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Canadian Industrial

Market OverviewDecember 2016

2016 Toronto Real Estate Forum

Slides assembled by GWL Realty Advisors,

Research Services & Strategy

National Industrial Market Inventory

Data: CBRE 2

185.7131.3 114.6

77.3112.6

761.6

300.4

29.9 12.2

Vancouver Calgary Edmonton Winnipeg WaterlooRegion

Toronto Montreal Ottawa Halifax

Industrial Inventory (MSF) - Q3 2016

Availability Trends Show Several Different Stories

3.8%

9.6%

8.8%

3.4%

8.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Q1

2008

Q2

2008

Q3

2008

Q4

2008

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Availability Rate Trends, Selected Cities

Vancouver* Calgary Edmonton Toronto Montreal

Data: CBRE 3

Data: CBRE 4

A better measure of demand than vacancy, occupied space

continues to grow in some markets; holding steady in others

Vancouver

Calgary

Edmonton

Toronto

Montreal

90

100

110

120

130

140

150

160

170

Q1

2001

Q3

2001

Q1

2002

Q3

2002

Q1

2003

Q3

2003

Q1

2004

Q3

2004

Q1

2005

Q3

2005

Q1

2006

Q3

2006

Q1

2007

Q3

2007

Q1

2008

Q3

2008

Q1

2009

Q3

2009

Q1

2010

Q3

2010

Q1

2011

Q3

2011

Q1

2012

Q3

2012

Q1

2013

Q3

2013

Q1

2014

Q3

2014

Q1

2015

Q3

2015

Q1

2016

Q3

2016

Industrial Real Estate Demand Growth Compared. Indexed. Q1 2001=100

Vancouver Calgary Edmonton Toronto Montreal

Supply, Demand and Under-Construction Trends. Past 6

Quarters

Data: CBRE 5

4.84 4.66 5.46

8.20

2.864.25

0.18 0.65

6.85

0.58

9.62

1.33 0.54

18.70

0.61

Vancouver Calgary Edmonton Toronto Montreal

New Supply & U/C - MSF

New Supply Past 6 Qs Under Construction Demand Growth past 6 Qs

National Industrial Rental rate trends

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Vancouver

Calgary

Edmonton

TorontoMontreal

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00Q

1 20

06

Q3

2006

Q1

2007

Q3

2007

Q1

2008

Q3

2008

Q1

2009

Q3

2009

Q1

2010

Q3

2010

Q1

2011

Q3

2011

Q1

2012

Q3

2012

Q1

2013

Q3

2013

Q1

2014

Q3

2014

Q1

2015

Q3

2015

Q1

2016

Q3

2016

$ P

SF

Net Industrial Rents, selected cities

Data: CBRE

Retail sales are a key driver of industrial demand

5.2%

-0.1%0.7%

2.7% 2.9%

Vancouver Calgary Edmonton Toronto Montreal

Annual Retail sales growth, Year ending Q3 2016. (Estimates from the Conference Board)

$2,036

$8,125

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Canadian internet-based retail sales ($ Millions) Data: Euro-Monitor

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Other drivers of industrial demandManufacturing

-30% -20% -10% 0% 10% 20% 30% 40%

Quebec Non-Durable

Quebec Durable

Ontario Non-Durable

Ontario Durable

Alberta Non-Durable

Alberta Durable

BC Non-Durable

BC Durable

Manufacturing Sales by Province. Percent Change. Statistics Canada.

1 Year 5 Year

0

1,000,000

2,000,000

3,000,000

4,000,000

2011 2012 2013 2014 2015

Container Shipping Trends. Total TEUs handled. 2011-2015

Halifax

Montreal

Vancouver

Container Shipping

16.10%

-1.00% -1.80%

Halifax Montreal Vancouver

Container Shipping Traffic. TEUs handled. Percent Change (2016 YTD vs 2015 YTD)

8

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

Single Tenant Cap Rate Range by City - 2016Q3

2016Q3 Vancouver Calgary Edmonton Winnipeg Toronto Ottawa Montreal Halifax National

Single-Tenant High 5.00% 6.25% 6.75% 7.25% 5.75% 6.50% 7.50% 7.00% 6.50%

Single-Tenant Low 4.25% 5.50% 6.00% 6.50% 5.25% 6.00% 6.75% 6.50% 5.84%

Multi-Tenant High 6.00% 6.75% 7.00% 7.25% 7.25% 6.50% 7.75% 7.75% 7.03%

Multi-Tenant Low 5.00% 6.00% 6.00% 6.50% 6.25% 6.00% 7.00% 7.25% 6.25%

Source: Colliers International

National Industrial Cap Rates

9