This document summarizes the multi-residential rental market in Halifax, Nova Scotia. It finds that Halifax remains predominantly a rental market compared to other major Canadian cities. While condo development has increased, rental demand remains strong. The cost of renting an apartment in Halifax is approximately 20% lower than the cost of owning a condo when considering taxes and other ownership costs. Regular annual increases in operating costs and necessary repairs put downward pressure on property values over time unless rental rates are also increased annually to maintain revenues and asset values. The summary demonstrates how a small annual increase in rent of one cent per square foot can significantly increase revenues, net operating income, and property values over a 5 year period compared to keeping rents flat.

1. HALIFAX
MULTI-RESIDENTIAL MARKET
Robert Mussett
Senior Vice President
902 492 2077
robert.mussett@cbre.com
Chris Carter
Vice President
902 492 2085
chris.carter@cbre.com
Andrew Cranmer
Sales Associate
902 492 2065
andrew.cranmer@cbre.com
Edwina Govindsamy
Client Service Assistant
902 492 2069
edwina.govindsamy@cbre.com
RENTAL DRIVERS
Halifax,unlikemostmajorcitiesinCanada,
has remained a predominately rental
market when looking at multi-residential
stock and the current development
pipeline. While interest in condominiums
has increased recently in Halifax and
new format product is being developed
and absorbed, the rental market remains
strong with quality product being built in
urban and suburban nodes.
Based on a sample of new two bedroom
units, the cost to rent remains lower than
the carrying cost for condo ownership. When considering operating costs, including taxes, CBRE estimates that renting costs ±
20% less than ownership. As a result, apartment investors and managers have the ability to raise rents while still keeping the costs
of renting below cost of owning.
Multi-residential operating costs, including utilities, maintenance, taxes and capital costs, typically increase 1.5-2.0% year-over-
year. Over and above regular expenses are repair costs that are inevitable during a building’s lifecycle. All of these line items can
have an impact on a building’s operating statement, often putting downward pressure on net operating income. Without increasing
rental rates, or decreasing operating costs, property owners face the risk of a lower income and asset value erosion. Further, over
time it’s significantly more difficult, if not impossible, to regain that asset value with higher rental increases.
However, these risks can be mitigated through minor increases in rental rates year-over-year. For instance, increasing rent by only
one cent per square foot, property owners can achieve a higher revenue and maintain building value. This effect, is what we refer
to as “The Power of the Penny”.
Second Quarter, 2016
CBRE CAPITAL MARKETS | ATLANTIC CANADA
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Rental Ownership
Source: CBRE Research, 2016.
Annual Average Apartment Rental vs Condo Ownership Costs
Taxes
Rent/Mortgage
Fees/Parking
20%
CONTACT US
Government of Canada
10-Yr Bond
National Cap Rate,
Apartment A Class
High Rise
Halifax Cap Rate,
Apartment A Class
High Rise
1.08%
JUNE 27
4.20%
JUNE
4.75%-5.25%
JUNE

2. THE POWER OF THE PENNY - 5 YEAR CYCLE
© 2016 CBRE, Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates
used are for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction
the suitability of the property for your needs. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited. CBRE and the CBRE logo are
service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners.
As outlined below, increasing rental rates year-over-year by one penny has a significant impact on asset value. The model
below shows how a penny per year increase can ensure Building B maintains value and how by not doing so, results in
significant value loss as seen in Building A. Raising monthly rental rates only one cent per square foot will see:
• Increases in revenue, effective rent, NOI and market value;
• Expenses as a percentage of revenue increase at slower rate; and
• Over a 5 year cycle, Building B has maintained an upward trajectory of market value.
PROFESSIONAL PROFILE
Year 1 Year 5 Year 1 Year 5
Avgerage Rent Per Square Foot 1.02$ 1.02$ 1.02$ 1.06$
Average Rent Per Suite 1,450 SF) 1,479$ 1,479$ 1,479$ 1,537$
Total Rental Revenue 1,171,368$ 1,171,368$ 1,171,368$ 1,217,304$
Effective Rent (less vacancy and bad debt 2.0%) 1,147,941$ 1,147,941$ 1,147,941$ 1,192,958$
Total Expenses (1.75% increase per year) 382,800$ 410,322$ 382,800$ 410,322$
Expenses/Revenue 33.3% 35.7% 33.3% 34.4%
NET OPERATING INCOME 765,141$ 737,619$ 765,141$ 782,636$
Estimated Cap Rate
Value Per Door 220,820$ 212,877$ 220,820$ 225,869$
Market Value 14,574,107$ 14,049,879$ 14,574,107$ 14,907,351$
Assumptions
1. Based on 66 unit building
2. 1.75% increase in expense YoY
3. Flat cap rate at 5.25%
4. 1,450 SF/2 Bedroom
Building A | Year 1-5 Building B | Year 1-5
5.25% 5.25%
No change in rental rate One cent increase over 5 years
Assumptions
1. Based on 66 unit building
2. 1.75% increase in expenses YoY
3. Unchanged cap rate at 5.25%
4. 1,450 SF/2 Bedroom
Building A | Year 1-5
No change in YoY rental rate
Building B | Year 1-5
One cent increase YoY
CBRE Capital Markets, National
Investment Team & National
Apartment Group
CHRIS CARTER
Vice President
www.cbre.ca/chris.carter
• No change in Effective Rent
• $27,522 decrease in NOI
• $524,228 loss in Market Value
• $45,017 increase in Effective Rent
• $17,495 increase in NOI
• $333,244 increase in Market Value
AVERAGE INVESTMENT CAP RATE
Apartment Q2 2015 Q2 2016
High Rise A 5.00-5.50% 4.75-5.25%
High Rise B 5.00-6.00% 5.00-5.75%
Low Rise A 5.00-5.50% 5.00-5.50%
Low Rise B 5.75-6.25% 5.50-6.00%
Source: CBRE Research, 2016.
CAP RATE SURVEY
HALIFAX
MULTI-RESIDENTIAL MARKET
Second Quarter, 2016