We are pleased to share with you the our latest North American Research Report -covering approximately 70 metro areas - demonstrating that the office market in the United States and Canada will continue a steady growth, but will lack in the force and pace of prior cycles. However, positive market trends exist, including strong absorption and declining vacancy rates in all the major U.S. CBDs. Additionally, construction is increasing, but remains below historic highs.
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North American Commercial Real Estate Report
1. North American Research
OFFICE MARKET OUTLOOK
Q2 2015
Key Takeaways
>> The U.S. economy picked up in Q2 amid stronger job growth.
Housing, construction and consumer spending all improved, and
GDP for Q2 saw a strong pop in the second revision, but the final
tally is still undetermined. Meanwhile, the Canadian economy
has actually contracted this year, mostly due to falling commodity
prices.
>> Absorption improved to 22.6 million square feet (MSF) in the
approximately 70 metro areas we track across North America.
This is more than double that in Q1 (10.6 MSF) though still modest
by historical standards at this point in the cycle. Some 23.1 MSF
was absorbed in the U.S. with increases in both central business
district (CBD) and suburban markets. Spurred by weakness in
energy markets, Canada saw negative absorption of 537,000 SF
in Q2.
>> The vacancy rate in the much larger U.S. fell 20 basis points to
13.0%, while the vacancy rate in Canada increased by 50 basis
points to 9.0%.
>> Development is generally concentrated in the most in-demand
markets including Manhattan, Los Angeles, San Francisco,
Houston, San Jose and Atlanta. In Canada, supply is focused in
Toronto, Vancouver, Calgary and Edmonton.
>> The North American construction pipeline currently totals 119.2
MSF of office space under development with 101.7 MSF of that
in the U.S. with Houston, Seattle, Silicon Valley, Dallas and
Washington, D.C. expecting significant amounts of new space to
come to market in the next few years.
>> Colliers’ survey of local market experts shows a sharp split
between the U.S. and Canada outlooks. Respondents in the U.S.
are strongly positive about the prospects for absorption and rent
growth over the rest of the year. Respondents in Canada are
consistently negative about the prospect for rent growth and have
mixed views on future absorption.
Top CBDs See Solid Growth in 2nd Quarter,
US - Canada Performance Diverges
Andrew Nelson Chief Economist | USA
Summary Statistics, Q2 2015
North America Office Market
U.S. CANADA
NORTH
AMERICA
Vacancy Rate 13.0% 9.1% 12.7%
Change From Q1 2015
(Basis Points)
-0.2% 0.5% -0.2%
Absorption
(MSF)
23.1 -0.5 22.7
New Construction
(MSF)
15.4 2.2 17.7
Under Construction
(MSF)
101.7 17.3 119.0
ASKING RENTS (USD/CAD)
PER SQUARE FOOT PER YEAR
Downtown Class A $47.69 $48.49
Change From Q1 2015 1.7% -2.7%
Suburban Class A $28.21 $32.50
Change From Q1 2015 0.4% 0.6%
Market Indicators
Relative to prior period
U.S.
Q2 2015
U.S.
Q3 2015*
CANADA
Q2 2015
CANADA
Q3 2015*
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE**
*Projected
**Rental rates for current quarter are for CBD; rent forecast is for metrowide rents.
2. N O R T H E A S T
W E S T
S O U T H
C A N A D A
M I D W E S T
Absorption Per Market (SF)
Q1 2015 to Q2 2015
2,300,000
1,150,000
230,000
-230,000
-1,150,000
-2,300,000
2 billion
1 billion
200 million
Occupied SF
Vacant SF
SF By Region
Absorption Per Market (SF)
Q1 2015 to Q2 2015
2,300,000
1,150,000
230,000
-230,000
-1,150,000
-2,300,000
2 billion
1 billion
200 million
Occupied SF
Vacant SF
SF By Region
2 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
U.S. Economic Trends
For a while, it looked like 2015 was going to be the year the U.S.
economy broke out of the moderate growth path it has been on
for the past few years. Although the quarterly numbers have been
uneven, GDP has been growing at a roughly 2.5% year-over-year
rate for several years. Even after the bumpy first quarter, hurt
by the severe weather and collapse in oil prices, the economy
seemed ripe for a bump. But Q2 indicators didn’t pop the way
many predicted, and now it seems likely the 2.5% pace is going to
continue for a while.
To be sure, the economy’s current performance is solid. Through
seven months, the economy is on its way to adding 2.5 million
jobs, somewhat below last year’s 3 million, but excellent numbers
nonetheless and great drivers for all types of commercial real estate
demand, and offices in particular. Office-using employment sectors
have expanded robustly. Professional and business services added
666,000 jobs over the past 12 months through July, while financial
activities (156,000) and information (53,000) also did well.
Other economic metrics are also solid. Consumer confidence is
strong, with the University of Michigan’s Consumer Sentiment Index
up 14% year-over-year as of Q2 (though falling somewhat more
recently). The housing market recovery is in full swing, with sales
of new and existing home sales reaching multi-year highs in recent
months, according to the National Association of Realtors. Auto
sales are up to a strong 17.5-million-per-year pace. Consumer
spending is not growing as much as would have been expected
given the reduction in energy costs, but the impact of lower oil
prices tends to lag and may still provide a boost to the economy in
the second half.
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Vacancy%
14.3
14.1
13.9
13.9
13.4
13.2
13.2
13.0
13.713.7 13.2
13.0
Q2 2013 Q3 Q4
Q1 2014 Q2 Q3 Q4
Q1 2015 Q2
Absorption MSF Completions MSF Vacancy %
U.S. OFFICE MARKET Q2 2013 - Q2 2015
-1,000 -600 -200 200 600
Calgary, AB
Ottawa, ON
Saskatoon, SK
Winnipeg, MB*
Regina, SK
Edmonton, AB
Waterloo Region, ON
Victoria, BC
Montréal, QC
Toronto, ON
Vancouver, BC
Thousands
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2-15
* - Q4-14 data displayed. These markets report semi-annually.
0.0
0.0
0.0
0.1
0.2
0.3
1.0
1.1
0.0 0.5 1.0 1.5
Ottawa, ON
Saskatoon, SK
Waterloo Region, ON
Winnipeg, MB*
Regina, SK
Victoria, BC
Vancouver, BC
Montréal, QC
Edmonton, AB
Calgary, AB
Toronto, ON
CANADIAN DOWNTOWN OFFIC
BY MARKET Q2-15
* - Q4-14 data displayed. These mark
N.A. Downtown Markets:
Excluding renewals, of the leases signed this quarter in
CBD/downtown, did most tenants:
N.A. Downtown Markets:
What was the trend in Fr
-24.1
-18.8
2.7
23.7
29.8
53.4
65.3
167.7
236.4
544.3
-844.5-844.5
0.90
0.92
0.94
0.96
0.98
1.00
1.02
1.04
All Other Office Using
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jan-07
Nonfarm and Office-Using Employment (Jan.2008=1)
Office Market | Q2 2013–Q2 2015 | US
Office Vacancy, Inventory & Absorption
Q2 2015 | North America
Source: Colliers International
Nonfarm and Office-Using Employment
Note: Jan 2008 = 1
Source: BLS, IHS Global Insight, and Colliers International
3. 3 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
The timing and extent of interest rate hikes remain of keen interest
to the commercial real estate market. It appears as if the Federal
Reserve will begin to raise rates in the fall, although the increases
are likely to be modest until the economy proves it can withstand
the removal of such stimulus. The increases are likely to have a
marginal effect on loan rates and acquisition yields, which will
have some impact on real estate capital markets but not likely to be
debilitating.
Despite this underlying economic strength, office leasing
continues to be weak relative to historical standards. To wit,
office employment is now 4.5% above its prior peak, yet the office
occupancy rate is still some 100 bps below its peak in 2006.
This, despite unusually limited construction. Firms continue to
be conservative in taking on new space, reflecting new emphasis
on more efficient space layouts and increasing opportunities
for telecommuting. With the exception of firms in some key
tech markets, few businesses seem inclined to lease space in
anticipation of future hiring.
Vacancy
After pausing during the weak first quarter, office vacancies
resumed their slow decline during Q2. The North American
vacancy rate fell 20 basis points to 12.7% from 12.9% in Q1. In
the U.S., vacancy rates fell to 13.0%, down from 13.2% in Q1. The
25-basis-point decline was slightly better than the 16-basis-point
average since the peak in Q1 2010. Canada’s office vacancy rate
rose sharply, up 48 basis points to 9.0% from 8.6% in Q1.
The improvements in the U.S. were fairly broad-based. Vacancies
in CBD markets fell by 34 basis points to 11.6%, down from 12.0%
in Q1, while suburban vacancies fell 20 basis points to 13.6% from
13.8% in Q1. The vacancy rate declined in each region, led by the
Midwest (-36 basis points to 13.3%), Northeast (-27 basis points
to 12.9%), West (-23 basis points to 12.9%) and South (-17 basis
points to 13.0%).
The vacancy story continues to be shaped by long-term
demographic and social trends. Among the largest 30 markets in
the U.S., the best performances in Q2 were turned in by Oakland
(-1.9% decline in vacancy rate from Q1), New Hampshire (-1.6%),
Lowest Overall Vacancy Rates
Q2 2015 - North America
MARKET VACANCY MARKET VACANCY
Toronto, ON 6.1% Denver, CO 11.9%
NYC - Midtown South 7.6% Baltimore, MD 12.0%
Pittsburgh, PA* 8.1% Minneapolis, MN 12.5%
Seattle/Puget Sound, WA 10.1% Philadelphia, PA 12.6%
NYC - Midtown 10.1% Houston, TX 14.1%
North America 12.7%
U.S. 13.0%
Canada 9.1%
*Q1-15 data shown
Note: Ranking is of the 20 U.S. and Canadian markets with at least 100 MSF of
inventory
Largest Q-o-Q Decrease in Overall Vacancy Rate
Q2 2015 - North America
MARKET*
VACANCY RATE
Q1 2015
VACANCY RATE
Q2 2015
BASIS-POINT
CHANGE
NYC - Midtown 11.1% 10.1% -94
Detroit, MI 16.0% 15.2% -84
Philadelphia, PA 13.3% 12.6% -68
Atlanta, GA 15.2% 14.7% -51
Minneapolis, MN 12.9% 12.5% -49
Dallas, TX 15.7% 15.2% -46
NYC - Downtown 14.6% 14.1% -45
Boston, MA 14.6% 14.3% -28
Los Angeles, CA 16.5% 16.3% -28
Seattle/Puget Sound, WA 10.3% 10.1% -16
North America 12.9% 12.7% -20
Markets > 100MSF 13.6% 13.4% -22
Markets < 100MSF 12.0% 11.8% -17
San Jose (1.2%), Nashville (-1.0%), Midtown Manhattan (-0.9%)
and Detroit (-0.8%). These markets generally are known as centers
of TAMI (technology, advertising, media and information) segments,
which are leading the way in job creation among office-using
industries and/or are locations that have growing populations due
to their attractiveness to Millennials and others looking for appealing
live-work-play environments.
Few U.S. markets experienced increases in vacancy rates in Q2,
and those that did are generally small suburban metros. The only
large metro with rising vacancy rates was Houston, where vacancy
rates climbed 108 basis points to 14.1%, from 13.0% in Q1. The
increase was focused on the CBD, where vacancy rates increased
149 basis points, and reflects new supply coming on line just as
weakness in the oil market in the energy sector forced cutbacks
among energy sector firms.
In Canada, the story is much different, as the vacancy rate is
headed upward, in large part because the rise in oil prices has
had a negative impact on the energy-reliant markets in the West.
Particularly hard hit was Calgary, where the vacancy rate jumped
242 basis points in one quarter to 13.0% from 10.6% in Q1, while
Edmonton’s vacancy rate climbed 59 basis points to 11.2% from
10.6% in Q1. However, Canada also is in the midst of an ill-timed
supply surge that caused vacancy rates to rise even in markets with
positive absorption in Q2, such as Vancouver and Toronto.
Going forward, we expect current trends to hold in coming
quarters. Our forecast calls for U.S. vacancy rates to continue
to decline modestly, down to 12.7% in Q2 2016, with the biggest
improvements in the South and Midwest and the least in the
Northeast. Steadily improving vacancy rates in Downtown and
Midtown Manhattan are likely to be offset in the Northeast by
increases in suburban markets and CBDs in Washington, D.C., and
Baltimore.
* Markets with 100+ MSF of inventory
Source: Colliers International
4. North American Market Survey: LEASES
CBD/Downtown Markets:
Excluding renewals, of leases signed Q2 2015,
tenants:
CBD/Downtown Markets:
The trend in Free Rent offered by landlords
Q2 2015:
CBD/Downtown Markets:
The trend for Tenant Improvement
allowances offered by landlords Q2 2015:
Suburban Markets:
Excluding renewals, of leases signed Q2 2015,
tenants:
Source: Colliers International
Thousands
Expanded
Space, 21.0%
N/A, 6.2%
Contracted
Space 13.6%
N.A. Downtown Markets:
Excluding renewals, of the leases signed this quarter in
CBD/downtown, did most tenants:
Held
Steady, 59.3%
Held
Steady, 59.3%
Less, 16.0%
More, 12.3%
N/A, 8.6%
Same, 63.0%Same, 63.0%
N.A. Downtown Markets:
What was the trend for tenant Improvement allowances
offered by CBD landlords this quarter?
Expanded
Space, 21.0%
N/A, 6.2%
Contracted
Space 13.6%
Excluding renewals, of the leases signed this quarter in
CBD/downtown, did most tenants:
Held
Steady, 59.3%
Held
Steady, 59.3%
Less, 16.0%
More, 12.3%
N/A, 8.6%
Same, 63.0%Same, 63.0%
N.A. Downtown Markets:
What was the trend for tenant Improvement allowances
offered by CBD landlords this quarter?
Expanded
Space, 25.6%
Contracted
Space, 13.4%
N/A, 4.9%
N.A. Suburban Markets:
Excluding renewals, of the leases signed this quarter in
your suburban market, did most tenants:
Held
Steady, 56.1%
Held
Steady, 56.1%
Less, 18.5%
More, 9.9%
N.A. Downtown Markets:
What was the trend in Free Rent (in months) offered by
CBD landlords this quarter?
Same, 63.0%Same, 63.0%
N/A, 8.6%
2.0
4.0
6.0
8.0
0.0
5.0
10.0
15.0
Vacanc
Q2 2013 Q3 Q4
Q1 2014 Q2 Q3 Q4
Q1 2015 Q2
Absorption MSF Completions MSF Vacancy %
-1,000 -600 -200 200 600
Calgary, AB
Ottawa, ON
Saskatoon, SK
Winnipeg, MB
Regina, SK
Edmonton, AB
Waterloo Region, ON
Victoria, BC
Montréal, QC
Toronto, ON
Vancouver, BC
Thousands
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2-15 CANADIAN DOWNTOWN OFFICE UNDER CONSTRUCTION
BY MARKET Q2-15
Expanded
Space, 21.0%
N/A, 6.2%
Contracted
Space 13.6%
N.A. Downtown Markets:
Excluding renewals, of the leases signed this quarter in
CBD/downtown, did most tenants:
Held
Steady, 59.3%
Held
Steady, 59.3%
Less, 16.0%
More, 12.3%
N/A, 8.6%
Same, 63.0%Same, 63.0%
N.A. Downtown Markets:
What was the trend for tenant Improvement allowances
offered by CBD landlords this quarter?
Expanded
Space, 25.6%
Contracted
Space, 13.4%
N/A, 4.9%
N.A. Suburban Markets:
Excluding renewals, of the leases signed this quarter in
your suburban market, did most tenants:
Held
Steady, 56.1%
Held
Steady, 56.1%
Less, 18.5%
More, 9.9%
N.A. Downtown Markets:
What was the trend in Free Rent (in months) offered by
CBD landlords this quarter?
Same, 63.0%Same, 63.0%
N/A, 8.6%
-24.1
-18.8
2.7
23.7
29.8
53.4
65.3
167.7
236.4
544.3
-844.5-844.5 0.0
0.0
0.0
0.0
0.2
0.3
1.0
1.1
2.1
3.4
3.8
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Ottawa, ON
Saskatoon, SK
Winnipeg, MB
Waterloo Region, ON
Regina, SK
Victoria, BC
Vancouver, BC
Montréal, QC
Edmonton, AB
Calgary, AB
Toronto, ON
Millions
0.0
Q2 2013 Q3 Q4
Q1 2014
Absorption MSF C
-1,000 -600 -200 200 600
Calgary, AB
Ottawa, ON
Saskatoon, SK
Winnipeg, MB
Regina, SK
Edmonton, AB
Waterloo Region, ON
Victoria, BC
Montréal, QC
Toronto, ON
Vancouver, BC
Thousands
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2
Expanded
Space, 21.0%
N/A, 6.2%
Contracted
Space 13.6%
N.A. Downtown Markets:
Excluding renewals, of the leases signed this quarter in
CBD/downtown, did most tenants:
Held
Steady, 59.3%
Held
Steady, 59.3%
Less, 16.0%
More, 12.3%
N/A, 8.6%
Same, 63.0%Same, 63.0%
N.A. Downtown Markets:
What was the trend for tenant Improvement allowances
offered by CBD landlords this quarter?
-24.1
-18.8
2.7
23.7
29.8
53.4
65.3
167.7
236.4
544.3
-844.5-844.5
North American Market Survey: CONCESSIONS
4 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International4
Meanwhile, we expect the vacancy rate in Canada to continue
climbing due to the combination of negative absorption and a bump
in supply. Our forecast is for a 10.9% office vacancy rate in Canada
by Q2 2016, primarily due to huge spikes in Calgary and Ottawa.
Montreal is the only major Canadian market in which we see
vacancies declining.
Absorption & Tenant Demand
Net absorption in Q2 also was a tale of two countries. It picked
up considerably in the U.S. after a weak performance in Q1, while
in Canada overall leasing was negative with wildly mixed results
by metro. Of the 80 markets surveyed in the U.S., 66 or 83% had
positive absorption, up from the 70% that had positive absorption in
Q1, while only 14 metros were negative. In Canada, just five of the
12 markets surveyed had positive absorption; one was flat and six
were negative.
Absorption in the U.S. totaled 23.1 MSF, including 7.7 MSF in the
CBDs and 15.4 MSF in the suburbs. Both represented substantial
increases over Q1 but CBDs recorded the bigger turnaround both
absolutely and relatively. CBDs were virtually flat in Q1, with net
absorption of only 436,000 SF. So the Q2 leasing amounted to
a gain of over 7 MSF. But the 60% pickup in suburbs was still
significant, up almost 6 MSF over the 9.6 MSF absorbed in Q1. In
all, Q2 absorption amounted to 3.3% of available space in the CBDs
and 2.7% in the suburbs, compared to 0.2% and 1.7% respectively
in Q1. However, there are regional differences at play: In the
Northeast and Midwest, absorption is concentrated in the CBDs,
while in the West and South, it is concentrated in the suburban
markets.
Overall, the Q2 absorption numbers are roughly in line with the
pace of absorption in recent years and thus not likely to signify
that the market is about to break out. Rather, we expect continued
positive absorption in the U.S. as the economy improves but still
not commensurate with the robust growth in office-using jobs due
to firms’ more efficient space usage as noted above. Plus, the large
amount of shadow space that was created in the wake of the last
recession has shrunk but has not totally disappeared. Consequently,
job growth is fueling less demand for office space than has been
the case in prior economic expansions.
Metros with the most Q2 absorption remain generally the same
as in recent quarters. Midtown Manhattan topped the list with 2.2
MSF, with new 200,000+ SF leases signed by financial tenants
Bloomberg and TD Bank. Other top markets include Dallas (1.7
MSF), Atlanta (1.5 MSF), Los Angeles (1.4 MSF), Philadelphia
(1.1 MSF), San Jose – Silicon Valley (972,000 SF) and Raleigh-
Durham-Chapel Hill (933,000 SF). One surprise might be the
1.9 MSF absorbed in Detroit, where demand is growing from
companies that support the booming auto industry and the fruit of
downtown redevelopment efforts led by financier Dan Gilbert.
With CBDs, Manhattan, which includes a combined 2.9 MSF in
Midtown, Midtown South and Downtown, represented roughly
one-third of all absorption. Space is being taken up by a variety
5. 5 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
of traditional firms, including professional services, media and
consumer goods, as well as some new sources such as WeWork.
The executive suites/co-working company now leases nearly 2
MSF in Manhattan, making it one of the metro’s biggest occupiers.
Other markets with strong CBD absorption in Q2 were Boston
(577,000 SF), Detroit (500,000 SF) and Washington DC (483,000
SF). CBDs that gave up the most space in Q2 were: Houston
(-639,000 SF), Baltimore (-428,000 SF) and Denver (-135,000
SF).
Top Markets for Absorption
Q2 2015 - North America
MARKET* ABSORPTION (MSF)
NYC - Midtown 2.21
Detroit, MI 1.93
Dallas, TX 1.72
Atlanta, GA 1.59
Los Angeles, CA 1.36
Philadelphia, PA 1.13
Washington, DC 0.60
Minneapolis, MN 0.56
Phoenix, AZ 0.53
Toronto, ON 0.53
North America 22.65
U.S. 23.13
Canada -0.48
*Markets with 100+ MSF of inventory
Source: Colliers International
Similar to absorption, rent growth varies significantly by location.
Asking rents made robust gains in U.S. downtown markets, rising
1.7% in Q2 and 5.9% year-over-year. Asking rents in U.S. suburban
markets are rising at a more moderate rate, up 0.4% in Q2 and
2.9% year-over-year. Increases in U.S. downtown asking rents
were led by primary coastal CBD markets. The Northeast (1.8%
in Q2 and 6.4% year-over-year) and West (2.3% in Q2 and 8.4%
year-over-year) outperformed the Midwest (-0.2% in Q2 and 2.2%
year-over-year) and South (1.6% in Q2 and 3.3% year-over-year).
Downtown markets that outperformed include Manhattan Midtown
South (2.9% in Q2 and 11.3% year-over-year), Atlanta (8.0% in
Q2 and 9.5% year-over-year), Los Angeles (7.1% in Q2 and 10.2%
year-over-year), Oakland (5.2% in Q2 and 13.7% year-over-year),
San Francisco (1.6% in Q2 and 9.3% year-over-year) and Seattle
(1.5% in Q2 and 9.9% year-over-year).
Absorption in suburban metros was led by Dallas (1.5 MSF), Atlanta
(1.5 MSF) Detroit (1.4 MSF), Los Angeles (1.2 MSF) and San Jose
– Silicon Valley (868,000 SF). Dallas continues to thrive, despite
the hovering cloud of lower energy costs, as companies in finance,
communications and consumer products take up space. Atlanta’s
suburban submarkets, particularly Buckhead and Central Perimeter,
benefit from proximity to transit, which helps attract Millennial
workers, while Northwest Atlanta is boosted by momentum
stemming from the construction of the new baseball stadium for
the Atlanta Braves. The Los Angeles suburbs are drawing creative
industries in technology and media, with new tenants including
Hulu and Apple. San Jose – Silicon Valley continues to be a haven
for technology and information firms – nearly 20% of all vacant
suburban space and 10% of vacant downtown space were leased in
Q2 alone.
Asking rents in the suburbs were led by the West (1.9% in Q2 and
7.0% year-over-year), while the Northeast struggled (-1.4% in Q2
and -1.1% year-over-year). Suburban markets that outperformed in
terms of rent growth include: Atlanta (1.5% in Q2 and 9.7% year-
over-year), Austin (4.2% in Q2 and 6.2% year-over-year), Detroit
(3.4% in Q2 and 4.8% year-over-year), San Francisco Peninsula
(3.2% in Q2 and 18.4% year-over-year) and San Jose – Silicon
Valley (3.6% in Q2 and 12.8% year-over-year).
With the amount of attention around companies focusing on CBD
markets, the general success of suburban markets in attracting
tenants – nearly 26 MSF absorbed year-to-date compared to 7.1
MSF for CBDs – may come as a bit of a surprise. One factor is
that population and job growth are strong in markets in the South,
West and Southwest, where a higher proportion of offices are in
locations classified as suburbs. Another factor is that there is a
dearth of available space in some CBDs, particularly if a tenant
is looking for a large block. Consequently, we expect that inner-
ring suburban offices in growing markets with access to public
transportation and amenities that appeal to workers will continue to
find success attracting occupiers.
In Canada, the three top markets for absorption in Q2 – Vancouver
(650,000 SF), Toronto (527,000 SF) and Montreal (493,000 SF)
– gained roughly as much space as was lost in Calgary (-1.7 MSF)
during the quarter. Calgary’s office market ramped up when oil
prices were above $100 per barrel and is feeling the effects of the
sharp decline in prices to below US$50 per barrel as companies
such as ConocoPhillips, Nexen and Talisman have announced mass
layoffs at their Calgary offices.
With rising vacancy rates, it is no surprise then that asking rents
in Canada have been flat to negative. In the suburbs of Canada,
asking rents rose 0.6% in Q2 and were -0.4% year-over-year. In
the Canadian CBDs, asking rents were -2.7% in Q2 and up 1.4%
year-over-year. The most dramatic changes have been in Calgary
(-6.0% in Q2 and -19% year-over-year) and Ottawa (-25.0% in Q2
and 0.0% year-over-year). Ottawa’s vacancy rate has climbed 270
basis points to 6.0% as a result of cutbacks by the region’s biggest
employer, the federal government, in an effort to eliminate a $2
billion dollar deficit.
Construction Activity
New supply growth continues to be restrained, with a total of 17.7
MSF in North America, comprising 15.4 MSF in the U.S. and 2.2
MSF in Canada. Q2 was the second straight quarterly decline in
completions, and construction remains well below pre-recession
levels. In the U.S., completions rose more in suburbs (9.7 MSF)
than CBDs (5.7 MSF). There are signs that supply growth will pick
6. 6 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
up, however, as 119.0 MSF is now under construction (101.7 MSF
in the U.S. and 17.3 MSF in Canada), or 22.9 MSF more than was
under construction in Q1. Of the stock under construction in the
U.S., 61 MSF is in the suburbs, concentrated in the South (38%)
and West (34%), while nearly three-quarters of the 40 MSF under
construction in the CBDs are in the West (42%) and Northeast
(31%).
New inventory continues to be heavily concentrated in the most
in-demand markets. Financing for speculative projects outside of
core markets generally remains somewhat tight. More stringent
capital requirements imposed upon banks by regulators at the
beginning of the year are likely to help limit supply growth going
forward, particularly for projects in secondary and tertiary markets,
where the most likely lender would be a regional or local bank. The
regulations increase capital costs for banks, making loans more
expensive, and put pressure on developers to put at least 15%
equity in deals. Although the long-term impact is hard to judge, it
adds a layer of expense and complicates construction projects.
Only 16 downtown markets – less than one-quarter of metros
tracked by Colliers – had any new supply in Q2, and more than two-
thirds of the new inventory was in Manhattan. Seattle (428,000
SF) and Cincinnati (310,000 SF) were the only other CBDs with
more than a quarter-million SF that came online. The numbers in
the suburbs were slightly more spread out, as 29 of the 71 markets
had some new supply in Q2. Houston (2.1 MSF) had by far the
most space come online in the quarter, followed by Los Angeles
(866,000 SF) and Austin (656,000 SF).
Top Markets for Office Space Under Construction
Q2 2015 - North America
MARKET CONSTRUCTION (MSF) TREND
Houston, TX 12.3
Seattle/Puget Sound, WA 8.8
San Jose - Silicon Valley, CA 7.8
Dallas, TX 6.5
Washington, DC 6.4
Boston, MA 5.4
San Francisco, CA 5.2
Calgary, AB 5.2
Toronto, ON 4.8
Phoenix, AZ 4.4
North America 119.0
Leaders in space under construction in the CBD include: Seattle
(7.1 MSF), San Francisco (5.2 MSF), Manhattan (4.8 MSF) and
Chicago (3.6 MSF). In the suburbs, Houston has 10.8 MSF under
construction, which could be worrisome given the trend toward
negative absorption as a result of the drop in energy prices. Other
suburban markets with heavy supply pipelines include San Jose –
Silicon Valley (7.8 MSF), Dallas (6.0 MSF), Phoenix (4.4 MSF) and
Washington DC (4.0 MSF), while North and Central New Jersey
have a combined 2.5 MSF under construction.
In Canada, 12.3 MSF is under construction in the CBDs, led by
Toronto (3.8 MSF) and Calgary (3.4 MSF). Toronto’s downtown
office vacancy rate has declined once again, currently at 2.6%.
Demand for space is strong, driven by the financial services sector,
where many of the newly-constructed buildings have no available
space and of the 3.8 MSF currently under construction, most of the
space is fully pre-leased. Calgary paints a different picture, where
the oil price slump has been weakening business investment. And
with 3.4 MSF of construction scheduled for completion between
2016 and 2018, recovery will be slow for the Calgary office market,
though tenants are in a good position to upgrade space.
Construction as % of Existing Inventory
Q2 2015 - North America
MARKET
SQUARE FEET
UNDERWAY
% OF
EXISTING INVENTORY
TREND
San Jose - Silicon Valley, CA 7,770,638 10.1%
Edmonton, AB 2,229,416 8.3%
Calgary, AB 5,169,387 7.8%
Seattle/Puget Sound, WA 8,777,806 6.7%
San Francisco, CA 5,199,587 5.8%
Houston, TX 12,267,435 5.6%
Phoenix, AZ 4,397,100 3.3%
Toronto, ON 4,819,444 3.2%
Austin, TX 2,223,590 3.1%
Boston, MA 5,365,471 3.1%
North America 119,019,888 1.8%
Note: Ranking includes markets with at least 2 MSF under construction.
Source: Colliers International
Source: Colliers International
7. 7 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
Outlook
Although the office sector has made strides since the recession, it
continues to underperform relative to its typical recovery pattern
during an expansion period. Vacancy rates and rents have improved
incrementally for several years, but fundamentals are still weak in
many markets. Vacancy rates remain stubbornly high, and strong
rent growth is limited to the best markets. That is in stark contrast
to property segments such as industrial, the other major pro-cyclical
sector, which has benefited from increased trade and consumer
trends such as online sales that translate into robust demand for
warehouses and a wave of logistics development across the country.
Office demand, on the other hand, is being restrained by business
and technological trends. Demand for space is tempered by
companies’ economizing, designing more efficient workspaces and
telecommuting, even though office-using jobs have grown at a faster
rate than employment as a while.
Still, the office sector does have some positive trends and pockets of
strength. Absorption is likely to remain positive for the foreseeable
future, as job growth demonstrates no signs of faltering, especially
in office-using segments such as business services, finance and
technology. Key office markets – metros such as Manhattan, Los
Angeles, Dallas, Seattle, Atlanta and San Jose among elsewhere
– are bustling with new leasing from a wide range of firms in
technology, media, consumer products and more. Even companies
that are tightening belts can cut space only so much if staffs keep
growing. Development has largely been limited to markets where
demand is strongest, with large numbers of metros having virtually
no new supply. As vacancy rates drop, rents will continue to increase
in most markets.
Overall, though, the recovery will continue to be slow and spotty.
Markets that feature concentrations in significant growth industries
– think New York with finance, San Francisco and Boston with
technology, Houston with energy and healthcare – or those that
have become magnets of Millennials because of lifestyle – Seattle,
Portland, Denver, Nashville, etc. – will be more competitive and
experience faster growth. However, the confluence of trends that
limit growth in demand are likely to produce less robust upside than
would have been the case in previous cycles.
8. 8 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Downtown - All Classes
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
NORTHEAST
Baltimore, MD 28,883,761 0 651,456 13.1% 14.1% -428,951 -388,238
Boston, MA 63,254,333 187,187 1,631,269 10.8% 10.2% 577,889 698,139
Hartford, CT 9,971,800 0 0 14.1% 14.0% 7,351 8,666
New York, NY - Downtown Manhattan 106,444,600 1,136,000 2,800,000 14.6% 14.1% 475,703 -1,375,364
New York, NY - Midtown Manhattan 234,039,911 589,237 514,237 11.1% 10.1% 2,208,463 1,782,753
New York, NY - Midtown South Manhattan 163,787,088 2,272,563 1,509,500 7.7% 7.6% 205,910 1,061,354
Philadelphia, PA 42,539,370 0 1,958,682 10.5% 9.8% 284,589 378,726
Pittsburgh, PA* 32,445,384 0 959,246 9.2% 9.2% 19,408 19,408
Stamford, CT 18,901,657 0 0 18.9% 18.2% 135,915 -41,470
Washington, DC 143,852,712 111,466 2,328,605 10.9% 10.6% 483,445 73,631
White Plains, NY 7,744,936 0 0 14.9% 14.6% 29,071 -2,824
Northeast Total 851,865,552 4,296,453 12,352,995 11.0% 10.6% 3,998,793 2,214,781
SOUTH
Atlanta, GA 50,378,644 0 0 15.9% 15.6% 115,537 253,988
Austin, TX 12,327,837 73,430 747,284 8.2% 8.4% 50,227 377,770
Birmingham, AL 4,895,917 0 0 23.3% 22.6% 33,850 -74,291
Charleston, SC 2,252,948 0 164,190 9.9% 11.5% -34,826 -60,554
Charlotte, NC 22,255,810 0 0 8.5% 8.3% 53,925 17,930
Columbia, SC 4,678,427 0 110,000 10.7% 10.5% 11,077 23,177
Dallas, TX 31,883,706 0 450,000 20.9% 20.4% 145,307 313,230
Ft. Lauderdale-Broward, FL 7,062,384 0 0 23.9% 22.3% 109,567 149,027
Ft. Worth, TX 10,121,276 0 0 13.3% 12.6% 67,420 126,321
Greenville, SC 3,562,131 0 0 15.9% 15.2% 32,722 24,516
Houston, TX 42,866,022 0 1,463,258 12.6% 14.1% -639,740 -1,630,632
Huntsville, AL 3,893,972 0 0 8.3% 8.6% -44,373 -37,687
Jacksonville, FL 15,572,544 0 0 13.7% 12.4% 194,664 255,882
Little Rock, AR 6,903,382 0 0 6.8% 6.8% 9,867 15,276
Louisville, KY 44,176,486 60,000 398,000 9.7% 9.6% 67,818 240,679
Memphis, TN 5,374,329 0 0 15.9% 15.5% 21,497 -3,392
Miami-Dade, FL 18,556,376 0 0 18.9% 18.6% 31,867 134,980
Nashville, TN 13,178,272 11,446 894,000 10.1% 9.7% 150,444 212,566
Norfolk, VA 4,850,716 0 0 13.6% 13.1% 27,036 49,048
Orlando, FL 12,289,185 17,124 0 11.9% 11.4% 72,111 184,070
Raleigh/Durham/Chapel Hill, NC 14,945,874 242,969 242,969 5.0% 5.7% 115,908 179,004
Richmond, VA 16,308,828 0 321,500 9.5% 9.5% 3,464 14,608
Savannah, GA 803,516 0 0 13.8% 13.1% 5,853 -2,343
Tampa Bay, FL 6,811,806 0 0 14.8% 14.9% -5,492 2,738
West Palm Beach/Palm Beach County, FL 11,979,918 0 0 19.8% 18.9% 65,587 71,379
South Total 367,930,306 404,969 4,791,201 13.4% 13.3% 661,317 837,290
* Q1-15 data displayed
9. 9 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International9
United States - Downtown - All Classes
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
MIDWEST
Chicago, IL 157,877,484 0 3,558,164 12.4% 12.2% 266,861 -219,331
Cincinnati, OH 18,379,005 310,000 365,000 14.7% 13.5% 467,985 544,931
Cleveland, OH 20,040,072 0 0 17.8% 16.8% 185,417 202,747
Columbus, OH 19,674,367 0 150,000 9.5% 9.0% 46,832 23,267
Dayton, OH 5,105,238 0 58,000 27.3% 28.5% -59,871 20,495
Detroit, MI 26,795,491 0 0 16.0% 15.3% 499,142 609,074
Grand Rapids, MI 5,484,206 0 135,000 14.0% 11.6% 132,546 169,574
Indianapolis, IN 22,569,294 20,892 164,000 9.4% 9.4% 36,225 60,610
Kansas City, MO 34,157,148 0 0 12.8% 12.5% 88,479 379,179
Milwaukee, WI 18,603,481 0 0 9.7% 9.3% 43,251 173,633
Minneapolis, MN 33,879,008 0 1,822,000 13.4% 12.5% 299,037 71,754
Omaha, NE 6,460,005 0 0 8.3% 7.5% 52,301 -24,800
St. Louis, MO 22,280,647 0 0 16.9% 16.6% 55,596 -213,994
St. Paul, MN 11,493,759 0 0 13.2% 13.0% 23,555 -62,845
Midwest Total 402,799,205 330,892 6,252,164 13.1% 12.7% 2,137,356 1,734,294
WEST
Albuquerque, NM 3,158,324 0 0 26.7% 25.1% 50,797 -30,989
Bakersfield, CA 3,307,449 0 0 6.2% 7.2% -33,874 -3,838
Boise, ID 4,177,362 0 466,022 11.8% 12.4% -23,446 -13,675
Denver, CO 35,140,368 156,384 1,859,191 10.2% 11.0% -135,176 -68,664
Fresno, CA 3,288,944 0 0 11.4% 11.7% -8,625 8,036
Honolulu, HI 7,164,686 0 0 14.5% 14.3% 13,522 -8,667
Las Vegas, NV 5,018,065 0 129,000 11.4% 12.6% -61,536 -89,356
Los Angeles, CA 32,258,544 0 771,892 18.8% 18.3% 141,700 97,000
Oakland, CA 17,255,313 0 0 9.0% 7.0% 347,121 344,147
Phoenix, AZ 20,324,074 0 0 20.6% 20.2% 85,615 44,125
Portland, OR 34,223,812 29,933 526,029 9.0% 9.0% 9,555 -70,026
Reno, NV 3,363,048 0 0 13.3% 13.8% -18,139 -2,168
Sacramento, CA 12,507,771 0 0 15.7% 15.2% 64,094 70,579
San Diego, CA 9,984,263 0 320,000 16.2% 14.9% 127,609 266,020
San Francisco, CA 88,944,277 62,050 5,199,587 6.7% 6.3% 299,519 1,208,805
San Jose - Silicon Valley, CA 8,346,400 0 0 15.5% 14.0% 104,183 59,012
Seattle/Puget Sound, WA 56,528,261 428,677 7,057,113 10.5% 10.4% 45,229 380,526
Stockton, CA 8,221,819 0 306,000 12.4% 12.2% 9,730 153,887
Walnut Creek, CA 12,346,542 0 0 15.8% 16.3% -65,580 -54,826
West Total 365,559,322 677,044 16,634,834 11.5% 11.3% 952,298 2,289,928
U.S. TOTALS 1,988,154,385 5,709,358 40,031,194 12.0% 11.6% 7,749,764 7,076,293
(continued)
10. 10 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Downtown - Class A
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(USD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
NORTHEAST
Baltimore, MD 12,601,398 $22.72 12.0% 11.4% 71,598 3.4% 5.8%
Boston, MA 44,102,537 $53.18 11.7% 11.0% 292,615 1.4% 7.4%
Hartford, CT 6,771,455 $22.38 15.8% 15.7% 9,277 0.4% -1.0%
New York, NY - Downtown Manhattan 81,123,149 $56.30 16.5% 16.0% 384,505 -0.1% 10.5%
New York, NY - Midtown Manhattan 201,481,717 $80.23 11.4% 10.5% 1,911,082 2.7% 5.6%
New York, NY - Midtown South Manhattan 36,062,986 $74.72 6.0% 5.7% 84,230 2.9% 11.3%
Philadelphia, PA 30,253,239 $28.91 10.3% 10.0% 94,904 0.5% 4.6%
Pittsburgh, PA* 17,820,982 $25.90 6.4% 6.3% 5,800 -0.2% 3.3%
Stamford, CT 13,473,953 $40.81 19.2% 18.9% 33,139 1.2% 6.5%
Washington, DC 89,461,253 $56.51 11.7% 11.4% 364,614 0.8% 1.4%
White Plains, NY 4,798,269 $32.06 17.3% 16.8% 24,186 -0.2% 1.6%
Northeast Total 537,950,938 $61.91 12.0% 11.4% 3,275,950 1.8% 6.4%
SOUTH
Atlanta, GA 31,186,813 $23.69 17.3% 17.1% 78,877 8.0% 9.5%
Austin, TX 7,260,706 $41.58 10.5% 10.8% 13,713 -2.5% 3.9%
Birmingham, AL 3,939,806 $20.55 18.5% 18.3% 5,592 -0.1% -2.1%
Charleston, SC 1,009,994 $32.60 10.0% 7.7% 23,457 -1.2% -4.0%
Charlotte, NC 15,765,596 $27.84 8.7% 8.4% 53,152 0.5% 11.7%
Columbia, SC 2,131,068 $21.48 11.0% 10.5% 11,509 0.7% 3.4%
Dallas, TX 22,377,614 $23.10 20.7% 20.3% 92,984 0.4% 0.7%
Ft. Lauderdale-Broward, FL 4,270,944 $35.47 15.4% 14.5% 26,487 1.6% 7.3%
Ft. Worth, TX 5,914,246 $28.95 16.8% 16.2% 39,792 0.2% 0.2%
Greenville, SC 2,290,167 $22.61 16.0% 14.7% 33,490 -0.5% 5.0%
Houston, TX 30,288,063 $42.32 9.5% 10.0% -142,547 0.9% 0.3%
Huntsville, AL 943,189 $23.98 7.6% 7.6% 0 -1.7% N/A
Jacksonville, FL 6,846,824 $20.65 16.8% 13.8% 203,097 1.6% 3.4%
Little Rock, AR 3,052,799 $17.99 8.4% 8.9% -5,918 5.9% 12.5%
Louisville, KY 10,894,192 $21.94 9.5% 9.6% 12,083 4.3% 7.4%
Memphis, TN 2,026,788 $17.59 23.6% 22.3% 25,761 1.0% 2.7%
Miami-Dade, FL 10,198,774 $41.25 17.6% 16.9% 43,695 0.8% 2.7%
Nashville, TN 4,637,054 $24.67 9.7% 9.5% -8,020 1.1% 3.8%
Norfolk, VA 2,327,023 $22.14 12.3% 11.3% 23,289 -1.2% -7.8%
Orlando, FL 5,683,167 $25.60 12.4% 12.2% 8,455 2.2% 2.4%
Raleigh/Durham/Chapel Hill, NC 7,617,445 $26.87 5.4% 7.0% 108,375 0.7% 3.2%
Richmond, VA 6,374,428 $24.36 7.5% 7.0% 34,452 -0.2% -2.1%
Savannah, GA 645,713 $21.04 8.9% 8.0% 5,853 -1.3% 0.6%
Tampa Bay, FL 4,999,685 $25.64 13.1% 13.2% -4,096 -0.7% 5.8%
West Palm Beach/Palm Beach County, FL 3,837,756 $32.89 17.9% 17.3% 23,574 1.8% -7.7%
South Total 196,519,854 $28.83 13.6% 13.3% 707,106 1.6% 3.3%
* Q1-15 data displayed
11. 11 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International11
United States - Downtown - Class A
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(USD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
MIDWEST
Chicago, IL 61,837,979 $40.68 11.6% 11.6% -13,303 -0.5% 4.0%
Cincinnati, OH 7,798,710 $22.58 14.6% 14.1% 303,678 0.2% 3.7%
Cleveland, OH 9,747,807 $20.41 15.7% 15.3% 38,592 -1.8% -4.4%
Columbus, OH 8,906,062 $20.72 12.5% 12.2% 39,304 4.3% 4.9%
Dayton, OH 2,302,797 $17.92 29.5% 28.9% 13,730 0.3% N/A
Detroit, MI 7,226,182 $23.76 12.3% 12.2% 12,887 1.4% 3.4%
Grand Rapids, MI 1,570,529 $22.34 16.7% 14.4% 36,006 9.4% 20.9%
Indianapolis, IN 9,501,787 $19.05 12.2% 12.1% 10,151 -0.3% 0.5%
Kansas City, MO 10,707,002 $18.90 18.3% 17.9% 35,796 -0.2% 0.1%
Milwaukee, WI 5,285,718 $27.92 9.0% 8.3% 7,470 1.9% 3.1%
Minneapolis, MN 13,805,787 $17.02 15.0% 13.9% 153,726 -1.3% -0.9%
Omaha, NE 3,492,762 $20.38 3.7% 3.7% 0 0.0% 0.6%
St. Louis, MO 9,639,250 $17.97 13.6% 12.0% 154,198 -0.4% -0.5%
St. Paul, MN 2,773,960 $14.56 14.3% 12.2% 57,578 0.0% 0.8%
Midwest Total 154,596,332 $28.29 13.1% 12.7% 849,813 -0.2% 2.2%
WEST
Albuquerque, NM 575,047 $20.25 23.6% 23.6% 0 0.5% 2.5%
Bakersfield, CA 788,282 $17.40 5.7% 5.9% -1,632 0.0% 0.0%
Boise, ID 1,941,427 $19.97 15.7% 5.4% 200,434 2.0% -3.8%
Denver, CO 21,609,358 $35.58 12.5% 13.0% -112,954 2.3% 9.1%
Fresno, CA 1,026,046 $24.60 7.9% 6.4% 15,407 0.0% 0.0%
Honolulu, HI 4,966,720 $35.88 14.2% 14.3% -6,071 1.0% 1.0%
Las Vegas, NV 1,103,341 $31.32 16.2% 20.9% -52,174 4.8% -0.8%
Los Angeles, CA 18,098,000 $41.11 18.5% 17.8% 112,000 7.1% 10.2%
Oakland, CA 10,562,045 $38.88 7.7% 5.6% 224,394 5.2% 13.7%
Phoenix, AZ 9,467,221 $23.77 22.4% 23.0% -59,167 2.5% 3.6%
Portland, OR 12,987,200 $27.89 9.5% 9.7% -28,542 2.5% 6.6%
Reno, NV 583,955 $24.37 12.6% 13.1% -2,659 0.0% 3.7%
Sacramento, CA 5,832,195 $31.92 17.0% 16.4% 34,415 1.5% 1.9%
San Diego, CA 7,257,266 $31.20 14.1% 13.0% 81,189 1.6% 4.8%
San Francisco, CA 57,516,593 $65.26 7.1% 6.7% 217,911 1.6% 9.3%
San Jose - Silicon Valley, CA 3,494,393 $39.12 15.9% 14.9% 34,018 2.5% 6.5%
Seattle/Puget Sound, WA 33,207,867 $37.43 10.0% 9.9% 37,647 1.5% 9.9%
Stockton, CA 2,790,574 $17.76 14.5% 15.0% -12,252 -9.8% -8.6%
Walnut Creek, CA 8,188,282 $32.40 16.1% 16.1% 300 4.2% 7.1%
West Total 201,995,812 $43.01 11.6% 11.3% 682,264 2.3% 8.4%
U.S. TOTALS / AVERAGES 1,091,062,936 $47.69 12.4% 11.9% 5,515,133 1.7% 5.9%
(continued)
12. 12 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Suburban - All Classes
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
NORTHEAST
Baltimore, MD 89,741,032 42,704 663,640 11.7% 11.3% 401,544 626,809
Boston, MA 112,459,297 0 3,734,202 16.7% 16.7% -142,706 847,789
Fairfield County, CT 39,578,509 0 0 14.5% 15.6% -402,806 -862,799
Hartford, CT 12,784,662 0 0 11.9% 11.6% 49,765 72,796
Long Island, NY 74,588,098 20,000 0 10.4% 10.1% 212,858 122,107
New Hampshire Markets 17,760,017 0 118,684 15.2% 13.6% 277,887 277,887
New Jersey - Central 84,985,841 0 1,507,000 13.8% 13.9% -75,172 218,494
New Jersey - Northern 120,651,442 0 981,000 18.2% 18.2% -38,341 -738,664
Philadelphia, PA 102,753,256 168,000 647,080 14.4% 13.8% 845,335 970,360
Pittsburgh, PA* 92,442,609 298,256 732,743 7.7% 7.8% 107,843 107,843
Washington, DC 288,973,700 481,658 4,023,476 17.7% 17.7% 119,920 -449,340
Westchester County, NY 38,235,679 297,000 0 14.6% 14.5% -19,664 -137,496
Northeast Total 1,074,954,142 1,307,618 12,407,825 14.9% 14.7% 1,336,463 1,055,786
SOUTH
Atlanta, GA 171,154,176 578,000 1,287,000 15.0% 14.4% 1,477,301 2,255,304
Austin, TX 60,253,871 656,603 1,476,306 10.6% 11.0% 369,705 658,236
Birmingham, AL 14,712,033 0 0 13.9% 14.4% -90,633 -57,632
Charleston, SC 9,964,419 0 135,000 10.3% 9.4% 86,786 334,650
Charlotte, NC 62,747,728 131,048 1,090,942 10.9% 10.8% 191,986 415,383
Columbia, SC 4,911,391 0 0 23.5% 22.5% 48,519 70,648
Dallas, TX 244,739,761 510,245 6,041,905 15.0% 14.5% 1,571,024 3,298,565
Ft. Lauderdale-Broward, FL 44,517,878 0 0 13.0% 12.7% 66,247 -117,239
Ft. Worth, TX 22,473,956 245,150 489,128 13.9% 13.7% 262,467 390,027
Greenville, SC 4,765,002 0 80,000 18.7% 17.4% 61,364 95,678
Houston, TX 178,046,376 2,139,864 10,804,177 13.1% 14.0% 115,060 1,333,134
Huntsville, AL 19,147,310 0 0 13.0% 13.2% -37,932 48,322
Jacksonville, FL 46,194,984 0 47,270 10.1% 10.0% 32,343 170,978
Little Rock, AR 7,583,569 0 0 10.4% 9.8% 47,714 151,975
Memphis, TN 27,780,885 0 0 13.9% 13.9% -9,876 313,906
Miami-Dade, FL 63,570,017 0 0 11.1% 11.0% 76,958 23,174
Nashville, TN 41,177,757 53,000 591,000 5.8% 4.7% 532,275 591,450
Norfolk, VA 34,514,064 74,600 84,360 12.0% 12.1% 27,282 88,494
Orlando, FL 54,940,017 0 0 13.1% 12.6% 267,825 441,169
Raleigh/Durham/Chapel Hill, NC 68,356,789 465,124 796,730 10.8% 10.3% 817,563 1,065,403
Richmond, VA 35,313,699 37,658 209,878 10.5% 10.4% 65,670 137,459
Savannah, GA 1,394,498 0 0 17.1% 16.7% 5,242 65,294
Tampa Bay, FL 57,601,546 0 307,335 15.8% 15.2% 312,875 723,330
West Palm Beach/Palm Beach County, FL 25,361,313 0 0 17.0% 15.5% 114,450 156,281
South Total 1,301,223,039 4,891,292 23,441,031 13.1% 12.9% 6,412,215 12,653,989
* Q1-15 data displayed
13. 13 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International13
United States - Suburban - All Classes
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
MIDWEST
Chicago, IL 156,451,190 0 0 17.0% 17.0% 76,548 -134,889
Cincinnati, OH 44,640,874 139,725 774,073 16.9% 16.4% 373,526 570,892
Cleveland, OH 54,405,481 0 80,000 13.1% 12.8% 172,460 179,925
Columbus, OH 43,872,427 43,000 575,840 10.0% 9.0% 122,698 161,412
Dayton, OH 9,145,009 0 100,000 21.2% 20.8% 33,770 70,179
Detroit, MI 138,001,461 150,006 514,522 16.0% 15.2% 1,426,353 1,989,536
Grand Rapids, MI 12,991,221 12,580 295,760 20.0% 22.9% 24,658 96,793
Indianapolis, IN 43,521,787 112,500 250,000 8.9% 8.0% 471,112 584,517
Kansas City, MO 59,620,465 0 957,000 11.6% 11.7% -29,107 -82,029
Milwaukee, WI 33,346,986 300,200 0 12.0% 12.1% 160,743 136,535
Minneapolis, MN 81,394,670 0 765,980 12.7% 12.4% 260,095 279,825
Omaha, NE 21,478,894 0 294,316 10.4% 9.9% 75,566 170,290
St. Louis, MO 56,266,277 0 98,000 9.2% 9.0% 125,449 -258,687
Midwest Total 755,136,742 758,011 4,705,491 13.9% 13.6% 3,293,871 3,764,299
WEST
Albuquerque, NM 10,965,528 0 0 18.7% 18.7% 8,517 93,264
Bakersfield, CA 6,150,350 0 108,810 5.7% 6.5% -47,860 -32,551
Boise, ID 17,186,733 0 0 13.5% 13.6% -9,878 353,283
Denver, CO 107,503,164 292,938 1,457,966 12.5% 12.1% 627,952 766,620
Fairfield, CA 5,065,448 0 0 19.1% 18.7% 21,341 60,103
Fresno, CA 17,612,190 0 50,000 14.0% 13.9% 13,238 -41,384
Honolulu, HI 7,730,394 0 15,500 12.4% 11.8% 42,930 24,319
Las Vegas, NV 38,399,679 16,052 171,444 20.1% 19.7% 155,667 825,865
Los Angeles - Inland Empire, CA 20,421,424 0 0 16.0% 16.8% -173,400 35,200
Los Angeles, CA 167,076,373 866,912 2,377,512 16.1% 15.9% 1,222,500 1,384,760
Oakland, CA 16,200,725 0 0 15.5% 13.6% 298,197 399,051
Orange County, CA 81,674,989 0 497,387 13.5% 13.5% 101,500 396,800
Phoenix, AZ 113,755,988 593,430 4,397,100 17.6% 17.5% 443,477 622,505
Pleasanton/Tri-Valley, CA 27,447,346 0 0 12.4% 12.8% -98,174 96,189
Portland, OR 44,066,222 141,226 644,171 9.1% 9.1% 144,385 119,314
Reno, NV 9,752,688 0 0 14.1% 13.4% 72,243 68,196
Sacramento, CA 50,643,158 0 0 17.9% 17.5% 169,357 344,197
San Diego, CA 72,596,890 419,309 838,436 11.5% 11.8% 200,436 472,196
San Francisco Peninsula, CA 40,216,650 0 1,107,746 8.2% 7.7% 182,738 396,282
San Jose - Silicon Valley, CA 68,883,406 432,375 7,770,638 7.6% 6.4% 868,106 1,942,540
Seattle/Puget Sound, WA 73,672,731 0 1,720,693 10.1% 9.9% 124,325 188,682
Walnut Creek, CA 5,359,532 0 0 17.7% 18.2% -29,501 -57,594
West Total 1,002,381,608 2,762,242 21,157,403 13.7% 13.4% 4,338,096 8,457,837
U.S. TOTALS 4,133,695,531 9,719,163 61,711,750 13.8% 13.6% 15,380,645 25,931,911
(continued)
14. 14 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
United States - Suburban - Class A
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(USD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
NORTHEAST
Baltimore, MD 32,364,723 $24.73 12.0% 11.2% 276,480 0.2% 1.8%
Boston, MA 49,316,662 $26.19 15.2% 16.1% -452,024 -3.5% 0.0%
Fairfield County, CT 17,708,567 $33.98 13.1% 13.7% -100,040 -2.6% -9.5%
Hartford, CT 7,123,495 $21.06 11.4% 11.5% -8,398 0.0% 0.2%
Long Island, NY 24,844,207 $30.91 12.1% 11.5% 151,930 -0.5% 0.9%
New Hampshire Markets 9,437,262 $19.85 17.2% 14.6% 245,967 -2.2% N/A
New Jersey - Central 58,323,432 $26.84 12.3% 12.4% -48,791 -0.3% 0.8%
New Jersey - Northern 87,834,184 $28.79 16.6% 16.8% -178,333 -1.3% -0.8%
Philadelphia, PA 52,552,740 $25.71 11.8% 11.1% 472,715 -1.0% 0.3%
Pittsburgh, PA* 17,498,963 $23.74 8.8% 9.2% 124,793 -11.7% 8.6%
Washington, DC 140,361,493 $32.29 18.3% 18.3% 337,685 -0.8% -1.1%
Westchester County, NY 18,102,621 $27.40 18.2% 17.9% 3,728 -0.1% -1.1%
Northeast Total 515,468,349 $28.50 15.1% 15.0% 825,712 -1.4% -1.1%
SOUTH
Atlanta, GA 81,321,713 $25.13 13.0% 12.1% 1,280,295 1.5% 9.7%
Austin, TX 23,967,668 $32.87 10.8% 11.6% 427,927 4.2% 6.2%
Birmingham, AL 9,281,152 $21.44 10.7% 10.9% -17,582 3.2% 3.1%
Charleston, SC 3,821,404 $25.79 8.1% 7.6% 30,850 2.3% 2.9%
Charlotte, NC 20,822,123 $24.46 11.4% 11.5% 24,386 2.2% 7.0%
Columbia, SC 1,001,769 $17.14 17.6% 14.4% 31,379 1.0% 0.5%
Dallas, TX 102,147,021 $25.50 14.0% 13.4% 1,003,999 0.4% 2.4%
Ft. Lauderdale-Broward, FL 11,048,562 $29.17 12.2% 11.7% 36,794 1.0% 6.2%
Ft. Worth, TX 3,755,579 $25.00 5.3% 5.0% 9,547 0.0% 2.9%
Greenville, SC 2,458,559 $19.22 11.2% 9.6% 38,490 0.2% 2.8%
Houston, TX 85,290,726 $32.88 12.3% 13.9% 590,701 0.1% 0.0%
Huntsville, AL 4,037,079 $17.75 6.7% 6.7% 913 4.5% N/A
Jacksonville, FL 9,207,858 $20.97 7.2% 6.9% 26,156 1.9% 7.0%
Little Rock, AR 2,843,202 $20.00 8.7% 8.3% 16,556 0.0% 6.7%
Memphis, TN 8,513,634 $20.60 6.8% 6.5% 21,949 -0.1% -1.8%
Miami-Dade, FL 14,541,949 $32.11 11.5% 10.9% 53,745 0.5% 16.9%
Nashville, TN 15,170,069 $24.43 5.3% 3.2% 365,012 1.5% 4.4%
Norfolk, VA 10,983,000 $20.36 11.7% 11.6% 38,318 0.3% 1.6%
Orlando, FL 17,274,522 $22.10 13.9% 13.7% 33,540 0.8% 4.3%
Raleigh/Durham/Chapel Hill, NC 26,298,663 $22.87 10.0% 8.9% 681,771 0.1% 7.3%
Richmond, VA 13,939,107 $18.79 10.2% 10.1% 54,834 -1.4% 0.3%
Savannah, GA 488,384 $22.01 13.4% 12.0% 7,003 1.8% -0.3%
Tampa Bay, FL 19,207,226 $24.38 13.2% 12.3% 166,731 0.5% 3.3%
West Palm Beach/Palm Beach County, FL 7,470,387 $30.60 14.6% 13.7% 71,421 3.2% -2.5%
South Total 494,891,356 $26.35 12.0% 11.8% 4,994,735 1.1% 4.4%
* Q1-15 data displayed
15. 15 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International15
United States - Suburban - Class A
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(USD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
MIDWEST
Chicago, IL 79,348,545 $27.65 17.9% 17.7% 130,403 0.3% 1.2%
Cincinnati, OH 16,364,168 $20.73 15.8% 14.2% 378,969 1.6% 1.8%
Cleveland, OH 9,784,161 $20.15 10.5% 9.5% 95,710 -0.5% -4.7%
Columbus, OH 18,239,783 $19.03 8.2% 8.0% 100,312 -0.9% -3.3%
Dayton, OH 2,129,609 $21.08 21.9% 20.7% 24,918 -1.5% N/A
Detroit, MI 36,195,269 $21.11 15.1% 14.0% 551,820 3.4% 4.8%
Grand Rapids, MI 1,479,763 $18.04 15.7% 44.8% 4,114 2.4% 3.1%
Indianapolis, IN 12,589,324 $18.87 11.1% 10.3% 93,455 0.2% 0.4%
Kansas City, MO 17,071,180 $20.91 9.9% 10.8% -140,334 1.0% 1.9%
Milwaukee, WI 6,546,365 $22.40 8.6% 8.3% 285,499 0.0% 1.2%
Minneapolis, MN 27,777,390 $14.82 13.4% 12.8% 169,560 0.4% 1.3%
Omaha, NE 5,375,186 $26.03 2.7% 3.0% 8,425 2.1% -1.2%
St. Louis, MO 27,134,869 $21.97 9.1% 8.9% 58,738 -0.6% 0.5%
Midwest Total 260,035,612 $22.31 13.6% 13.4% 1,761,589 0.6% 0.8%
WEST
Albuquerque, NM 811,008 $21.30 4.3% 4.3% 0 0.0% 1.7%
Bakersfield, CA 2,836,404 $24.00 5.2% 7.5% -65,246 0.0% 0.0%
Boise, ID 5,854,337 $15.98 17.8% 16.1% 103,609 -4.6% 1.5%
Denver, CO 36,996,251 $26.11 11.5% 11.1% 218,722 1.2% 4.3%
Fairfield, CA 1,980,606 $25.61 18.9% 18.4% 10,818 -0.2% 0.0%
Fresno, CA 4,023,358 $25.80 18.1% 17.5% 22,019 0.0% 0.0%
Las Vegas, NV 5,122,696 $31.44 25.7% 24.4% 65,840 0.4% 0.4%
Los Angeles - Inland Empire, CA 5,074,649 $25.56 14.4% 14.3% 4,600 0.0% 0.0%
Los Angeles, CA 102,680,023 $35.88 14.3% 14.2% 618,000 2.4% 2.4%
Oakland, CA 3,682,927 $34.56 13.2% 9.7% 125,442 7.0% 17.6%
Orange County, CA 33,659,103 $29.76 14.7% 14.6% 31,500 3.3% 12.2%
Phoenix, AZ 32,643,518 $25.36 15.2% 14.5% 393,174 1.0% 5.0%
Pleasanton/Tri-Valley, CA 15,525,270 $32.64 13.4% 14.3% -131,019 0.7% 12.4%
Portland, OR 11,519,797 $24.42 10.3% 9.8% 83,192 1.7% 3.0%
Reno, NV 965,801 $20.94 13.8% 12.3% 14,864 2.5% 0.7%
Sacramento, CA 14,292,709 $22.56 15.4% 13.9% 210,244 1.1% 1.1%
San Diego, CA 24,342,199 $37.20 11.4% 11.5% 129,360 1.0% 4.4%
San Francisco Peninsula, CA 23,083,521 $54.12 9.6% 9.4% 47,396 3.2% 18.4%
San Jose - Silicon Valley, CA 36,720,523 $48.72 8.7% 6.7% 909,540 3.6% 12.8%
Seattle/Puget Sound, WA 27,314,386 $36.24 10.2% 10.4% -44,621 -1.3% 1.2%
Walnut Creek, CA 737,964 $25.56 14.6% 14.3% 2,201 1.9% 0.0%
West Total 389,867,050 $34.15 12.9% 12.5% 2,749,635 1.9% 7.0%
U.S. TOTALS / AVERAGES 1,660,262,367 $28.21 13.4% 13.2% 10,331,671 0.4% 2.9%
(continued)
16. 16 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International
Canada - Downtown - Class A
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(CAD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
Calgary, AB 27,568,453 $47.00 8.4% 9.9% -420,787 -6.0% -19.0%
Edmonton, AB 8,535,654 $21.60 7.8% 7.7% 6,811 0.0% 0.5%
Montréal, QC 23,073,808 $49.00 6.9% 5.2% 394,844 0.0% 8.9%
Ottawa, ON 10,004,044 $36.75 7.1% 6.7% 20,164 -25.0% 0.0%
Regina, SK 1,391,653 $22.70 4.7% 4.8% -1,678 0.0% 0.0%
Saskatoon, SK 570,560 $44.00 8.4% 10.2% -9,898 0.0% 2.3%
Toronto, ON 43,020,330 $59.56 3.4% 2.8% 409,332 -2.3% 10.4%
Vancouver, BC 11,337,097 $55.87 7.5% 11.1% 502,599 -0.9% 5.4%
Victoria, BC 513,808 $35.00 0.5% 0.9% -1,755 0.0% 0.0%
Waterloo Region, ON 1,561,288 $24.06 10.8% 10.2% 10,023 -0.1% 0.0%
Winnipeg, MB 2,715,593 $34.31 5.9% 7.7% 42,536 0.0% 1.7%
CANADA TOTALS* / AVERAGES 132,243,391 $48.49 6.2% 6.4% 962,182 -2.7% 1.4%
Canadian Downtown Office Absorption
By Market Q2-15
Canadian Downtown Office Under Construction
By Market Q2-15
* Totals include Halifax market
Canada - Downtown - All Classes
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
Calgary, AB 40,447,480 0 3,359,000 10.7% 12.8% -844,538 -1,712,307
Edmonton, AB 17,311,801 23,683 2,090,493 9.4% 9.5% 23,683 -8,466
Montréal, QC 49,610,579 0 1,124,698 5.6% 5.2% 167,670 364,167
Ottawa, ON 15,995,156 0 0 9.8% 9.9% -24,128 38,511
Regina, SK 3,856,587 0 160,000 11.2% 11.1% 2,728 2,728
Saskatoon, SK 2,427,338 0 0 14.1% 14.9% -18,771 -59,088
Toronto, ON 75,928,990 0 3,774,200 2.7% 2.6% 236,367 838,597
Vancouver, BC 25,716,351 979,185 978,390 7.2% 8.6% 544,276 481,155
Victoria, BC 4,875,360 -22,474 261,000 8.6% 7.3% 65,292 65,292
Waterloo Region, ON 3,908,755 0 43,280 13.0% 12.3% 29,780 58,062
Winnipeg, MB 11,443,932 96,165 0 9.4% 9.7% 53,446 10,726
CANADA TOTALS* 256,069,956 1,076,559 12,254,961 6.8% 7.2% 76,064 -80,364
* Totals include Halifax market
Absorption MSF Completions MSF Vacancy %
-1,000 -600 -200 200 600
Calgary, AB
Ottawa, ON
Saskatoon, SK
Winnipeg, MB*
Regina, SK
Edmonton, AB
Waterloo Region, ON
Victoria, BC
Montréal, QC
Toronto, ON
Vancouver, BC
Thousands
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2-15
* - Q4-14 data displayed. These markets report semi-annually.
0.0
0.0
0.0
0.1
0.2
0.3
1.0
1.1
2.1
3.4
3.8
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Ottawa, ON
Saskatoon, SK
Waterloo Region, ON
Winnipeg, MB*
Regina, SK
Victoria, BC
Vancouver, BC
Montréal, QC
Edmonton, AB
Calgary, AB
Toronto, ON
Millions
CANADIAN DOWNTOWN OFFICE UNDER CONSTRUCTION
BY MARKET Q2-15
* - Q4-14 data displayed. These markets report semi-annually.
Expanded
Space, 21.0%
N/A, 7.4%
Contracted
Space 13.6%
N.A. Downtown Markets:
Excluding renewals, of the leases signed this quarter in
CBD/downtown, did most tenants:
Held
Steady, 58.0%
Held
Steady, 58.0%
Less, 16.0%
More, 12.3%
N/A, 9.9%
Same, 61.7%Same, 61.7%
N.A. Downtown Markets:
What was the trend for tenant Improvement allowances
offered by CBD landlords this quarter?
Expanded
Space, 25.6%
Contracted
Space, 13.4%
N/A, 6.1%
N.A. Suburban Markets:
Excluding renewals, of the leases signed this quarter in
your suburban market, did most tenants:
Held
Steady, 54.9%
Held
Steady, 54.9%
Less, 18.5%
More, 9.9%
N.A. Downtown Markets:
What was the trend in Free Rent (in months) offered by
CBD landlords this quarter?
Same, 61.7%Same, 61.7%
N/A, 9.9%
-24.1
-18.8
2.7
23.7
29.8
53.4
65.3
167.7
236.4
544.3
-844.5-844.5
Absorption MSF Completions MSF Vacancy %
-1,000 -600 -200 200 600
Calgary, AB
Ottawa, ON
Saskatoon, SK
Winnipeg, MB
Regina, SK
Edmonton, AB
Waterloo Region, ON
Victoria, BC
Montréal, QC
Toronto, ON
Vancouver, BC
Thousands
CANADIAN DOWNTOWN OFFICE ABSORPTION BY MARKET Q2-15 CANADIAN DOWNTOWN OFFICE UNDER CONSTRUCTION
BY MARKET Q2-15
Expanded
Space, 21.0%
N/A, 6.2%
Contracted
Space 13.6%
N.A. Downtown Markets:
Excluding renewals, of the leases signed this quarter in
CBD/downtown, did most tenants:
Held
Steady, 59.3%
Held
Steady, 59.3%
Less, 16.0%
More, 12.3%
N/A, 8.6%
Same, 63.0%Same, 63.0%
N.A. Downtown Markets:
What was the trend for tenant Improvement allowances
offered by CBD landlords this quarter?
Expanded
Space, 25.6%
Contracted
Space, 13.4%
N/A, 4.9%
N.A. Suburban Markets:
Excluding renewals, of the leases signed this quarter in
your suburban market, did most tenants:
Held
Steady, 56.1%
Held
Steady, 56.1%
Less, 18.5%
More, 9.9%
N.A. Downtown Markets:
What was the trend in Free Rent (in months) offered by
CBD landlords this quarter?
Same, 63.0%Same, 63.0%
N/A, 8.6%
-24.1
-18.8
2.7
23.7
29.8
53.4
65.3
167.7
236.4
544.3
-844.5-844.5 0.0
0.0
0.0
0.0
0.2
0.3
1.0
1.1
2.1
3.4
3.8
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Ottawa, ON
Saskatoon, SK
Winnipeg, MB
Waterloo Region, ON
Regina, SK
Victoria, BC
Vancouver, BC
Montréal, QC
Edmonton, AB
Calgary, AB
Toronto, ON
Millions
17. 17 North American Research & Forecast Report | Q2 2015 | Office Market Outlook | Colliers International17
Canada - Suburban - All Classes
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
NEW SUPPLY
Q2 2015 (SF)
UNDER
CONSTRUCTION
(SF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
YTD ABSORPTION
(SF) 2015
Calgary, AB 25,921,745 0 1,810,387 10.4% 13.4% -775,756 -569,707
Edmonton, AB 9,708,047 226,392 138,923 12.7% 14.2% -80,737 -89,297
Montréal, QC 26,535,766 0 706,900 10.6% 9.4% 325,428 628,852
Ottawa, ON 21,717,774 0 230,000 12.2% 14.2% -443,687 -457,275
Regina, SK 931,058 77,083 0 4.7% 10.0% 24,215 24,215
Toronto, ON 72,433,490 850,235 1,045,244 9.4% 9.8% 291,216 165,036
Vancouver, BC 30,187,348 0 1,014,529 11.5% 11.2% 103,905 75,393
Victoria, BC 3,817,040 0 76,000 10.9% 11.6% -5,891 -5,891
Waterloo Region, ON 7,589,996 0 0 17.3% 18.1% -55,601 -13,526
Winnipeg, MB 3,924,927 0 0 7.8% 7.7% 5,684 11,368
CANADA TOTALS* 206,049,273 1,153,710 5,021,983 10.7% 11.4% -554,264 -173,872
Canada - Suburban - Class A
MARKET
EXISTING
INVENTORY (SF)
JUNE 30, 2015
AVG ANNUAL
QUOTED RENT
(CAD PSF)
VACANCY RATE
MAR 31, 2015
VACANCY RATE
JUNE 30, 2015
ABSORPTION (SF)
Q2 2015
QUARTERLY
CHANGE
IN RENT
ANNUAL
CHANGE
IN RENT
Calgary, AB 12,828,979 $38.00 11.2% 16.0% -616,225 -2.6% -11.6%
Montréal, QC 15,362,185 $31.00 10.8% 8.5% 350,042 0.0% 6.9%
Ottawa, ON 12,716,930 $31.25 13.1% 15.7% -326,818 5.0% -2.3%
Regina, SK 110,000 $29.00 0.0% 16.8% -18,500 0.0% 5.5%
Toronto, ON 35,196,710 $31.09 9.3% 9.9% 468,315 -0.3% -0.1%
Vancouver, BC 15,804,143 $35.86 13.4% 13.2% 28,272 3.9% 4.7%
Victoria, BC 898,167 $40.00 19.7% 19.0% 5,915 0.0% 0.0%
Waterloo Region, ON 3,895,520 $23.30 15.3% 18.0% -105,612 -3.4% 5.5%
CANADA TOTALS* / AVERAGES 98,290,759 $32.50 11.3% 12.2% -170,283 0.6% -0.4%
Canada | Office Investment
MARKET
CBD
SALES PRICE
(CAD PSF)
CBD
CAP RATE
SUBURBAN
SALES PRICE
(CAD PSF)
SUBURBAN
CAP RATE
Calgary, AB N/A N/A $450.00 6.0%
Montréal, QC $275.00 6.5% $175.00 7.3%
Ottawa, ON $360.00 6.0% $165.00 7.0%
Regina, SK $280.00 7.0% $200.00 7.0%
Vancouver, BC $500.00 5.0% $338.00 6.1%
Victoria, BC $300.00 6.0% $280.00 6.5%
Waterloo Region, ON $170.00 7.8% $179.66 7.5%
CANADA AVERAGES* $314.17 6.4% $255.38 6.8%
* Totals include Halifax market
* Totals include Halifax market
* Straight averages used