Cushman & Wakefield

Licensed to CWL Realty Inc.

200-260 St. Mary Avenue

Winnipeg, MB R3C 0M6

www.cushmanwakefield.com/knowledge

For more information, contact:

Wayne Sato, Vice President, Office

204-934-6207

wsato@stevenson.mb.ca

The market terms and definitions in this report are based on NAIOP standards. No

warranty or representation, express or implied, is made to the accuracy or completeness

of the information contained herein, and same is submitted subject to errors, omissions,

change of price, rental or other conditions, withdrawal without notice, and to any special

listing conditions imposed by our principals.

© 2015 Cushman & Wakefield, Inc. All rights reserved.

1

PROVINCIAL ECONOMIC OVERVIEW

Manitoba’s Real GDP growth is projected to be

2.3% in 2015, a solid growth rate which ranks

third best among all Canadian provinces. The

first two quarters of 2015, saw the labour force

gain 16,000 entrants and the unemployment

rate hit 5.6%, third lowest among all provinces (Source: RBC

Economics, BMO Capital Markets Economics).

OVERALL VACANCY RATE UP AGAIN IN Q2 2015

Winnipeg’s overall office vacancy rate rose to 9.2% in the second

quarter of 2015, up from 8.7% in Q1 2015.

The class A CBD vacancy rate rose in Q2 2015 to 5.3% from 4.1% in

the previous quarter. The increase in vacancy in the class A CBD

market was primarily due to 51,346 square feet (sf) of headlease

space becoming available at 200 Graham Avenue. The previous

federal government tenant relocated to another building in the

downtown market.

The class B CBD overall vacancy rate was 10.9% at the end of the

second quarter of 2015 – an increase of 0.5 percentage points from

the previous quarter. Several smaller blocks of space became available

on Portage Avenue, which continues to see high rates of vacancy.

The class C CBD overall vacancy remained unchanged at 9.8% at the

end of Q2 2015. The Class C CBD market continues to be an

attractive option for tenants who are looking for affordable office

space even though net asking rents in class C have increased from

$10.49 per square foot (psf) a year ago to $10.92 psf in Q2 2015.

In the suburban market, Winnipeg’s overall vacancy rate rose to

10.0% in Q2 2015, up marginally from the preceding quarter.

The class A suburban market vacancy rate remained unchanged at

13.6% during Q2 2015. This market class has been relatively quiet

over the last four quarters but is expected to improve as space in this

class remains highly desirable.

In the class B suburban market, the overall vacancy rate decreased

slightly to 6.3% this quarter, down from 6.5% last quarter. Building

Ten in Tuxedo Busines Park is now completely leased, as 3,000 sf was

absorbed by Business Development Bank of Canada.

The class C suburban vacancy rate rose to 12.9% during the second

quarter of 2015, up 0.9 percentage points from the previous quarter.

Supply far outstrips demand in this market class. Nonetheless, the

vacancy rate is expected to remain steady for the remainder of the

year.

OUTLOOK

A strong economic forecast tied with new residential construction

projects in Winnipeg’s downtown core are positively impacting the

office market in the CBD. 311 Portage Avenue at Centrepoint

welcomed the occupancy of Stantec Inc. and iQmetrix over the past

two quarters as the office component of this new development was

90% leased at opening. In addition, it is anticipated that ground

breaking of the $400-million True North Square development project

will occur this year, which is expected to encourage new businesses

to relocate into this growing market.

STATS ON THE GO

Q2 2014 Q2 2015

Y-O-Y CHANGE

12 MONTH FORECAST

Overall Vacancy 9.1% 9.2% 0.1 pp

Direct Net Asking Rents (psf/yr) $12.64 $13.32 5.4%

YTD Absorption (sf) (79,147) (53,938) 25,209

DIRECT RENTAL VS. VACANCY RATES

ABSORPTION

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

2011 2012 2013 2014 Q2 2015

psf

/yr

TOTAL GROSS RENT OVERALL VACANCY RATE

-1

145

-121

151

-30

28

103

-27

-7

-24

-150

-100

-50

0

50

100

150

200

2011 2012 2013 2014 2015 YTD

sf (

thousa

nds)

CBD Non-CBD

Q2 2015 WINNIPEG, MANITOBA

OFFICE SNAPSHOT MARKETBEAT

A Cushman & Wakefield Alliance Research Publication

Cushman & Wakefield

Licensed to CWL Realty Inc.

200-260 St. Mary Avenue

Winnipeg, MB R3C 0M6

www.cushmanwakefield.com/knowledge

For more information, contact:

Wayne Sato, Vice President, Office

204-934-6207

wsato@stevenson.mb.ca

The market terms and definitions in this report are based on NAIOP standards. No

warranty or representation, express or implied, is made to the accuracy or completeness

of the information contained herein, and same is submitted subject to errors, omissions,

change of price, rental or other conditions, withdrawal without notice, and to any special

listing conditions imposed by our principals.

© 2015 Cushman & Wakefield, Inc. All rights reserved.

2

WINNIPEG, MANITOBA

SUBMARKET INVENTORY OVERALL VACANCY

RATE

DIRECT VACANCY

RATE

UNDER CONSTRUCTION

YTD CONSTRUCTION COMPLETIONS

CURRENT QUARTER

ABSORPTION

YTD OVERALL

ABSORPTION

WTD. AVG. NET

RENTAL RATE*

WTD. AVG. GROSS

RENTAL RATE*

Class A 2,919,540 5.3% 5.2% 0 81,069 (37,155) 18,793 $19.56 $35.23

Class B 3,587,840 10.9% 10.7% 0 0 (17,341) (55,716) $14.02 $27.28

Class C 3,827,716 9.8% 9.8% 0 0 1,657 6,883 $10.92 $20.11

CBD TOTAL 10,335,096 8.9% 8.8% 0 81,069 (52,389) (30,040) $13.67 $25.65

Class A 202,385 13.6% 13.6% 0 0 0 (6,500) $21.24 $30.31

Class B 1,407,068 6.3% 4.5% 0 0 2,792 (3,379) $12.12 $19.71

Class C 1,535,457 12.9% 12.1% 0 0 (12,633) (14,019) $11.88 $19.35

SUBURBAN TOTAL 3,144,910 10.0% 8.8% 0 0 (9,841) (23,898) $11.92 $19.41

WINNIPEG TOTALS 13,480,006 9.2% 8.8% 0 81,069 (62,680) (53,938) $13.32 $24.43

* RENTAL RATES REFLECT ASKING $PSF/YEAR

MARKET HIGHLIGHTS

SIGNIFICANT Q2 2015 LEASE TRANSACTIONS SUBMARKET TENANT BUILDING CLASS SQUARE FEET

201 Portage Avenue Central Telus A 4,950

191 Lombard Avenue Central Dash Agency C 3,708

Building Ten- Tuxedo Business Park Suburban Business Development Bank of Canada B 3,000

SIGNIFICANT Q2 2015 SALE TRANSACTIONS SUBMARKET BUYER PURCHASE PRICE SQUARE FEET

1080 Kingsbury Avenue Suburban Private $650,000 5,187

1108 St. James Street Suburban Private $1,980,000 23,184

SIGNIFICANT Q2 2015 CONSTRUCTION

COMPLETIONS SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET

N/A

SIGNIFICANT PROJECTS UNDER

CONSTRUCTION SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET

N/A