Greater Edmonton Industrial Vacancy Greater Edmonton Historical Vacancy Rate (%) 7.0% 6.4% 6.1% Q4 2016: 6.4% 6.0% 5.0% 5.0% 0.3% 3.6% 3.6% 4.0% 3.4% 3.1% 3.0% 2.0% Q1 2017: 6.1% 1.0% 0.0% 2012 2013 2014 2015 2016 2017 Q1 Q2 Q3 Q4
Edmonton Industrial Vacancy Edmonton Industrial Submarkets Annual Average Vacancy (%) 14.0% 12.0% 2016 Vacancy 5.5% 10.0% 8.50% 7.20% 8.0% 7.00% 6.10% 5.80% 6.0% 5 Year Annual Average 3.9% 2.50% 4.0% 2.0% 0.0% Edmonton Northwest Southeast Leduc/Nisku Acheson Sherwood Park 2012 2013 2014 2015 2016 Q1 2017
Multi Market Vacancy Comparison VACANCY RATE: NORTH AMERICAN MARKETS (ANNUAL AVERAGE) 12.0% 2012 2013 2014 2015 2016 Q1 2017 Average Vacancy 10.0% 8.5% North American Cities With Population Greater Than 1 million 8.0% 6.2% 6.1% 5.1% 5.3% 4.5% 6.0% 5.1% 1.9% 2.2% 4.0% 2.0% 0.0%
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 New Supply Dynamics Greater Edmonton Market (sf) 5,000,000 4,500,000 4,000,000 3,562,673 3,500,000 3,000,000 2,500,000 1,785,755 2,000,000 1,274,400 1,602,733 To be delivered in 2017 1,500,000 1,245,420 1,000,000 716,690 500,000 5,360 YTD 0 2012 2013 2014 2015 2016 2017 New Supply Absorption (sf)
Reefer To The Rescue? A Case For Cheech & Chong • Canopy Growth Corporation looking to secure production facility over 150,000 sf • Aurora leases 30 acres at the Edmonton International Airport to build the 800,000 sf Aurora Sky production facility
Legalization Timeline: Colorado Legalizes Recreational Use 2010 2014 2012 2000 RETAIL BUSINESSES BEGIN INDIVIDUAL MUNICIPALITIES COLORADO LEGALIZES AMENDMENT 64 PASSES DECRIMINALIZE RECREATIONAL SELLING RECREATIONAL LEGALIZING RECREATIONAL MEDICAL MARIJUANA MARIJUANA MARIJUANA MARIJUANA 56% 36% 3.8% PERCENTAGE INCREASE OF PERCENTAGE OF NET DIRECT VACANCY IN LEASE RATES IN MARIJUANA ABSORPTION DRIVEN WAREHOUSE SPACE OCCUPIED PROPERTIES BY MARIJUANA DECREASES: 2011 2015 2009 2010 2010 2015
Denver, Colorado: Industrial Growth Potential Warehouse Direct Vacancy Denver Industrial Absorption 2010 – 2015 2009 – 2010 3.7% 7.5% 3.8% The marijuana industry accounted for 36% of Denver’s total net absorption in industrial space
Trickle Down Costs of Construction & Operation National Energy Code Components affected: Building Envelope, Lighting, HVAC, Service Water Heating Required R-Value increasing cost of construction Carbon Pricing 2017: 4.7 cents per litre increase (conventional fuel) 2017: 5.5 cents per litre increase (Diesel) 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 Enbridge Pipelines Inc. Line 3 Replacement $4.9 billion invested on Canadian side ATCO Heartland Generation Station $800 million Inter Pipeline Propane Dehydrogenation Facility $2.5 billion Kinder Morgan Trans Mountain Expansion Pembina Propane Dehydrogenation & $7.4 billion Polypropylene Upgrading Facility $4.0 billion
2017 Outlook Let’s go around the horn Audience Questions?
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