office landscape (2009-Q1 2016)

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SLIDE 19
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SLIDE 20

5.1% 8.1% 7.7% 11.3% 10.1% 8.9% 9.0% 12.8% 12.1% 7.3% 6.3% 9.8% 8.0%

0% 2% 4% 6% 8% 10% 12% 14% 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 1Q 16 3Q 16 1Q 17 3Q 17 1Q 18 3Q 18 1Q 19 3Q 19 1Q 20 3Q 20 Availability Rate (000’s sf) Class A Class AAA New Inventory Medium Demand Low Demand High Demand

5.5 million sf of premium future space

OUTLOOK

Balancing act between supply and demand continues