The report reviews key market indicators, trends and forecasting for the Kitchener, Waterloo and Cambridge office markets, including vacancy rates, absorption, lease rates, sale prices and recent market transactions.

1. Research &
Forecast Report
WATERLOO REGION
OFFICE
First Quarter 2017

2. 2 Research & Forecast Report | First Quarter 2017 | Waterloo Region / Office | Colliers International
Market Summaries
City of Cambridge...........................................................................................................4
City of Kitchener......................................................................................................5
City of Waterloo.......................................................................................................6
Glossary................................................................................................................................ 7
Table of Contents

3. 3 Research & Forecast Report | First Quarter 2017 | Waterloo Region / Office | Colliers International
Waterloo Region Market Overview
The Waterloo Region office leasing market has seen many
showings, but few leases over the past two quarters.
A number of companies have been actively looking to
fulfill their space requirements, but only a few have made
firm commitments. New or newly renovated buildings
are generating the most activity and attracting tenancies.
There is significant demand for Class A office space;
many companies insist that their primary real estate
requirement is high quality office space.
The impact on the regional market is demand for new
development. New development continues to pursue and
secure tenants for currently un-built projects. The long-
term outcome of this will be an overall increase in the
quality of office space in the market along with a very
competitive market to backfill space that is being left by
exiting companies.
The City of Waterloo continues to attract companies
looking for high quality buildings, big blocks of space, and
favourable demographics. Waterloo has a striking
advantage for large blocks of available space and high
quality buildings over Kitchener and Cambridge.
The City of Kitchener continues to be the busiest node in
the Region with the highest number of transactions,
however tenant demand continues to be for new or newly
updated space. The downtown market’s competitive
advantage over the rest of the Region is its broad
Market Indicators
Relative to prior period
Waterloo Region
Q4 2016
Waterloo Region
Q1 2017 Trend
VACANCY 15.34% 15.66%
NET ABSORPTION -70,283 -28,708
CONSTRUCTION 363,637 227,912
RENTAL RATE* $13.32 $13.54
* Rental rates for current quarter are asking weighted averages for all submarkets.
selection of prices, sizes, types of space, and overall
quality. The tech sector is robust, and with the current
political climate in the United States, Canadian companies
and locations will benefit from the new “push” factors.
The light rail transit tracks are largely completed and
there is a sense of anticipation as the downtown
community awaits the arrival and operation of the new
rail cars.
The Cambridge market continues to show positive signs.
For several quarters, the lack of Class A space available
in the City of Cambridge has been noted, and in span of
this bi-annual report, a large piece of Class A space has
come to market and leased before the existing tenant has
vacated the premises. Demand for high quality office
space along the Highway 401 corridor is present and new
vacancies will continue to lease as they come available.
Investment Market
There were two office investment sales within the last
two quarters: 236-264 Victoria Street North (53,960
square feet mixed-use property consisting of a fitness
centre and a 22,360 square feet fully leased office
building) which sold for $11,000,000. The DREAM
portfolio, consisting of eight buildings, sold in December
2016 for $138,000,000 or $128 per square foot. Due to a
high vacancy rate within the portfolio, the cap rate was
uncharacteristically high.
Regional Historical Performance and Forecast
(600,000)
(500,000)
(400,000)
(300,000)
(200,000)
(100,000)
0
100,000
200,000
300,000
400,000
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
Net Absorption New Supply Vacancy Rate

4. 4 Research & Forecast Report | First Quarter 2017 | Waterloo Region / Office | Colliers International
Notable Lease Transactions
TENANT NAME & ADDRESS TYPE
APPROXIMATE
SIZE (SF)
1.
Undisclosed
73 Water Street North
Headlease 32,240
2.
exactEarth Inc.
260 Holiday Inn Drive
Headlease 8,961
1
Notable Lease Notable Sale New Supply
City of Cambridge
Cambridge’s continuing trend is to lease space and
reduce vacancy. No new office product is currently
coming to the market and the suburban area vacancy is
expected to decline in 2017.
The downtown market has had some recent leasing
success, but the preference of many companies to be
closer to Highway 401 is still more prevalent.
Trends
>> The long-term trend of declining vacancy will be suspended
until the second half of 2017.
>> Currently there are no new office developments in the
planning stage in the City of Cambridge.
>> Cambridge has the highest number of office transactions
done in industrial, retail, mixed use and similar facilities.
Notable Sale Transactions
PURCHASER & ADDRESS PRICE
APPROXIMATE
SIZE (SF)
3. 156 Argyle Street $1,100,000 6,000
Upcoming New Inventory
ADDRESS COMPLETION
APPROXIMATE
SIZE (SF)
Not Applicable
Summary Statistics
Cambridge Office Market 2016 Q4 2017 Q1 Trend
Office Inventory 1,170,909 1,170,909
Net Absorption 19,012 -9,062
Vacancy Rate 14.75% 15.52%
Average Asking Net Rent
(Per Square Foot)
$10.90 $10.85
Average Additional Rent
(Per Square Foot)
$8.60 $8.48
Historical Performance and Forecast
(20,000)
(10,000)
0
10,000
20,000
30,000
40,000
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
Net Absorption New Supply Vacancy Rate
2
3

5. 5 Research & Forecast Report | First Quarter 2017 | Waterloo Region / Office | Colliers International
Notable Lease Transactions
TENANT NAME & ADDRESS TYPE
APPROXIMATE
SIZE (SF)
1.
Atomic Labs
119 King Street West
Sublease 10,940
2.
Overlap Associates
305 King Street West
Headlease 6,439
3.
Laurentian Bank
305 King Street West
Headlease 5,520
Notable Lease Notable Sale New Supply
City of Kitchener
The downtown core has two distinct property types:
traditional towers and brick and beam buildings.
Downtown Kitchener towers are aggressively pursuing
tenants with lower lease rates and increased tenant
incentives. Brick and beam buildings are currently
enjoying low vacancy rates.
Trends
>> Downtown core is enjoying the completion of the LRT tracks.
>> The office towers in Downtown Kitchener are aggressively
pursuing tenant requirements and are having success.
>> The market for unique, urban office environments continues
to be strong.
>> New projects in the downtown core that were previously
in the planning stages are aggressively pursuing tenants to
anchor their developments.
Summary Statistics
Kitchener Office Market 2016 Q4 2017 Q1 Trend
Office Inventory 4,229,401 4,241,220
Net Absorption 22,374 -22,083
Vacancy Rate 11.22% 11.99%
Average Asking Net Rent
(Per Square Foot)
$12.52 $12.92
Average Additional Rent
(Per Square Foot)
$9.23 $9.65 Notable Sale Transactions
ADDRESS PRICE
APPROXIMATE
SIZE (SF)
4. 450 Frederick Street $2,125,000 15,892
Upcoming New Inventory
DEVELOPER & ADDRESS COMPLETION
APPROXIMATE
SIZE (SF)
5.
Allied Properties
195 Joseph Street
2017 26,000
6.
5 Michael Street Inc.
5 Michael Street
2017 30,490
7.
Primus
4273 King Street East
2017 29,106
8.
Schembri Property Management
31 Kingsbury Drive
2017 80,725
9.
Voisin Development
235 The Boardwalk
Q2 2017 18,047
Historical Performance and Forecast
(100,000)
(50,000)
0
50,000
100,000
150,000
200,000
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
Net Absorption New Supply Vacancy Rate
8
5
1
7
9
4
6
2&3

6. 6 Research & Forecast Report | First Quarter 2017 | Waterloo Region / Office | Colliers International
Notable Lease Notable Sale New Supply
City of Waterloo
The City of Waterloo will continue to be dominated by
the former BlackBerry portfolio, now owned by Spear
Street Capital and Waterloo Innovation Network. The
sheer depth and breadth of inventory has opened up
many opportunities for leasing, owning, investing and
development in this market. Modern space continues to
be in high demand.
Trends
>> Suburban Waterloo continues to attract tenants, notably the
buildings on Phillip Street
>> The Uptown Waterloo office market continues to have very
low vacancy and a new building still under construction on
Willis Way is pre-leased.
>> Confidence is high with speculative development taking place.
>> The suburban market seems to be categorically divided into
buildings serviced by new LRT system and those that are not.
Summary Statistics
Waterloo Office Market 2016 Q4 2017 Q1 Trend
Office Inventory 6,672,698 6,672,698
Net Absorption -111,669 2,437
Vacancy Rate 18.05% 18.02%
Average Asking Net Rent
(Per Square Foot)
$13.99 $14.15
Average Additional Rent
(Per Square Foot)
$7.94 $7.68
Historical Performance and Forecast
(600,000)
(500,000)
(400,000)
(300,000)
(200,000)
(100,000)
0
100,000
200,000
300,000
400,000
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
Net Absorption New Supply Vacancy Rate
Notable Lease Transactions
TENANT NAME & ADDRESS TYPE
APPROXIMATE
SIZE (SF)
1.
GHD
455 Phillip Street
Headlease 105,200
2.
Tech firm
85 Willis Way
Headlease 57,365
3.
Axonify
450 Phillip Street
Headlease 19,720
4.
ETAS Embedded Systems
419 Phillip Street
Headlease 10,857
Notable Sale Transactions
PURCHASER & ADDRESS PRICE
APPROXIMATE
SIZE (SF)
5. 735 Bridge Street West $1,675,000 12,184
Upcoming New Inventory
DEVELOPER & ADDRESS COMPLETION
APPROXIMATE
SIZE (SF)
6.
Primus Properties
85 Willis Way
Q3 2017 84,872
7.
2425955 Ontario Inc.
19 Regina Street North
Q4 2017 21,350
8.
Voisin Development
245 The Boardwalk
Q2 2017 18,047
5
3
7
8
1
2&6
4

7. 7 Research & Forecast Report | First Quarter 2017 | Waterloo Region / Office | Colliers International
Glossary
Weighted Average Asking Net Rent
The dollar amount requested by landlords for direct available space, not including subleases, expressed in dollars per
square foot per year.
Availability
The amount of available space and available space to be delivered to the market within six months, divided by the
market’s inventory base including those future deliveries. Available space is space that is available for lease, and may or
may not be vacant.
Net Absorption
The net change in physically occupied space between the current measurement period, and the last measurement
period. It can be either positive or negative.
Vacancy
The amount of vacant space divided by the building inventory base. Vacant space is physically unoccupied, and it may
or may not be available for lease or sublease. This is physical vacancy. It is not determined whether a tenant is paying
rent on the space.

8. Copyright © 2017 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to
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MARKET CONTACT:
Serguei Kaminski
Market Intelligence Coordinator | Waterloo Region
+1 519 904 7007
serguei.kaminski@colliers.com
REGIONAL AUTHORS:
John Lind | Senior Sales Representative
Karl Innanen, CCIM | Managing Director, Broker
Serguei Kaminski | Market Intelligence Coordinator
Jennie Ross | Client Project Coordinator
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