Greater Edmonton Industrial Vacancy Greater Edmonton Historical - - PowerPoint PPT Presentation

Greater Edmonton Industrial Vacancy

Q4 2016: 6.4% Q1 2017: 6.1% 0.3%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

2012 2013 2014 2015 2016 2017 3.6% 3.4% 3.1% 3.6% 5.0% 6.1% 6.4%

Greater Edmonton Historical Vacancy Rate (%)

Q1 Q2 Q3 Q4

Edmonton Industrial Vacancy

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%

Edmonton Northwest Southeast Leduc/Nisku Acheson Sherwood Park 6.10% 5.80% 7.20% 8.50% 2.50% 7.00%

Edmonton Industrial Submarkets

Annual Average Vacancy (%)

2012 2013 2014 2015 2016 Q1 2017

2016 Vacancy 5.5% 5 Year Annual Average 3.9%

Multi Market Vacancy Comparison

Average Vacancy

North American Cities With Population Greater Than 1 million

5.1%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

6.1% 8.5% 1.9% 2.2% 5.1% 5.3% 4.5% 6.2%

VACANCY RATE: NORTH AMERICAN MARKETS

(ANNUAL AVERAGE)

2012 2013 2014 2015 2016 Q1 2017

Notable Lease Transactions: Diversity In Our Marketplace

Notable Industrial Lease Transactions Location Commencement Type Size (sf) Tenant Horizon Business Park Building B 1st June 2016 New Building 270,288 Connect Logistics 161 Strathmoor Way 1st March 2017 Existing Building 79,665 Silent-Aire GP Inc Northport Business Park Building A 1st September 2017 New Building 75,468 Medline Northwest Business Park Building 7B 1st November 2017 New Building 61,772 Carlstar Group Horizon Business Park Building D 1st March 2017 New Building 45,067 Curt Manufacturing LLC 50, 53016 AB-60, Acheson 1st May 2017 Existing Building 37,265 Envirosystems Inc 53338 Range Road 321, Strathcona County 1st April 2017 Land Lease 20 Acres Modspace Financial Services

Notable Sale Transactions: Diversity In Our Marketplace

Notable Investment Sale Transactions Property Price Vendor Size (sf) Purchaser Multiple Buildings* $144,229,200 Artis Reit 939,800 PIRET Reit Multiple Buildings $31,350,000 PIRET Reit 349,732 BMO Life Assurance Co

* Portion of Artis disposition within the Edmonton Capital Region

Notable Owner User Sales Transactions Property Price Vendor Size (sf) Purchaser Former Graham Building $19,000,000 Ache Graham Group Ltd 38,912 Forbes Bro. Real Estate Ltd Former KBR Fabricators $17,200,000 Falcon Fabricators 137.42 Acres Panattoni Development Company Former Savanna Energy Building $10,000,000 MLS Property Group Ltd 38,400 Tomyn Holdings Ltd Former Brock White Building $12,500,000 SLP Properties Inc 99,940 Pumm Developments Ltd Former Air Liquide Building $7,500,000 Air Liquide Canada Inc 76,884 Consolidated Fastfrate Holdings

Lease Rates

Lease Rates

2013 2014 2015 2016 Q1 2017 Northwest $ 9.88 ▲ $ 9.90 ▲ $ 10.50 ▲ $ 9.06 ▼ $ 9.94 ▲ Southeast $ 10.65 ▲ $ 11.50 ▲ $ 11.00 ▼ $ 9.74 ▼ $ 10.75 ▲ Leduc/Nisku $ 14.00 ▲ $ 14.00

• $ 15.80

▲ $ 12.86 ▼ $ 11.75 ▼ Acheson $ 10.40

• $ 11.50

▲ $ 16.17 ▲ $ 16.17

• $ 13.63

▼ Sherwood Park $ 13.90 ▲ $ 13.25 ▼ $ 12.63 ▼ $ 15.00 ▲ $ 12.75 ▼ Northeast $ 7.13 ▼ $ 8.90 ▲ $ 11.50 ▲ $ 11.77 ▲ $ 10.50 ▼

($/sq ft): Edmonton Market (Q1 Year-over-Year)

Trend Line

New Supply Dynamics

1,274,400

1,245,420 1,602,733 1,785,755 3,562,673 716,690 5,360 YTD 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000

2012 2013 2014 2015 2016 2017

New Supply Dynamics

Greater Edmonton Market (sf)

New Supply Absorption (sf)

To be delivered in 2017

Reefer To The Rescue? A Case For Cheech & Chong

• Aurora leases 30 acres at the Edmonton

International Airport to build the 800,000 sf Aurora Sky production facility

• Canopy Growth Corporation looking to

secure production facility over 150,000 sf

2000

COLORADO LEGALIZES MEDICAL MARIJUANA

2012

AMENDMENT 64 PASSES LEGALIZING RECREATIONAL MARIJUANA

2010

INDIVIDUAL MUNICIPALITIES DECRIMINALIZE RECREATIONAL MARIJUANA

2014

RETAIL BUSINESSES BEGIN SELLING RECREATIONAL MARIJUANA

Legalization Timeline: Colorado Legalizes Recreational Use

2009

36%

PERCENTAGE OF NET ABSORPTION DRIVEN BY MARIJUANA

2010 2011 2015

56%

PERCENTAGE INCREASE OF LEASE RATES IN MARIJUANA OCCUPIED PROPERTIES

3.8%

DIRECT VACANCY IN WAREHOUSE SPACE DECREASES:

2010 2015

Denver, Colorado: Industrial Growth Potential

Warehouse Direct Vacancy 3.8% 2010 – 2015 Denver Industrial Absorption 2009 – 2010 The marijuana industry accounted for 36% of Denver’s total net absorption in industrial space

7.5% 3.7%

Trickle Down Costs of Construction & Operation

 2017: 4.7 cents per litre increase (conventional fuel)  2017: 5.5 cents per litre increase (Diesel)

Carbon Pricing National Energy Code

 Components affected:

Building Envelope, Lighting, HVAC, Service Water Heating

 Required R-Value increasing cost of construction

Import Tariffs

 Drywall tariffs increased costs by as much as 276%  Lumber dispute with the U.S., will it increase or decrease costs

Proposed Major Projects

Inter Pipeline Propane Dehydrogenation Facility $2.5 billion Pembina Propane Dehydrogenation & Polypropylene Upgrading Facility $4.0 billion Kinder Morgan Trans Mountain Expansion $7.4 billion ATCO Heartland Generation Station $800 million Enbridge Pipelines Inc. Line 3 Replacement $4.9 billion invested on Canadian side

2017 Outlook

• Let’s go around the horn
• Audience Questions?