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C&W 2012 Market Survey Presentation

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Check out our presentation from recent market survey breakfast. Lots of interesting projections for 2012!

Check out our presentation from recent market survey breakfast. Lots of interesting projections for 2012!

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  • 1. STUART BARRONNational Director Research
  • 2. Canada stands strong
  • 3. Canada stands strong Key national observationsToronto’s explosive downtown office growth made i the hT ’ l i d ffi h d it h hottestmarket in North AmericaCanada is at a remarkable launching point, looking to an gp , gexpansionary cycle from 2013 to 2015Both global and domestic factors are driving demand – key tosustained growthSuburban market rebound remains fragile – may find a “newnormal” in the years to comeRecord level of new building announcements in Vancouver, Calgary,Montreal and Toronto
  • 4. Canada’s stellar performance Well-positioned for expansion Vacancy rate vs. new supply (all classes) Vacancy New Supply Rate (millions of sf) 20% 20 18% 17.3% 18 16% 16 14% 14 11.5% 12% 12 8.2% 8.8% 10% 10 6.6% 6 6% 8% 8 6.1% 7.5% 6% 6 4% 4 2% 2 0% 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 3Q 11 New Supply Overall Vacancy RateUpdated Q3 2011
  • 5. Check out Canada Low vacancy: Our springboard to growth Q3 2011 central area vacancy 10 largest US markets, 5 largest Canadian markets (all classes) Vacancy Rate 35% 30% 28.9% 25% 20% 18.3% 16.8% 13.8% 14.4% 15% 11.6% 12.0% 9.9% 10.0% 10.2% 10% 6.4% 6.5% 5.1% 5.1% 5% 3.7% 0%Updated Q3 2011
  • 6. Our suburbs: surprising comparison Low supply in Canada sets the stage for faster recovery Q3 2011 Suburban area vacancy Vacancy 10 largest US markets, 5 largest Canadian markets (all classes) Rate 30% 25.3% 25% 22.4% 21.9% 20.4% 20.6% 20% 17.8% 17.0% 15.6% 16.1% 15.3% 15% 13.4% 12.1% 9.8% 9 8% 10% 8.2% 8.7% 5% 0%Updated Q3 2011
  • 7. Outperforming expectationsVancouver, Calgary, Montreal
  • 8. Good-bye ocean views Vancouver’s premium space all but gone Vancouver downtown vacancy vs. average absorption (all classes) Vacancy(000s f)(000 sf) Rate250 15.0% 12.7%200 12.0%150 9.0% % 5.9%100 5.6% 6.0% 50 3.0% 3.5% 2.4% 0 0.0% 0 0% Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 11 -50 -3.0%-100 -6.0%-150 -9.0%-200 -12.0%-250 -15.0% Absorption Vacancy Rate
  • 9. Boom times again Calgary soaks up office space Calgary downtown vacancy vs. rolling average absorption (all classes) Vacancy (000s sf) Rate 11.7% 11.8%800 12.0%600 9.0%400 6.9% 6.0% 5.5%200 3.0% 0.3% 0 0.0% 0 0%(200) -3.0%(400) -6.0% 6.0%(600) -9.0% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 11 11 Absorption Vacancy Rate
  • 10. Strong rebound Montreal central area gathers steam Montreal central area vacancy vs. rolling average absorption (all classes) Vacancy (000s sf) Rate400 15.0% 12.3% 12.0%300 8.1% 9.0%200 9.3% 9 3% 6.5% 6 5% 7.7% 6.0% 5.5%100 3.0% 0 0.0% -3.0%(100) -6.0%(200) -9.0%(300) -12.0%(400) -15.0% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 11 11 Absorption Vacancy Rate
  • 11. GTA suburban growth Aerocentre BMO Meadowvale building Hazel General Mississauga g 1919 Minnesota court
  • 12. Recovery takes hold Suburban demand gains traction Rolling absorption vs. vacancy (all classes) Vacancy (000s sf) Rate1000 25.0% 19.4% 800 20.0% 600 15.0% 15 0% 12.0% 400 9.5% 10.0% 8.2% 7.7% 200 6.6% 5.0% 0 0.0%-200 -5.0% Rolling Average Absorption Vacancy Rate-400 -10.0% Q1 92 Q4 92 Q3 93 Q2 94 Q1 95 Q4 95 Q3 96 Q2 97 Q1 98 Q4 98 Q3 99 Q2 00 Q1 01 Q4 01 Q3 02 Q2 03 Q1 04 Q4 04 Q3 05 Q2 06 Q1 07 Q4 07 Q3 08 Q2 09 Q1 10 Q4 10 Q3 11 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0
  • 13. Positioned for growth Low supply supports recovery GTA West new supply vs. Q4 vacancy class A (000s sf)2000 16.8% 200000.0% 18.0%1800 180000.0% 16.0%1600 160000.0% 14.0% 14 0%1400 140000.0% 12.0% 10.3%1200 10.1% 120000.0% 10.0%1000 100000.0% 8.0% 8 0% 800 80000.0% 6.9% 6.0% 600 60000.0% 5.2% 4.0% 400 40000.0% 200 2.0% 2 0% 20000.0% 20000 0% 0 0.0% 0.0% 2000 2001 2002 2003 2008 2009 2010 2011 YTD New Supply Vacancy Rate
  • 14. Moving in the right direction Absorption pushes towards expansionary demand GTA West average absorption (all classes) 2008 recession (000s sf)450 400375300 250225150 81 75 11 0 -75 -87-150 Year 1 Year 2 Year 3 Expansion Hot Demand Demand
  • 15. Recessionary impact Different experiences for GTA West submarkets GTA West - total absorption (class A) (000s sf)800600400200 0(200)(400)(600) Airport 427 Corridor Oakville Hurontario Meadowvale Mississauga Corporate Centre 1st 9 quarters of recession: Past 3 quarters Q4 2008 to Q4 2010
  • 16. Slow but sure GTA suburban markets recovery rates Vacancy all classes Vacancy Rate16% 14.5%14% 12.0%12% 10.6% 10.7% 10.0% 10 0% 10.3%10% 8.3%8% 6.8%6%4% 3.7%2%0% Q1 03 Q1 11 Q3 11 Q1 03 Q2 10 Q3 11 Q1 04 Q4 09 Q3 11-2% West East North 2003 D Downturn P k t Peak 2008 R Recession P k i Peak Current C t
  • 17. Suburban demand drivers Key observationsDemand will likely slow by mid-2012 and pick up again in 2013 mid 2012“New normal” demand may emerge; lower than historical averagesSlower recovery d to greater exposure to US economy andSl due dstimulus measuresTighter than after past recessions because of the low new supply, g p pp y,which will support faster recovery
  • 18. And,And now for DowntownToronto
  • 19. Who would’ve guessed? Demand reached record highs through the Great Recession Downtown vacancy vs. average absorption (all classes) Vacancy (000s sf) Rate 19.1% 20.0%750600 15.0% 11.9% 5.0%450 10.0%300 6.8% 5.0%150 3.6% 3.1% 3 1% 0 0.0%-150 -5.0%-300 -10.0%-450-600 -15.0% 3Q91 3Q92 3Q93 3Q94 3Q95 3Q96 3Q97 3Q98 3Q99 3Q00 3Q01 3Q02 3Q03 3Q04 3Q05 3Q06 Q307 3Q08 3Q09 3Q10 3Q11
  • 20. Ignited demand Telling the tale of new supply success Cumulative absorption – downtown premium space (000s sf)3,0002,0001,000 0-1,000-2,000-3,000 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Class A &AAA 2001 Downturn Class A&AAA 2008 Recession
  • 21. Staggering success of new buildings Corus Bay Adelaide RBC Centre Building UPIED AREA 1,027,937 1,223,479 482,000 occupied occupied occupied TOTAL OCCU Maple Leaf 25 York Street 25 York Street 18 York Street Square S 780,000 780,000 223,020 671,786 occupied occupied occupied occupiedUpdated Sept. 9, 2011
  • 22. Sectors leading expansion Downtown Toronto Q4 2009 – Q4 2011 Real Estate Government 0.9% 0.1% Information & Communications 5.1% Banks 40.4% 40 4% Other 16.1%Technology,Research &Professional Services 22.6% 22 6% Other Finance & Insurance 14.8%
  • 23. Looking for ard forward•The shape of demand 2013 to 2015 The
  • 24. Factors strengthening downtown demandToronto increasingly seen as a prime location for global businessEducated multicultural talent poolFollowing the talent: Business migration to downtown g gCanada’s strong banking sector -- poised for future expansionFlight to sustainable buildings & efficient high density workplaces high-densityCondos support growing downtown populationUrban revitalization marches on – Waterfront, Union Station, new retailformats & more
  • 25. Factors weakening downtown demandUncertainty about impact of global economic upheaval on short- termbusiness confidenceSlowing of global stimulus as governments show greater fiscal restraintBanking sector demand a hard readWork lW k place strategies and cost saving strategies increasing d i and i d i i i i density ddriving down need for space
  • 26. Downtown Toronto vacancy projections Premium space (includes large blocks returning to market) (000s sf) Vacancy Rate 2,000 16% Annual Absorption (000s) Low 225 1,750 14% Medium 450 1,500 High 675 12% 10.5% 10 5% 1,250 10% 8.7% 1,000 8% 6.9% 5.6% 750 6% 3.9% 500 4% 2.3% 250 2% 0 0% 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 Existing Class A Buildings - Large Blocks Existing Class AAA Buildings - Large Blocks New Developments Vacancy Downtown Class A & AAA Vacancy Rate - High Demand Downtown Class A & AAA Vacancy Rate - Medium Demand Downtown Class A & AAA Vacancy Rate - Low DemandUpdated Q3 2011