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1 DISCLAIMER This presentation, or any part thereof, may not be reproduced or transmitted in any form by any means, without the express written permission of Altus Group in each instance. The material in this document has been prepared by Altus Group based on data and experience. The information is believed to be accurate at the time of its preparation; however, no responsibility can be taken for errors or omissions. Any advice contained herein is of general nature and should not be relied upon unless confirmed with Altus Group. Altus Group makes no representation about the accuracy, completeness or suitability of the material represented herein for the particular purpose of any reader. Please contact with any questions. 1

2 Market Overview 2018 TREB s COMMERCIAL DEVELOPMENT FORUM PEEL REGION November 7 th, 2018 DATA SOLUTIONS

3 Commercial Overview Agenda Office Market and the Chase for Talent E-Commerce Impact Retail and Industrial Capital Market Overview Summary 2

4 What Keeps Us Up at Night Recession? Consumer Debt and rising interest rates Trade and Tariffs Housing Affordability Lack of Wage Inflation Speed of Change Cyber-Security 3

5 Everyone s Challenge! 4

6 Job Changes A.I. Influence Source: The Economist 5

7 Everyone Wants not just the millennials 6

8 All About Community LIVE: Self-contained mini-cities are on trend 7

9 WORK: Co-Working Space is Everywhere and Anywhere! Altus Group Limited altusgroup.com 8

10 WeLive Not for Everyone 9

11 PLAY: North America is beginning to see a resurgence in retail and entertainment complexes 1. Know your market and deliver or change the market! 2. Broaden the demographic appeal! 3. Re-route circulation to benefit park visitors and adjacent retail tenants 4. Become the new visual and physical hub for the mall Galeries de la Capital s Mega Parc, Quebec City, QC Oxford s Galeries de la Capital s Mega Parc gets a facelift with 18+ attractions and expand F&B offerings Triple Five s American Dream Mall will be North America s largest shopping-dining-entertainment complex. Expected to bring 30 to 40M visitors a year The American Dream Mall in East Rutherford, NJ Source: Plumpton, J. (2018). Energizing your retail environment with compelling entertainment experiences. Toronto, ON. ICSC Canadian Convention. 10

12 PropTech Market 11

13 Getting Crowded 12

14 Is CRE Prepared for What s Next? 13

15 Driverless Automobiles 14

16 Rooms Locked Until Ransomware Paid 15

17 Office Market

18 Office Vacancy Rate Contrast Urban Vs. Suburban VACANCY RATE 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 9.3% 8.6% 6.3% 4.4% 14.9% 14.8% 14.9% GTA Downtown West Airport Corporate Centre % Q Q3 13.3% 13.0% 13.9% 13.4% 12.3% 10.7% Heartland Meadowvale Mississauga City Centre Source: Altus Group 17

19 Occupancy Costs Remains Competitive $50 $45 $45.64 $40 $35 $30 $32.38 $29.76 $30.58 $23.34 $30.66 $33.27 $25 $20 $15 $10 $5 $0 GTA Downtown West Airport Heartland Meadowvale Mississauga City Corporate Centre T&O Centre Net Rent Source: Altus Group 18

20 New Office Construction, Again Contrast SQ. FT. (MILLIONS) % 45.8% 46.3% 85.1% GTA Downtown West Airport Corporate Centre 15.1% Heartland 0.0% 0.0% Meadowvale Mississauga City Centre 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% % AVAILABLE Under Construction % Available Source: Altus Group 19

21 GTA Office Construction Delivery Forecast Will Bring Little Available Supply in ,000 6,000 Available Pre-Leased Sq. Ft. (Thousands) 5,000 4,000 3,000 2,000 1, Source: Altus Group 20

22 Under Construction in Downtown Toronto Stacked Availability Comparison Source: Altus Group 21

23 Ecommerce Revolution

24 Percentage of E-Commerce Sales Increasing Total Retail Sales $700 $600 $500 $400 $300 $200 $100 E-Commerce Retail Sales $70 $60 $50 $40 $30 $20 $10 $ Retail e-commerce Retail Sales $0 Source: Statistics Canada, in $billions 23

25 Sales Per Capita and Retail Sales Change 2015 to 2017 NATIONAL 10.0% Sales Per Capita Change British Columbia 14.7% Sales Per Capita Change 17.7% Retail Sales Change Saskatchewan 2.7% Sales Per Capita Change 5.7% Retail Sales Change Quebec 10.6% Sales Per Capita Change 13.4% Retail Sales Change 3.2% Sales Per Capita Change 11.1% Retail Sales Change Alberta 8.2% Sales Per Capita Change 11.8% Retail Sales Change Manitoba 10.8% Sales Per Capita Change 12.5% Retail Sales Change Nova Scotia 11.5% Sales Per Capita Change 12.9% Retail Sales Change 15.1% Retail Sales Change Ontario 24

26 Retail Vacancy By Major City (Mid-Year 2018) 12% 10% 10.50% 8% 6% 5.90% 6.20% 7.10% 4% 4.30% 3.70% 2% 2.20% 2.10% 0% Vancouver Calgary Edmonton Winnipeg Toronto Ottawa Montreal Halifax Source: Altus InSite, CBRE, Colliers International, Cushman & Wakefield 25

27 National Industrial Demand Driven by Growth in E-Commerce % 4% SQ.FT. (MILLIONS) % 2% 1% VACANCY RATE 0 Q Q Q Q Q Q Q Q Q Q Q Q Q New Construction Q Q Q Q Q Vacancy Rate Q Q Q Q Q Q Q % Source: Altus Group 26

28 Industrial Vacancy Rates Remain Tight in Toronto 8% 2017 Q Q3 7% 6% 5% 5.4% 6.0% 6.8% 6.4% 5.5% 4% 3% 2% 1% 2.4% 2.2% 3.4% 2.9% 1.9% 1.3% 3.6% 3.2% 3.7% 3.2% 2.7% 0% Vancouver Edmonton Calgary Winnipeg Toronto Ottawa Montreal National Source: Altus Group/Johnson Report 27

29 Industrial Rental Rates Continue to Creep Up $ PSF $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 $18.06 $14.21 $14.95 $11.58 $12.49 $16.09 $9.65 $13.77 Vancouver Edmonton Calgary Winnipeg Toronto Ottawa Montreal National Net Rent TMI Source: Altus Group/Johnson Report 28

30 Much Needed New Industrial Supply on the Horizon % % % 60.0% SQ. FT. (MILLIONS) % 40.4% 44.1% 1.0% 8.0% 0.2% 3.8% Vancouver Edmonton Calgary Winnipeg Toronto Ottawa Montreal National 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% % AVAILABLE Under Construction % Available Source: Altus Group/Johnson Report 29

31 Industrial Vacancy Rates 4% 2017 Q Q3 3% 3.2% 3% 2.7% 2% 2% 1% 1.9% 1.3% 1.8% 1.6% 1.1% 1.4% 1.1% 2.1% 1% 0.8% 0.8% 0% GTA West Mississauga Brampton Oakville Burlington Source: Altus Group/Johnson Report 30

32 Industrial Rental Rates Continue to Creep Up $14 $12 $12.50 $12.22 $12.42 $11.79 $12.62 $ $10 $ PSF $8 $6 $4 $2 $0 GTA West Mississauga Brampton Oakville Burlington Net Rent TMI Source: Altus Group/Johnson Report 31

33 Much Needed New Industrial Supply on the Horizon % % 100.0% 100.0% SQ. FT. (MILLIONS) % 36.1% 76.1% 80.0% 60.0% 40.0% % AVAILABLE % 0 0.0% GTA West Mississauga Brampton Oakville Burlington Under Construction % Available 0.0% Source: Altus Group/Johnson Report 32

34 Growing Op Fast: Cannabis Facilities Across Canada SQ. FT. (MILLIONS) Existing Planned/Underway British Columbia Alberta Saskatchewan Ontario Quebec New Brunswick National Includes: green houses, grow rooms, related vegetation, nutrient delivery and post production infrastructure. Source: Select large Public Company's, Management's discussion and analysis reports,altus Group 33

35 Capital Markets

36 Canadian Investment Activity Source: Altus Group 35

37 Supply Issue, not a Demand Issue $30 $25 $26.7 $28.0 $20 $15 $10 $5 $0 $10.6 $11.3 $7.3$6.7 $2.7 $2.3 $1.4 $1.9 $1.6 $1.7 $2.5 $3.2 $0.8 $0.7 GVA GEA GCA GTA GGH GOA GMA National In $ billions 1st Half st Half 2018 Source: Altus Group 36

38 Availability of New Real Estate Equity Very Poor Poor Good Very Good Excellent Source: Investment Trends Survey, Altus Group 37

39 Cap Rates Stable 5.5% 5.3% 4.6% 3.7% 1.4% H Source: Altus Group 38

40 GTA Investment Activity by Sector Source: Altus Group 39

41 Notable ICI Land Transactions Downsview Airport, North York ICI Land June 2018 $825,000,000 $2,261,813 / acre Mixed Use Dixie Road, Mississauga ICI Land August 2018 $52,000,000 $2,097,620 / acre Industrial Hurontario Street, Brampton ICI Land January 2018 $32,000,000 $1,070,234 / acre Commercial Source: Altus Group 40

42 Transit Hubs Driving CRE Investment Activity Pearson Transit Centre Vaughan Metropolitan Centre Hurontario LRT East Harbour Project 41

43 Pearson Transit Hub 42

44 Notable Office Transactions 1243 Islington Ave, Etobicoke Lansing Square, North York Parkway Place, North York Office Office Office September 2018 July 2018 May 2018 $40,431,085 $162,300,000 $256,250,000 $363 / sf $369 / sf $296 / sf Mid-High 5% Cap Not Applicable 6.0% Cap Source: Altus Group 43

45 Notable Retail Transactions Woodside Square, Scarborough Retail March 2018 $97,280,000 $331 / sf 5.1% Cap 282 Monarch Ave, Ajax Retail July 2018 $22,000,000 $224 / sf 5.4% Cap 700 King St W, Toronto Retail May 2018 $15,120,000 $1,952 / sf 3.6% Cap Source: Altus Group 44

46 Notable Industrial Transactions American Business Park, Mississauga Industrial March 2018 $90,600,000 $164 / sf 4.9% Cap 4455 North Service Road, Oakville Industrial June 2018 $28,110,000 $114 / sf 5.8% Cap 350 Parkhurst Square, Brampton Industrial September 2018 $27,550,000 $159 / sf 3.8% Cap Source: Altus Group 45

47 What allows some of us to sleep? USMCA and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Trade and Tariff Discussion Rise of the Entrepreneur - Innovation Adaptation and Innovation Anything that removes uncertainty in the market 46

48 Thank you.

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