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Global Research and Consulting

Commercial Real Estate Market Conditions in Canada

Presented by John O’Bryan, Vice Chairman, CBRE Limited, Canada Asieh Mansour, Head of Research, Americas and Senior Managing Director, Global Research October, 2011

CBRE Global In-Sights

The Global In-Sights podcasts PDF presentations are available for download on www.cbre.com/EN/Research/pages/globalinsights.aspx. Podcasts are also available through iTunes under podcasts and on the CBRE iPhone app.

CB Richard Ellis | Page 2


Asieh Mansour

Asieh Mansour, Ph.D. Head of Research, Americas and Senior Managing Director, Global Research Asieh directs Americas commercial real estate market analysts, advises Americas leadership and professionals on economic issues, and serves as spokesperson on the commercial real estate environment. She has more than 20 years experience as a leading real estate economist in commercial real estate. [email protected]



John O’Bryan

John O’Bryan Vice Chairman, CBRE Limited, Canada John O’Bryan is Vice Chairman of CBRE’s Limited, where his primary responsibility is to oversee the marketing initiatives of the company. John has over 35 years of experience in brokerage and management positions. His career began in 1974 when he founded and managed the Appraisal Practice Group of Royal LePage. In 1985 John moved into the brokerage industry where he was a top 10 broker for Royal Le Page until 1990. John has sold some of the highest profile assets in Canada and was responsible for over $8 billion in transaction activity. John has also completed over 3 million SF of leasing activity in the last decade. [email protected]



-1000

-800

-600

-400

-200

0

200

-10,000

-8,000

-6,000

-4,000

-2,000

0

2,000

0 10 20 30 40

Can

ada

Job

Loss

es (0

00s)

U.S

. Job

Los

ses

(000

s)

US ( L ) Canada ( R )

It Is All About Jobs!

Source: Statistics Canada and Bureau of Labor Statistics

Nov. ‘10 Aug. ‘11

Aug. ‘11

2008



Canada “An Oasis of Stability”

CANADA

USA

Office – 17.9% Industrial – 11.1%


Office – 20.6% Industrial – 12.0% Office – 13.4%

Industrial – 13.7%



Source: CBRE



Bank Stability Makes the Difference

Soundest Banking Systems

• Canada (1) • South Africa (2) • Panama (3) • Australia (4) • Singapore (5)

*** • France (27) • Japan (72) • Germany(87) • United States (90) • United Kingdom (111)

Source: The World Economic Forum’s Global Competiveness Report 2011-2012

World’s 50 Safest Banks

Source: Global Finance

• KfW; Germany (1) • Caisse des Depots et

Consignations; France (2) • Bank Nederlandse

Gemeenten; Netherlands (3) ***

• Royal Bank of Canada (11) • Toronto-Dominion Bank (13) • Scotiabank (18) • BMO Financial Group (30) • CIBC (31)



Improvement in U.S. Office Vacancy Lags Canada

0

4

8

12

16

20

24

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Vaca

ncy

Rat

es (%

)

Canada US

Source: CBRE-EA Office Outlook, Winter 2011

Forecast



Canada Outperforms!

0%

2%

4%

6%

8%

10%

12%

14%

16%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Ava

ilabi

lity

Rat

e

Canada US

Forecast

Source: CBRE-EA Canada Industrial Outlook XL, Spring 2011



Retail Stability in Canada, U.S. Continues to Struggle

0%

3%

6%

8%

11%

14%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Est

imat

ed V

acan

cy R

ate

(%)

Canada US

Source: CBRE EA Retail Spring Outlook 2011 and CBRE

Forecast



0.0

1.0

2.0

3.0

4.0

5.0

$0

$200

$400

$600

$800

$1,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Mid

-201

1

Vaca

ncy

Rat

e (%

)

Ave

rage

Mon

thly

Ren

t

Average Rent Vacancy

National Multi-Residential

Source: CBRE, CMHC



Who Bought in 2011 YTD? (Incl Hotel & ICI)

Buyers Office Industrial Retail Multi-Res ICI-Land Hotel Total

Private/Syndicates 24.8% 50.8% 36.6% 58.8% 95.3% 100.0% 43.8%

Foreign 5.8% 1.7% 0.0% 6.9% 0.0% 0.0% 2.8%

Pension Fund 3.2% 3.1% 25.4% 0.0% 0.0% 0.0% 10.0%

Institutions 6.9% 9.5% 1.5% 0.0% 1.9% 0.0% 4.2%

REITs/REOCs 56.5% 31.3% 36.6% 34.3% 1.6% 0.0% 37.7%

Private Equity 2.9% 3.7% 0.0% 0.0% 1.2% 0.0% 1.5%

Source: CBRE Limited/RealNet Canada



Cap Rates Hit 2007 Levels – Going Lower?

5%

6%

7%

8%

9%

10%

11%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1Q11 2Q11

Office - CBD A Industrial -A & B Retail - Neighbourhood Multi-Res - B

Source: CBRE



Metro Toronto Convention Centre Complex

$237.4 Million 1.95M SF Development on 7.41 Acres Incorporates:

• 225, 255& 277 Front Street West • 586 Room InterContinental Hotel • 265,000 SF Class A Office Tower • 1,200 Parking Stall

Vendor: Canada Lands CLC Limited Purchaser: Oxford Properties Group Deal Date: September 14, 2011



Canadian Investment Transactions ($B)

Property Type 2004 2005 2006 2007 2008 2009 2010 1H11

Office $4.1 $5.4 $4.4 $10.3 $6.0 $2.5 $3.7 $2.4

Industrial $3.4 $4.1 $7.2 $5.8 $4.4 $2.7 $5.7 $2.0

Retail $4.0 $4.1 $4.0 $4.4 $3.2 $2.4 $3.7 $3.0

Multi-Res $2.9 $3.0 $3.5 $4.4 $3.2 $2.4 $2.9 $1.7

Land $2.5 $2.4 $3.9 $4.6 $4.0 $2.6 $2.7 $1.2

Hotel $0.3 $0.8 $1.3 $2.6 $0.3 $0.2 $0.2 $0.1

Total $17.3 $19.8 $24.2 $32.2 $21.1 $12.7 $18.9 $10.3

Source: CBRE Limited/RealNet Canada


Thank You

CBRE © 2011 CBRE, Inc. We obtained the information contained in this presentation from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice. We include projections, opinions, assumptions or estimates for example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct your own investigation of the property and transaction.

CBRE Global In-Sights The Global In-Sights podcasts and PDF presentations are available for download on www.cbre.com/EN/Research/pages/globalinsights.aspx. Podcasts are also available through iTunes under podcasts and on the CBRE iPhone app. To register to receive Global In-Sights announcements, please go to http://www.cbre.com/EN/Research/pages/globalinsights.aspx

Asieh Mansour Head of Research, Americas and Senior Managing Director, Global Research [email protected]


Commercial Real Estate Market Conditions in Canada

Presented by John O’Bryan, Vice Chairman, CBRE Limited, Canada Asieh Mansour, Head of Research, Americas and Senior Managing Director, Global Research October, 2011

CBRE Global In-Sights

The Global In-Sights podcasts PDF presentations are available for download on www.cbre.com/EN/Research/pages/globalinsights.aspx. Podcasts are also available through iTunes under podcasts and on the CBRE iPhone app.

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