2017 Year-End Office Market Report. Metro Vancouver, BC

Transcription

1 217 Year-End Office Market Report Metro Vancouver, BC metro Vancouver vacancy & absorption trends 218F % 2.% 4.% 6.% 8.% 1.% 12.% -4, 92,87 437,64-158,95 Absorption Rate (sf) Vacancy Vacancy Rate 4, 7.3% 856, % 8% 8, 9.7% 9.4% 1% 1,2, Absorption 1,223,656 1,334,64 1,6, 12-month projection based on 1-year average absorption and known net absorption in new inventory Prolific downtown and suburban office leasing activity heightens regional supply constraints Demand for office space in Metro Vancouver continued to climb through 217 with vacancy tumbling to 8% at year-end 217 the lowest regional vacancy recorded since year-end 213 and a decline from the 9.7% registered at yearend 216. Vacancy in all but three submarkets was sub-1% at year-end 217 with two of those three submarkets Surrey and New Westminster forecasted to also drop below 1% in 218. Regional annual absorption of 1.22 million square feet (msf ) in 217 was the second-most annual absorption recorded since 25, surpassed only by the 1.33 msf of annual absorption recorded in Metro Vancouver in 215. All submarkets except one the North Shore registered positive annual absorption in 217 and were led by Vancouver-Broadway, Burnaby, Downtown and Surrey. Much of the leasing activity that manifested in the statistics at year-end 217 in the Vancouver-Broadway, Burnaby, Downtown and Surrey submarkets was actually completed in 216 and early 217 and is what led to the substantial drop in vacancy and increase in absorption as tenants occupied their spaces six to 12 months later. Much of the delay was simply attributable to fixturing periods as deal velocity through 217 remained robust and will likely lead to a similar but slightly smaller decline in vacancy in 218, particularly Downtown, as the number of options grows fewer. With no new Downtown office space scheduled for completion until the end of 219, vacancy is expected to tighten considerably by the end of 218. Vacancy in New Westminster is also expected to drop significantly in 218 as the long vacant Anvil Centre is finally occupied by a wide range of tenants, including Douglas College, which signed the largest suburban lease deal in Metro Vancouver in the back half of 217. Vacancy on the North Shore is also expected to decline as tenants such as COWI occupy the new CentreView development in 218, which was added to inventory as largely vacant at yearend 217. With almost two-thirds of new office development in Vancouver-Broadway set for delivery out to 22 already preleased, vacancy is expected to tighten further. In virtually all Metro Vancouver submarkets, vacancy will remain stable continued on back page DISTRICT METRO VANCOUVER OFFICE VACANCY SUMMARY (YEAR-END 217) HEAD LEASE SUBLEASE VACANCY RATE (%) 12-MONTH Downtown 22,943,145 1,52,24 11,438 1,621, % 2,811 Yaletown 2,47,372 83,92 3,39 86, % 52,735 Vancouver-Broadway 6,583,9 37,169 2,7 39, % 425,59 Burnaby 9,256,79 574, ,199 83,18 9% 323,759 Richmond 4,215,8 298, , , % 37,554 Surrey 2,96,67 293, , % 177,793 New Westminster 1,688, ,418 2,358 28, % 6,678 North Shore 1,45, , , % ,93,84 3,66,5 497,131 4,13,631 8% 1,223,656 Vacancy rate December 31, 217 8% Vacancy rate June 3, % Absorption (demand) Vacancy (supply) Rental Rates Partnership. Performance.

2 Downtown Downtown vacancy temporarily stable due to delivery of vacant space Vacancy trends Downtown vacancy remained stable at 7.1% at year-end 217, almost unchanged from 7.2% a year earlier; however, vacancy rose by 3 bps from 6.8% at mid-year 217 due primarily to the addition of 252, sf of vacant office space at The Exchange in the fourth quarter. While approximately 85, sf of the office space has been preleased in the Exchange, the tenants National Bank, Hyperwallet Systems, Smythe LLP and Sovereign Insurance will not occupy until mid-to-late 218 at the earliest. This addition to inventory the last new office tower of the previous construction cycle, which had delivered several new office buildings in 215/16 pushed class AAA vacancy to 8.2% at recent lease deals - YEAR-END 217 (>1, sf) tenant BUILDING SF GWL Realty Advisors will deliver VAncouver CEntre II in 221. Amazon 42 Dunsmuir Street 147, Spaces 939 Granville Street 67, WeWork Bentall 2 54, Legal Services Society 51 Burrard Street 5, Facebook Waterfront Centre 45, Peoples Trust (renewal/expansion) 888 Dunsmuir Street 35,6 BCBC (renewal) Oceanic Plaza 28,4 Splunk (sublease) 555 Robson Street 27,36 Kasian (renewal) 15 West Georgia Street 26, Oracle Canada (renewal) Bentall 1 24,8 Canada Drives (renewal/expansion) Bentall 2 19,8 Flight Centre 98 Howe Street 18,2 Real Estate Council of BC (renewal/expansion) Pender Place II 17,4 Great-West Life Assurance Co. Bentall 4 16,8 Pretium Resources Bentall 4 16,8 Aurora Cannabis 51 Seymour Street 16,8 Wesbild Holdings Royal Centre 14,7 Miller Titerle + Co. 638 Smithe Street 14,7 iq Office Suites Royal Centre 14,2 xmatters 51 Burrard Street 14,6 Indochino (sublease) 72 Robson Street 14, Kabam 175 West Georgia Street 13,8 Fluor Canada (renewal) 175 West Georgia Street 13,8 Safeway 15 West Pender Street 11, BBA Engineering 15 West Pender Street 11, Preszler Law Firm 175 West Georgia Street 1,8 VanWest College (renewal) 116 Nelson Street 1,8 Innergex Renewable Energy 1185 West Georgia Street 1,5 year-end 217 from 4.7% a year earlier. Class A vacancy continues to tighten, dropping to 6.7% at year-end 217 from 9.8% 12 months ago. Class B vacancy also declined, slipping to 6% from 6.4%. Class C vacancy actually increased to 8.3% from 6.1% in that 12-month period. Strong leasing velocity had placed the Downtown market on a trend towards lower vacancy in 217, but a statistical pause due to the delivery of the mixeduse Exchange building (the office portion of which still remains approximately 63% available) has temporarily delayed that trend from manifesting in the data. Sublease vacancy remained insignificant in the Downtown market in 217, dropping to just 6.3% (11,438 sf ) of total vacancy from 7.8% (128,232 sf ) a year earlier. There were almost no significant sublease deals (greater than 1, sf ) completed Downtown in 217. New and expanding occupants continue to redefine the tenant mix in Downtown Vancouver with continued demand from technology and co-working companies driving much of the activity. A lot of movement from existing tenants in the Vacancy Rate / SAF 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% market also generated activity but had a negligible effect on net absorption, positive or negative. With few vacant and available large blocks of contiguous space Downtown, alternative options for larger tenants are diminishing. absorption trends Annual absorption of 2,811 sf in 217 marked the third straight year of positive annual absorption recorded in the downtown core. The vast majority of absorption in 217 was recorded in class A buildings, which offset negative absorption in class B and C properties. Absorption in class AAA premises was limited by a lack of supply in 217. After peaking in 215 at 1.1 msf (the most annual absorption recorded Downtown since Avison Young started tracking the market in 1996), absorption has remained positive but declined in each subsequent year. This most recent three-year run of positive absorption ( ) totalled 1.69 msf, which was less than both of the previous three-year runs of positive annual absorption the market has experienced since 1996: (2.2 msf ) and (1.71 msf ). Vacancy with Space Availability Factor (SAF) and Absorption 3.4% 5.7% -27,56 3.4% 6.8% -34,835 1,11,41 2.8% 3.8% F Vacancy Absorption SAF* Space Availability Factor 1,2, 1,, 8, 9.3% 2.2% 6, 2.8% 387,99 4, 7.1% 7.2% 222,873 2, 2,811 6% -2, -4, 12-month projection based on 5-year average absorption and known net absorption in new inventory, and 1-year average SAF. Absorption Rate 2 Partnership. Performance

3 More than 2.1 msf scheduled for completion by 221 Downtown The occupancies of WeWork in Bentall 3, Kuehne + Nagel at 9 Howe Street and Sophos at 777 Dunsmuir Street all contributed towards absorption recorded in the second half of 217. Substantial but stabilized positive absorption is expected in 218 as tenants occupy contractually leased but physically vacant premises, including WeWork at Bentall 2, WSP Global at Robson Court, National Bank at the Exchange and the College of Registered Nurses at Granville Square. space availability factor The space availability factor, or SAF, refers to head lease or sublease space that is being marketed but is not physically vacant, and new supply that is nearing completion and available for lease. SAF decreased significantly to 2.2% at year-end 217 from 3.8% 12 months earlier. Combined with vacant space, the amount of space being marketed for lease in the Downtown core is 9.3% (or approximately 2.12 msf ) the lowest overall availability since year-end 213 (9.1% or 1.9 msf ). new construction Downtown is on the cusp of its next development cycle with developers declaring their intentions to deliver new buildings into 221. With no new deliveries until the back half of 219 (much of which is already preleased or sold), the next Downtown development cycle will start in 22 with the delivery of 71, sf in three new Downtown office towers as well as smaller projects in Railtown and Gastown. This cycle will continue in 221 with the delivery of more than 65, sf of lease space in three additional Downtown towers. One of the projects, the Bosa Waterfront Centre, also offers approximately 178, sf of strata office space, which was 1% sold in 217. These six towers will likely come to represent the next development cycle (22-221) and will total approximately 1.36 msf. However, a subsequent development cycle is already taking shape and represents a wave of fewer, but much larger buildings. These three projects are likely to be delivered in 222/223 and will total approximately 1.56 msf of new office space. More than 2.9 msf of new space is anticipated to be delivered by 223. market forecast Upward pressure on rates occurred through 217 as landlords benefited from the downward trend in vacancy and availability. With SAF at its lowest point since 213, non-existent sublease space and minimal near-term inventory scheduled for delivery in the next 18 months, rental rate increases and supply constraints are likely to intensify. Expect a return to imbalanced market fundamentals for the next 12 to 18 months. Vacancy may drop by up to 15 bps with Downtown vacancy likely to land below 6% by year-end. It appears statistically that the market is at the frontend of the next downtown development cycle and numerous developers have or are positioning themselves. Strata office in the Downtown market is likely to play an increased role moving forward due to the success of Bosa Waterfront Centre achieving sales in excess of $2, psf. The Downtown tenant mix continues to be reshaped by new and expanding tenancies with co-working spaces emerging as a new force in the market. Despite the temporary stabilization of vacancy at year-end 217, the market will be supply constrained as it enters the next development cycle in 218. DEVELOPER BUILDING SF PRELEASE SF PRELEASE % COMPLETION Reliance Properties/ Jim Pattison Developments The Offices at Burrard Place, 1281 Hornby Street (mixed use) 99, (office podium) Strata 67% sold Q3 219 Rendition Developments Bench, 353 Railway Street (I-4 zoning) 35, % Q3 219 Bosa Properties/ Arpeg Holdings The Cardero, 1575 West Georgia Street & 62 Cardero Street (mixed use) 44,948 (office) Lease/Strata Lease/Strata Q4 219 Oxford Properties 42 Dunsmuir Street 147, 147, 1% Q4 219 Reliance Properties/ Jim Pattison Developments The Offices at Burrard Place, 128 Burrard Street (mixed use) Annual absorption lowest since ,375 (office tower) % Q1 22 Westbank/Allied REIT 4 West Georgia Street and 725 & 731 Homer Street 353, % Q2 22 Low Tide Properties 155 Water Street 75, (office) % Q3 22 Omicron/ Rendition Developments Maker Exchange, 488 Railway Street (I-4 zoning) 152, % Q3 22 PCI / Greystone 61 West Hastings Street 21, % Q4 22 Uptown Property Group 625 West Hastings Street 12, % Q1 221 GWL Realty Advisors Vancouver Centre II, 753 Seymour Street 368,115 % Q2 221 Bosa Developments Bosa Waterfront Centre, 32 Granville Street 355, (5% for lease) Lease/Strata* % Q2 221 Bentall Kennedy 19 West Pender Street 53, - - Planning Oxford Properties 1133 Melville Street 53, (office) - - Planning QuadReal Property Group The Post on Georgia, 349 West Georgia Street (mixed-use) 5, (office) - - Planning Asia Standard Americas 1468 Robson Street 29,115 (office) - - Planning FDG Properties Water Street 68,576 (office) - - Proposed Eight 55 on Granville, Terrma GP I Inc. 29,785 (office) - - Proposed 855 Granville Street (mixed use) Aquilini Development and Aquilini Centre East, TBD - - Proposed Construction 777 Pat Quinn Way Westbank 72 Beatty Street TBD - - Proposed Cadillac Fairview Waterfront Tower, 555 West Cordova Street TBD - - Proposed *The building contains 5% lease space and 5% strata space. The strata space is 1% sold. No preleasing had been completed by year-end 217. CLASS HEAD LEASE SUBLEASE VACANCY (%) 12-MONTH SAF SAF (%) NET RENTAL RATE RANGE (PSF) GROSS OCCUPANCY COST (PSF) AAA 4,98, ,163 35,289 48, % 64,276 82, % $3 - $5 $5 - $75 A 8,13, ,722 49, , % 316,124 25, % $25 - $45 $43 - $69 B 6,714, ,17 1,886 44,93 6% -114, , % $22 - $35 $38 - $56 C 3,144, ,32 6, ,42 8.3% -65,277 52, % $18 - $28 $31 - $46 Total 22,943,145 1,52,24 11,438 1,621, % 2,811 5, % - - 3

4 downtown development timeline The offices at Burrard Place 1281 Hornby Street The Cardero,1575 w. georgia street & 62 cardero street The Offices at Burrard Place 42 Dunsmuir Street 4 West Georgia Street 128 Burrard Street Q3 219 Q4 219 Q4 219 q1 22 Q2 22 Developer Reliance Properties/ Jim Pattison Developments Bosa Properties/ Arpeg Holdings Oxford Properties Reliance Properties/ Jim Pattison Developments Westbank/Allied REIT Storeys 7-storey podium (3 floors) 3 floors in mixed-use building office sf 99, (strata) 45,346 (lease/strata) 147, 146,375 (office tower) 353, tenants Sold (phase 1-66, sf) 3, sf - Arpeg Holdings 147, sf - Amazon No tenants at this time No tenants at this time Not released (phase 2-33, sf) Occupancy 67% 7% 1% % % proposed downtown/railtown developments Maker exchange, 488 Railway Street omicron & Rendition Developments Storeys / Office area 7 / 152, sf bench, 353 railway Street rendition developments Storeys / Office area 6 / 35, Water Street FDG Properties Storeys / Office area 7 / 68,576 sf 19 West Pender Street Bentall Kennedy Storeys / Office area 31 / 53, sf Aquilini Centre East, 777 Pat Quinn way Aquilini Development & construction Floors / Office area TBD Developers of this 152,- sf, seven-storey mixed-use building featuring creative manufacturing uses and office uses applied for a development permit in September 217. The City s director of planning approved the project s development permit application on December 17, 217, subject to a number of conditions. The permit will be issued once all the conditions have been satisfied. Project marketing materials indicate building construction is scheduled to be complete by Q3 22. The developer had originally applied for a development permit in 215 for this six-storey, 35,-sf mixeduse building, which features creative manufacturing uses and office uses under the site s I-4 zoning. The project s development permit has been approved and construction is anticipated to break ground in the first half of 218 and complete in the second half of 219. A seven-storey, mixed-use commercial/residential building has been proposed on this site that would retain three existing heritage buildings. The development permit application was conditional so it may be permitted, but it requires the decision of the director of planning. The building features 68,576 sf of office space on floors 2, 3 and 4. As of December 31, 217, the development permit application with the City was no longer online. Further details were unavailable. UDP supported the design in February 214. A public hearing related to its rezoning application was set for February 24, 215, and the application was approved by the City. As of December 31, 217, the developer was continuing to work through development permit application requirements. It is anticipated that construction could potentially break ground at mid-219 and complete in the back half of 222. This proposed mixed-use residential/office tower will be the third and final building to form the Aquilini Centre development anchored by Rogers Arena. This building was originally scheduled for completion by the end of 218, but the timing of construction has been delayed due to the forthcoming removal of the Georgia and Dunsmuir viaducts. The east tower, as proposed, was to feature 69,3 sf of office space on floors 5 through 13 with residential units on the upper floors. 4 Partnership. Performance

5 155 Water Street 61 West Hastings Street 625 West Hastings Street Vancouver Centre II, 753 Seymour Street bosa waterfront centre, 32 granville street Q3 22 Q4 22 Q1 221 Q2 221 Q2 221 Developer Low Tide Properties PCI /Greystone Uptown Property Group GWL Realty Advisors Bosa Developments Storeys office sf 75, 21, 12, 368, , tenants Approx. 5% of the building has No tenants at this time No tenants at this time No tenants at this time No tenants at this time been sold as strata office space; no tenants at this time Occupancy % % % % % 1133 Melville Street Oxford Properties Storeys / Office area 34 / 53, SF The Post on Georgia, 349 West Georgia Street QuadReal Property Group Storeys / Office area 19 / 41, sf; Podium: 9, sf (3 floors) Waterfront Tower, 555 West Cordova Street Cadillac Fairview Storeys / Office area 25 / TBD 1468 robson Street Asia Standard americas floors / Office area 3 / 29,115 sf Eight 55 on Granville, 855 Granville Street Terrma gp I inc. Storeys / Office area 3 / 29,78 sf Rezoning application was filed on July 8, 215. The UDP did not support the initial building design as proposed, but subsequently supported a new design at a May 31, 217 UDP review meeting. New renderings were released in June 217. Oxford Properties re-submitted a revised rezoning application. Open house was held in November 217. As of December 31, 217, the City had not yet approved the application. Depending on approvals, construction could complete by 222. A public open house was held in 216 as part of the rezoning application process, which was originally submitted to the City in June 216. A proposed19-storey office tower includes 41, sf of office space and 9, sf in the podium. A revised rezoning application was filed in May 217 that reduced overall density & building massing and slimmed tower design. As of December 31, 217, the developer is working through the development permit application process. The Urban Design Panel (UDP) did not support the original building design in 215. The architect subsequently presented nine alternative concepts in a UDP workshop in June 215, which received a warmer reception. A public engagement session was held in December 215. As of December 31, 217, the developer remains in process with the City and while the design has changed somewhat, the scale of the building remains similar at 25 storeys. A revised development permit application was filed in February 217. The new project design was supported by the UDP in March 217 and appeared before the development board in June 217. While the development permit has not been issued as the applicant continues to work through the conditions of approval, demolition of the former hotel on site has commenced with project construction proposed to potentially start in early 219. A development permit application was filed to provide interior & exterior alterations and a change of use to include 27,11 sf of retail in the basement/ ground floor and 29,78 sf of office space on the 2nd and 3rd floors. The development permit application was approved by the city with conditions on January 27, 217. A building permit was applied for in July 217. As of December 31, 217, exterior renovations had not yet begun nor had an update been provided. 5

6 Vancouver-Broadway Vacancy plunges as new developments occupied Vacancy Rate 12.% 1.% 8.% 6.% 4.% 2.%.% 5.1% -16,768 Vacancy trends Overall vacancy in Vancouver-Broadway dropped to 5.9% at year-end 217, down from 1.7% a year earlier as a number of major tenancies took occupancy in primarily class A premises across the city. Major tenancies included BC Safety Authority and Associated Engineering occupying the Renfrew Centre as well as Intel and Townline Homes moving into Marine Gateway two new developments that were largely vacant for more than a year after they were completed. In the first full year of statistics for the newly designated Vancouver-Broadway core market, vacancy rose slightly to 3.4% at year-end 217 from 1.7% 12 months earlier. Vacancy in the Vancouver-Broadway periphery market plummeted to 9.2% at year-end 217 from 21.2% at year-end 216 due to the occupancies listed above and others. Vacancy is likely to tighten further in 218 with significant lease deals completed in 217 at 1333 West Broadway by the Provincial Health Services Authority and at 565 Great Northern Way, which is scheduled for completion in 218 and counts Finning, Blackbird Interactive, Samsung and Spaces among its new tenants. Sublease space is virtually non-existent in the overall Vancouver-Broadway market. absorption trends 41,466 Vacancy and Absorption (overall) 4.6% 4.5% - -38, % 15, % 425,59 Annual absorption of 425,59 sf in 217 was the most absorption registered in the market since Avison Young started tracking the market in New developments, particularly in the periphery, which had been delivered vacant in 215/16, were subsequently leased up and occupied in 217. New developments such as Renfrew Centre, Marine Gateway and phase two of Containers along with the Fifth have all been primarily occupied and resulted in absorption overwhelmingly occurring (94%) in class A premises. While 99,515 sf of annual absorption was noted in the Vancouver-Broadway core, more than 325, sf was registered in the periphery. new construction 6.6% 118, F Vacancy Absorption 45, 4, 35, 3, 25, 2, 15, 1, 5, -5, -1, 12-month projection based on 1-year average absorption and known net absorption in new inventory Absorption Rate Construction of new office space in the Vancouver-Broadway market remains very active with much of the new supply both strata and lease scheduled for delivery in 218/19 already significantly preleased/sold. The ongoing transformation of the former industrial node of Mount Pleasant into a tech-focused office hub continues unimpeded but developers attention is increasingly turning towards Great Northern Way, the False Creek Flats and the northern end of the Cambie Street corridor. However, outside of these central submarkets, little new development is being contemplated in East or South Vancouver with the exception of QuadReal Property Group s proposed 1-msf expansion of Broadway Tech Centre and Porte Commercial s much smaller The George development Annual absorption of 425,59 sf most recorded since 1996 at 1157 Parker Street. Two new large office developments were proposed in late 217: Cressey Development s 157,-sf, 1-storey office building at 425 West 6th Avenue on the current site of Craftsman Collision; and Rize Alliance s 13-storey, 29,-sf office tower at 1296 Station Street at Terminal Avenue, next to the Pacific Central train station. Both are scheduled to break ground in late 218. market forecast Upward pressure on rental rates strengthened through 217 as vacancy continued to tighten and availabilities on a head lease or a sublease basis remained few and far between, particularly for large blocks of contiguous space in the core Vancouver-Broadway market. That upward pressure on rental rates is anticipated to remain in 218 as vacancy remains tight with some potential relief coming in the small-to-mid-sized pockets of vacant space in the new developments (which are primarily preleased/sold) set for delivery in 218. Several new projects are working through the permitting process with the City of Vancouver and will continue to roll out through 218 and beyond, but they are anticipated to prelease/sell out quickly as availabilities are anticipated to remain limited and vacancy low. recent lease deals - YEAR-END 217 tenant BUILDING SF Provincial Health Services Authority 1333 West Broadway 83,54 Spaces 565 Great Northern Way 38,77 Thunderbird Entertainment West 7th Avenue 35,24 Finning International 565 Great Northern Way 28,69 Blackbird Interactive 565 Great Northern Way 28,69 City of Vancouver 555 & 575 West 8th Avenue 28, Umedia 24 West 6th Avenue 21,23 Samsung 565 Great Northern Way 2,2 GFC Enterprises (renewal) 1367 West Broadway 11,7 Inception Pharma 887 Great Northern Way 11,4 Engine Digital 34 West 8th Avenue 1,13 Jumpstart Games 112 East 6th Avenue 9,13 Eastside Games 555 West 12th Avenue 8,1 Method Studios 12 West 3rd Avenue 7,68 Arius Tech 33 West 8th Avenue 7, Brandlive 12 West 3rd Avenue 5,45 6 Partnership. Performance

7 New construction primarily focused in Mount Pleasant Vancouver-broadway Mount Pleasant Employment Area (I-1 Zoning) While office vacancy in Mount Pleasant rose slightly at year-end 217 from six months earlier, the rise was due to an increase in rentable area; otherwise, vacancy would have tightened. Much of the current leasing activity in the area is within new developments, which typically have little impact on overall vacancy in the area. The area remained in demand from office tenants in 217 particularly tech firms but availabilities remained scarce. The area continues to transition to an office precinct, away from the neighbourhood s light industrial heritage. Many vacant buildings (or soon to be vacant) have been earmarked for redevelopment as either strata office or flex office lease projects. There are very limited sublease options in the submarket with the exception of 149 West 7th Avenue. The remaining industrial space in Mount Pleasant continues to grow more challenging to lease as property taxes have increased significantly in the last three years, which has spiked operating costs in lease agreements and made it difficult for industrial tenants to justify remaining in Mount Pleasant and for landlords and property owners to forego the returns possible from renovations and/or redevelopment. Office rental rates are expected to continue to rise in existing buildings and new developments as vacancy is predicted to remain very tight. Demand is forecast to remain strong with several more developments in the pipeline. Vacancy will remain tight in 218 and beyond as it is expected that most new builds will be delivered fully leased/sold. DEVELOPER BUILDING SF PRELEASE % COMPLETION PC Urban Properties The Lightworks Building, 22 East 5th Avenue 46,74 (office/light industrial) 1% Q1 218 Rize Alliance The Independent at Main, 275 East 1th Avenue 17, (office) % Q1 218 BlueSky Properties Broadway Commercial, 988 West Broadway 94,12 1% Q2 218 Rendition Developments / MDC Property Services 24 West 6th Avenue 28,43 (office/light industrial) 76% Q2 218 PCI Group /Low Tide Properties 565 Great Northern Way 161, 73% Q2 218 Chard Development 34 W7, 34 West 7th Avenue 54,347 (office/light industrial) Strata: 87.5% sold Q3 218 Porte Commercial The George, 1157 Parker Street 34,38 (office/light industrial) % Q4 218 PC Urban Properties Nickel, 285 West 5th Avenue 71, (office/light industrial) 65% Q1 219 Rendition Developments The Beltline Off Broadway, 224 West 8th Avenue 32,898 (office/light industrial Strata Q3 219 Champion Development Group 151 West 5th Avenue 54,77 (office/light industrial) % Q1 22 Cressey Development 425 West 6th Avenue 156,983 (office) % Planning QuadReal Property Group Broadway Tech Centre, 33 East Broadway (five buildings) 962,3 % Planning Onni Group Voxel, 399 East 1st Avenue 86,531 % Planning Reliance Properties/ Porte Communities 339 East 1st Avenue 133,594 % Planning Rize Alliance 1296 Station Street 29, % Planning CRS Group of Companies 2395 Cambie Street 39,27 (office) % Planning Pacific Crown Management Ltd. 51 West Broadway 43,425 (office) % Planning Wesgroup Properties 11 West 5th Avenue 45,29 (office/light industrial) % Planning PCI Group / Low Tide Properties 91 Great Northern Way 4, % Proposed Vanlux Development West 8th Avenue 61,65 (office) % Proposed Medali Developments (West 6th) 35 & 43 West 6th Avenue 52,713 (office/light industrial) % Proposed Vivagrand Development Corp Cambie Street TBD % Proposed new projects by 22 PERIPHERY CORE CLASS CLASS 1 HEAD LEASE HEAD LEASE SUBLEASE SUBLEASE New SF by ,248 sf VACANCY (%) VACANCY (%) 12-MONTH 12- MONTH Currently preleased 64% NET RENTAL RATE RANGE (PSF) NET RENTAL RATE RANGE (PSF) GROSS OCCUPANCY COST (PSF) A 1,996,863 27,13 1,35 28, % 15,54 $25 - $32 $42 - $5 B 1,244,433 35,862 35, % 12,416 $18 - $25 $31 - $41 C 47,1 56,852 6,342 63, % -18,441 $15 - $19 $28 - $33 Total 3,711,36 119,817 7, , % 99, GROSS OCCUPANCY COST (PSF) A 2,181, ,364 13, , % 295,57 $22 - $32 $4 - $5 B 625,797 36,725 36, % 19,85 $18 - $23 $31- $38 C 65,498 1,263 1, % 11,42 $15 - $19 $28 - $33 Total 2,872,594 25,352 13, , % 325, OVERALL CLASS HEAD LEASE VACANCY SUBLEASE VACANCY VACANCY (%) 12-MONTH NET RENTAL RATE RANGE (PSF) GROSS OCCUPANCY COST (PSF) A 4,178, ,467 14, , % 4,597 $22 - $32 $39 - $5 B 1,87,23 72,587 72, % 31,51 $18 - $23 $31 - $38 C 535,58 58,115 6,342 64, % -7,39 $15 - $19 $2 8 - $33 Total 6,583,9 37,169 2,7 39, % 425,

8 Yaletown Vacancy tight as annual absorption strongest since 21 Vacancy Rate / SAF 14.% 12.% 1.% Vacancy trends Vacancy dropped to 4.2% at year-end 217 from 6.8% a year earlier. Vacancy tightened through 217 due to a significant increase in demand from tenants seeking small-to-mid-sized heritage brick-and-beam creative space close to the core. This demand resulted in the occupation of most of the large blocks of space (by Yaletown standards) that came available in 215/16 when some volatility roiled the typically stable submarket. Some tenants had relocated to up-andcoming office nodes such as Mount Pleasant with its gritty light industrial vibe or, in some cases, consolidated in the new office developments that were being delivered Downtown starting in 215. However, Yaletown s allure was quickly re-established by the end of 216 and deal velocity picked up throughout the past year and desirable spaces have leased up quickly. absorption trends Annual absorption surged to 52,735 sf in 217, a significant reversal of fortune from the negative annual absorption of -41,953 sf registered in 216 and the most annual absorption recorded in Yaletown since 21. The second-half Class 8.% 6.% 4.% 2.%.% 19,732 3% 4% Vacancy and Absorption F Vacancy 23, % 3.8% 3.1% 4.1% -2,91 4.9% -41,953.3% 52,735 Absorption SAF* Space Availability Factor occupancies of Stellar Creative Labs, Tuangru and Grosvenor all contributed to the surge. The relocation of McElhanney to class A space at 858 Beatty Street from class C office space at 78 Beatty Street had an outsized impact on absorption and vacancy and resulted in the one large block of vacant space to come available in this small submarket at year-end 217. space availability factor The space availability factor (SAF) refers to head lease and/or sublease space that is being marketed, but is not physically vacant. The SAF plummeted to a record low of.3% (5,5 sf ) at year-end 217 from 4.9% (98,839 sf ) a year earlier. Hence, the amount of available space currently being marketed (occupied and vacant) in Yaletown is 4.5%, or approximately 58, sf the lowest since mid-year 28. new construction -9,17 4.2% 4.7% 12-month projection based on 1-year average absorption and 1-year average SAF Inventory Head Lease Vacancy (sf) 6.8% 6, 5, 4, 3, 2, 1, -1, -2, -3, -4, -5, Boffo Developments mixed-use project, The Smithe, includes 31, sf of office space in a three-floor podium. Completion is set for the end of 22. Sublease Vacancy (sf) Total Vacancy (sf) 2.8% Total Vacancy (%) Absorption Rate (sf) 12-month Absorption (sf) Visier Workforce Analytics leased 22, sf at 111 Hamilton Street. recent lease deals - YEAR-END 217 tenant BUILDING SF Westside Preparatory School 873 Beatty Street 3, Visier Workforce Analytics 111 Hamilton Street 22, Nomadic Films 78 Beatty Street 19,88 Segment 15 Homer Street 5,27 Tuangru 1122 Mainland Street 4,78 SAF (sf) SAF (%) market forecast Rental rates rose significantly in 217 due to an uptick in demand for quality Yaletown office space and a very limited supply of such office space in the popular submarket. This upward pressure on rates is expected to continue in 218 as landlords increasingly dictate terms as demand continues to outpace supply and vacancy tightens further, particularly in class A and B premises. Slight relief in terms of vacancy may come later in 218 when Relic Entertainment, which currently occupies approximately 3, sf at 14 Hamilton Street, is scheduled to relocate to its new office in Mount Pleasant. Limited quality options will be available in 218, and when they do come to market, will lease quickly at likely higher rates than deals completed in 217. DEVELOPER BUILDING SF PRELEASE SF PRELEASE % COMPLETION Boffo Developments The Smithe, 885 Cambie Street 31, % Q3 22 Net Rental Rate (psf) Gross Occupancy Cost (psf) A 576,938 3,39 3,39.5% 16,33.% $32 - $4 $49- $57 B 998,357 35,98 35,98 3.6% 49,793 5,5.6% $26 - $31 $43 - $48 C 472,77 47,112 47,112 1% -13,388.% $21 - $25 $35 - $42 Total 2,47,372 83,92 3,39 86, % 52,735 5,5.3% Partnership. Performance

9 Most positive annual absorption recorded since 2 Burnaby Vacancy trends Vacancy declined to 9% at year-end 217 from 12.5% a year earlier and is at its lowest point since mid-year 213. Sublease vacancy at year-end 217 remained elevated at 255,199 sf the second most square footage since Avison Young started tracking the market in 1997 after peaking at mid-year 217. FortisBC removed the space it was offering for sublease at 437 Still Creek Drive. Telus sublease space at 3777 Kingsway and HSBC s sublease space at 3383 Gilmore Way were the dominant sources of sublease availability in Burnaby in 217. However, DA Townley s decision to vacate and sublease its former space at 44 Dominion Street added to that total along with Cymax offering to sublease 1, sf at 417 Still Creek Drive and Worley Parsons deciding to sublease 12, sf at 4321 Still Creek Drive. While the return of swing space used by Pacific Blue Cross at 461 Canada Way and Teradici s downsizing at 4621 Canada Way added some availabilities, there remain very limited options for mid-to-large-sized tenancies. There were very few significant lease deals in the back half of 217, but a number of smaller infill availabilities were leased. Vacancy and Absorption 35, 323, % 3, 246,115 25, 12.% 12.6% 12.9% 12.5% 2, 1.% 15, 9.6% 9% 8.% 99,358 1, 34,39 8.4% 6.% 5, 32,637 4.% -5, 2.% -1, -114,783.% -15, F 12-month projection based on 1-year average absorption and known net absorption in new inventory Vacancy Rate CLASS HEAD LEASE absorption trends Absorption Rate Annual absorption of 323,759 sf in 217 marked the most annual absorption recorded in Burnaby since 2 and followed positive annual absorption of 246,115 sf in 216. A number of significant occupancies, including Raymond James and Kinder Morgan at 3777 Kingsway, Capcom at Solo District, Flextronics at 4333 Still Creek and Metro Vancouver at Metrotower III, contributed to the absorption. The expansions of Clio at 4611 Canada Way and Binnie Consulting at 4946 Canada Way also contributed to the absorption. Few tenants are vacating the Burnaby market, while many are renewing and/or expanding. A lack of availabilities and rising rental rates in the Downtown and Vancouver-Broadway markets has benefited Burnaby s office market. SUBLEASE VACANCY (%) Vacancy slips to lowest point since 213 New Construction Anthem Properties mixed-use Station Square will feature 52,8 sf of office space on two floors in the project s podium. Two floors have been sold in Cressey Developments eight-storey, 74,16-sf strata office project, Kings Crossing. Onni Group s mixed-use project at 3355 North Road, which includes a 14-storey office tower featuring 161,2 sf of office space as well as retail on the ground floor, is set to break ground by mid-219. Market Forecast Rental rates remained stable in 217 as landlords maintained high face rates while offering larger inducements that have now been reduced in the face of tightening vacancy. Sublease vacancy will likely serve as the primary source of lease availabilities in next 12-month period. Upward pressure on rental rates in 218 is likely as vacancy decreases further and a constrained supply of new construction being delivered offers little relief in the short- to-mid term. recent lease deals - YEAR-END 217 tenant BUILDING SF Arista Networks Canada 91 Glenlyon Parkway 61,8 Themis Solutions (renewal/expansion) 4611 Canada Way 45,53 LMI Technologies (expansion) 92 Glenlyon Parkway 34,3 Teradici (renewal) 461 Canada Way 24,35 Flextronics Global Services Canada Inc Still Creek Drive 9,84 CH Robinson Worldwide (renewal) 4445 Lougheed Highway 6,746 DEVELOPER BUILDING SF PRELEASE SF PRELEASE % COMPLETION Anthem Properties Station Square, 66 Silver Avenue 52,8 (office) % Q3 218 Cressey Development Group Kings Crossing, 735 Edmonds Street 74,16 (office) Strata 3% sold Q2 219 Onni Group 3355 North Road 161,2 (office) % Q2 222 Kingswood Capital Discovery Place Business Park, 3555 Gilmore Way 5, % Awaiting prelease Belford Properties The Centre at Sun Towers, 4458 Beresford Street 7, (office) Strata NA Under construction Shape Properties The Amazing Brentwood (redevelopment) 5, (office) % Proposed Onni Group Gilmore Place, Gilmore Avenue & Lougheed Highway 4, (office - second phase) % Proposed 12-MONTH NET RENTAL RATE RANGE (PSF) GROSS OCCUPANCY COST (PSF) A 6,36,81 366, , , % 319,138 $18 - $28 $34 - $44 B 2,81, ,131 26,913 17,44 8.2% -12,652 $16 - $18 $28 - $3 C 869,38 65,17 65,17 7.5% 17,273 $15 - $18 $26 - $29 Total 9,256,79 574, ,199 83,18 9% 323,

10 Richmond Vacancy sinks below 1% for first time since 22 Vacancy Rate Vacancy trends Vacancy slipped to 9.8% at year-end 217 from 1.7% a year earlier and is at its lowest point since mid-year 22. The main reason for the decrease in vacancy was due to a number of small deals that were completed in the back half of 217 along with some larger deals that closed in the first half of 217, which resulted in space being occupied towards the end of 217. Despite the decline in vacancy, large blocks of space remain available at Airport Executive Park and Crestwood Corporate Centre. The departure of Tetra Tech and Procurify from Airport Executive Park has created opportunities for other tenants. absorption trends Annual absorption of 37,554 sf in 217 marked the seventh consecutive year of positive annual absorption in Richmond s office market. The majority of the absorption recorded in 217 was from tenants who relocated within the market in the second half of the year. While many smaller class A and B deals contributed to absorption in 217, the expansion of Vancouver Coastal Health in 7671 Alderbridge Way was also largely responsible. Expansion by tenants in the market Class 18.% 16.% 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% 167, % % 7,545 Vacancy and Absorption 12-month projection based on 1-year average absorption and known net absorption in new inventory Inventory 186,883 12% Vacancy 1.7% 54,82 9.8% Absorption was more responsible for the decrease in vacancy and positive absorption than new tenants to the market. new construction 8.8% F Head Lease Vacancy (sf) 37,554 41,86 2, 15, 1, 5, -5, The first new office space for lease delivered in Richmond since 28 is scheduled for completion by the end of 22. Yuanheng Holdings three phase mixed-use ViewStar development will include a 12-storey, 25,141-sf office tower in its second phase. ifortune Homes is awaiting the issuance of its development permit for its mixed-use project, the ifortune Centre, which includes an 11-storey, 15,42-sf office tower at 686 No. 3 Road scheduled for completion by the end of 22. New projects from Bene (No. 3) Road Development, New Sublease Vacancy (sf) Total Vacancy (sf) Absorption (sf) Positive annual absorption recorded 7 years in a row Total Vacancy (%) Continental Properties Inc. and Beckwith Development are expected to add another 24, sf of office space in the coming years. market forecast Lease rates remained relatively stable with small increases noted in buildings located near No. 3 Road and in the large office business parks as deal volume was minimal in 217. As vacancy tightens, lease rates will continue to rise albeit slowly. Rental rates should remain largely unchanged in 218, making Richmond one of the most cost-effective markets in Metro Vancouver. Large blocks remain available, which allows large tenants in the market to expand as well as accommodate new large tenants to the market. The forecasted decline in vacancy in 218 may be tempered somewhat due to a limited number of known future notable deals. recent lease deals - YEAR-END 217 tenant BUILDING SF Telecon (expansion) 6651 Fraserwood Place 41,87 Bootlegger 6651 Fraserwood Place 14,12 Patterson Dental Canada (expansion) 6651 Fraserwood Place 14, Transoft Solutions 137 International Place 12,98 Exchequer Management Ltd. (renewal) 5811 Cooney Road 12,93 Loblaws 6651 Fraserwood Place 11,79 Mainstream Broadcasting Crestwood Corporate 5 7,61 Freelife Solutions Ltd Vanier Place 7,75 DEVELOPER BUILDING SF PRELEASE SF PRELEASE % COMPLETION Yuanheng Holdings ViewStar, No. 3 Road, 8151 Capstan Way & 851/81 River Road 25,141 (office - second phase) 12-Month Absorption (sf) % Q4 22 ifortune Homes Inc. ifortune Centre, 686 No. 3 Road 15,42 (office) % Q4 22 Beckwith Development New Continental Properties 9451/9491/9511/9531/9551 Bridgeport Road and 944/946/948 Beckwith Road 832, 834 & 844 Bridgeport Way and 8311 & 8351 Sea Island Way 128,6 (office) % Proposed 5,527 % Proposed Bene (No. 3) Development Ltd. 47 No. 3 Road 63,479 (office) % Proposed MYIE Development International Trade Centre at Versante, 8477 Bridgeport Road 1, (office) Strata NA Average Net Rental Rate (psf) Under construction Vanprop Investments Lansdowne Centre (redevelopment) TBD % Proposed Gross Occupancy Cost (psf) A 2,895, ,63 94, 336, % 16,822 $17 - $18 $ $3 B 972,346 49,681 2,397 7,78 7.2% -3,37 $ $16 $ $28.5 C 348,198 6,643 6, % 24,12 $ $14 $ $22.5 Total 4,215,8 298, , , % 37, Partnership. Performance

11 Vacancy slips to lowest level since 212 surrey Vacancy Rate Vacancy trends Vacancy in Surrey s office market declined rapidly to 1.1% at year-end 217 from 15% a year earlier and finished the year at its lowest level since mid-212. The significant decline came in part from the delivery and 1% occupancy of Gateway Place, which was added to inventory in the second quarter of 217 and wholly occupied by year-end. BC s Ministry of Children and Family Development occupied 18,5 sf in the Northmark Building at 918 King George Boulevard, while Métis Family Services moved into 15, sf in Surrey Central Business Park. Both occupancies served to push vacancy lower. Sublease vacancy is non-existent in all classes, which has led tenants to secure head lease space at full cost. While deal velocity slowed in the back half of the year compared with the first six months, leasing activity remained steady. The ongoing tightening of vacancy, which has been occurring since hitting a record-high 22.1% in 214, has led some landlords to become more bullish on rates. Development activity is expected to resume in 218 with at least three new projects breaking ground. CLASS 25.% 2.% 15.% 1.% 5.%.% 17.3% -137, % Vacancy and Absorption 17.5% Vacancy Absorption 12-month projection based on 1-year average absorption and known net absorption in new inventory 15% 1.1% 8.5% F 14,475 36,751 HEAD LEASE VACANCY 237,51 177,793 absorption trends 45,842 3, 25, 2, 15, 1, 5, -5, -1, -15, -2, Annual absorption of 177,793 sf in 217 marked the second-most annual absorption recorded in Surrey since 25 and follows on the heels of record annual absorption of 237,51 sf in 216. Several significant occupancies in 217, including ICBC, McQuarrie Hunter, Métis Family Services and BC s Ministry of Children and Family Development, were largely responsible for the absorption. TransLink s decision to reoccupy space in early 217 that it had previously offered for sublease also boosted annual absorption. While a number of small-to-mid-sized vacancies did occur in all property classes in 217, particularly in class C buildings, they were offset by the larger class A occupancies. Office space closer to SkyTrain stations tended to attract more leasing activity. SUBLEASE VACANCY Absorption (sf) VACANCY (%) new construction Lark Group will put the finishing touches on CityCentre 2 in the first quarter of 218 and prepare for the launch of CityCentre 3, a 1-storey, 115,-sf strata office/retail building scheduled for completion in the back half of 22. PCI Group will launch the second phase of King George HUB at the Stations in 218, which will include 16, sf of office space and is contemplated for completion in early 221. Landview Construction s long-awaited GTC Professional Building is anticipated to break ground in the first half of 218 and complete by year-end 219. market forecast Upwards pressure on rental rates is anticipated in 218 as vacancy continues to tighten. Absorption is expected to remain positive and subsequently drive vacancy moderately lower during the next 12 months. Deal activity is forecast to remain stable and tightening vacancy in the market will likely lead landlords to start to push rental rates upwards. With no new lease supply until the end of 219, vacancy will likely decline and rents will rise slightly in 218. recent lease deals - YEAR-END 217 tenant BUILDING SF TransLink (renewal) Avenue 55,825 BC Ministry of Children & Family Development 918 King George Boulevard 18,5 Douglas College Avenue 14,2 Urban Systems King George HUB at the Stations 6, Legal Services Society Newton Landmark II 5, DEVELOPER BUILDING SF PRELEASE SF PRELEASE % COMPLETION Lark Group City Centre 2, A Street 172, (office) Strata 85% sold Q1 218 Landview Construction GTC Professional Building, rd Street 1,55 % Q4 219 Lark Group CityCentre 3, th Avenue 18,5 (office) Strata % sold Q3 22 PCI Group Avondale Development / Monark Group Blackwood Partners Second most annual absorption recorded since 25 King George HUB at the Stations (phase 2), 99 King George Boulevard (office/retail) The Professional South Point, nd Street Central City Tower 2, 1 Avenue & King George Boulevard 16, (office) % Q ,78 32,3 45% TBD 5, % Proposed 12-MONTH NET RENTAL RATE RANGE (PSF) GROSS OCCUPANCY COST (PSF) A 2,74, ,16 175,16 8.4% 138,579 $22 - $32 $36 - $45 B 626,1 81,358 81,358 13% 36,37 $15 - $2 $28 - $31 C 25,629 37,11 37,11 18% 2,97 $11 - $13 $25 - $27 Total 2,96,67 293, , % 177,

12 new Westminster Vacancy finally set to decline significantly in 218 Vacancy Rate 2.% 18.% 16.% 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% Vacancy and Absorption 178, % 17% 16.6% 15% 1.3% 9.3% 29,444 27,631 2, 15, 1, 5, 6, ,478-33,772-5, F Vacancy Absorption 12-month projection based on 1-year average absorption and known net absorption in new inventory Absorption Rate (sf) More than 9% of the Anvil Centre has been leased and will be occupied in 218. market forecast With vacancy expected to tighten significantly in 218, rental rates are anticipated to increase slightly by year s end. Absorption in 218 will be primarily driven by multiple tenants moving into the Anvil Centre, but this positive absorption will be offset somewhat by the departure of the BC Safety Authority from the market in the first half of the year. There is a renewed interest in New Westminster s office market, which has recorded limited leasing activity in the past 24 months, as tightening vacancy in Burnaby and Surrey pushes prospective tenants to explore leasing opportunities in other markets. Vacancy trends Vacancy declined to 16.6% at year-end 217 from 17% 12 months earlier. Vacancy has been greater than 15% since midyear 214 thanks to the delivery of the vacant 137,-sf Anvil Centre. However, leasing activity at the end of 217 in the formerly empty building should lead to a sharp decline in overall vacancy in New Westminster s office market in 218. While deal velocity was muted in the back half of 217, leasing and tour activity were on the rise when compared with the past 12 to 24 months. While significant occupancy of the Anvil Centre in 218 will help reduce vacancy, the departure of the BC Safety Authority from Westminster Centre to Renfrew Centre in Vancouver will contribute to a significant increase in sublease vacancy in the first quarter. Despite the likely overall decline in vacancy anticipated in New Westminster from the lease up of the Anvil Centre, there remains multiple options for businesses seeking small-tolarge-sized tenancies. Absorption trends Despite very modest annual absorption of 6,678 sf in 217, the total marked an improvement on the negative annual absorption recorded in 216 (-33,772 sf ) and 214 (-1,478 sf ). Evolution Gaming (16, sf ) and Aerotek (4,95 sf ) occupied Anvil Centre in 217. Century Group, LTSA BC and Douglas College will occupy an additional 1,45 sf in 218 and substantially reduce class A vacancy. A series of small tenancies in the market was responsible for the negative annual absorption of -17,714 sf recorded in class B premises in 217. new construction QuadReal Property Group s proposed Sapperton Green development adjacent to the Braid Street SkyTrain station continued to proceed as the developer works through the development permit application approval process after having secured the necessary OCP amendments in mid-217. A valid and active development permit for two office buildings up to 4, sf still remains in place for the property, but a prelease commitment would be necessary to start construction. DEVELOPER BUILDING SF PRELEASE SF PRELEASE % COMPLETION QuadReal Property Group 97 Braid Street (near Braid Street SkyTrain station) part of Sapperton Green mixed-use redevelopment site recent lease deals - YEAR-END 217 tenant BUILDING SF Douglas College Anvil Centre 68,45 TransLink 287 Nelson s Court 21, LTSA BC Anvil Centre 16, Century Group Anvil Centre 16, Aerotek Anvil Centre 4,95 Up to 4, (office) % Proposed CLASS HEAD LEASE VACANCY SUBLEASE VACANCY VACANCY (%) 12-MONTH NET RENTAL RATE RANGE (PSF) GROSS OCCUPANCY COST (PSF) A 78, ,415 2, , % 24,392 $22 - $27 $34 - $41 B 7,684 8,52 8, % -17,714 $14 - $19 $26 - $33 C 27,774 14,51 14,51 7.% $12 - $14 $24 - $28 Total 1,688, ,418 2,358 28, % 6, Partnership. Performance

13 Vacancy spikes with delivery of new vacant space north shore Vacancy and Absorption 14.% 4, 12.% 16,128 6, % 12.1% 2, Vacancy Rate 1.% 8.% 6.% 4.% 8.5% 7.8% 7.3% -7, % ,783-2, -4, -6, Absorption (sf) -86,621 Vacancy 12-month projection based on 1-year average absorption and known net absorption in new inventory Vacancy trends Vacancy jumped to 12.9% at year-end 217 from 7.9% a year earlier due to the vacant delivery of Onni s CentreView development, which added 78,8 sf of new office space to inventory in 217. While the office space is approximately 6% leased and will start to be occupied in 218, the project s largest office tenant, COWI North America, is simply relocating from its current North Shore location at 788 Harbourside Drive. If the delivery of CentreView is removed from the statistical analysis, vacancy remained stable with some tenants relocating within the market while others downsized. Deal velocity remained stable in the back half of 217 with sublease vacancy reduced to nil by year-end. With no new office product for lease set for delivery until early 22, vacancy is anticipated to decline in 218 and likely continue to tighten into 219. Absorption trends CLASS 2.%.% F HEAD LEASE VACANCY Absorption Negative annual absorption of -733 sf in 217 represented a significant improvement from mid-year as strong leasing activity in the back half of the year helped offset the relocation of Work- SafeBC and the downsizing by ICBC that occurred in the first half. Harbourfront Business Centre occupying more than 1, sf at 224 West Esplanade contributed significant positive absorption in the back half of 217. new construction Construction on Hollyburn Properties new mixed-use development in Central Lonsdale broke ground in November 217 and includes 13,89 sf of contiguous office space that can be demised into smaller units for lease. The project is scheduled for completion by the second quarter of 22 and besides delivery of Seaspan s new build-to-suit office building in 218, is likely the only new office supply for lease to come to market for at least the next three years. market forecast -8, -1, Centreview delivered 78,8 sf of new office space in 217. Rental rates remained stable in 217 and will continue to remain flat in 218 until vacancy starts to decline in a meaningful fashion after CentreView has been occupied. Plus, much of the space coming available as a result of COWI s relocation has been backfilled and will be occupied in 218. The uptick in leasing activity in the back half of 217 is anticipated to continue in 218 with more options for tenants, and vacancy will likely start to decline by mid-year 218. However, a decline in vacancy by mid-year may be slightly delayed as Seaspan vacates approximately 12, sf of office space in various buildings in order to consolidate operations in its new four-storey, 84,-sf head office at the foot of Pemberton Avenue in early 218. recent lease deals - YEAR-END 217 tenant BUILDING SF Keith Plumbing & Heating 788 Harbourside Drive 17,885 sf Harbourfront Business Centre 224 West Esplanade 1,35 sf Red Lion Management 267 West Esplanade 6,155 sf FDM Software Ltd. 93 West 1st Street 5,11 sf Enbala Power Networks (renewal) 93 West 1st Street 4,36 sf Coast Performance Rehabilitation 138 East 13th Street 4,19 sf Western Canadian Properties Group 93 West 1st Street 4, sf epact Network Ltd. 267 West Esplanade 3,79 sf Revitalize Wellness Centre 138 East 13th Street 3,67 sf DEVELOPER BUILDING SF PRELEASE SF PRELEASE % COMPLETION Hollyburn Properties Concert Properties Darwin Construction SUBLEASE VACANCY Lonsdale Avenue and West 14th Street 81, 889 & 925 Harbourside Drive and 18 Fell Avenue North Shore Innovation District, 242 Dollarton Highway VACANCY (%) 13,89 % Q2 22 TBD % Proposed TBD % Proposed 12-MONTH NET RENTAL RATE RANGE (PSF) GROSS OCCUPANCY COST (PSF) A 871, , , % -15,329 $22 - $3 $34 - $48 B 481,395 45,723 45, % 12,663 $18 - $22 $25 - $33 C 97,69 7,17 7,17 7.3% 1,933 $15 - $18 $24 - $31 Total 1,45, , , %

14 suburban development timeline (to 22) The Lightworks Building 22 East 5th Avenue City centre A Street The independent at main 275 East 1th avenue Broadway Commercial 988 West Broadway 24 West 6th Avenue Q1 218 Q1 218 Q1 218 Q2 218 Q2 218 city Vancouver-Broadway Surrey Vancouver-Broadway Vancouver-Broadway Vancouver-Broadway Developer PC Urban Properties Corp. Lark Group Rize Alliance BlueSky Properties Rendition Developments / MDC Property Services Storeys floor 1 4 office sf 46,74 172, 17, 94,12 28,43 tenants 46,74 sf - Saje Natural Wellness Strata No tenant at this time 94,12 sf - ia Financial Group 21,23 sf - Umedia Occupancy 1% 85% sold % 1% 75% 565 Great Northern Way 34 w7 34 west 7th Avenue Station Square 66 Silver Avenue The George 1157 Parker Street Nickel 285 WEst 5th Avenue q2 218 q3 218 q3 218 Q4 218 q1 219 City Vancouver-Broadway Vancouver-Broadway Burnaby Vancouver-Broadway Vancouver-Broadway Developer PCI Group Chard Development Anthem Properties Porte Commercial PC Urban Properties Corp. Storeys 7 4 Two floors 4 4 office sf 161, 54,35 52,84 (office) 34,31 7,915 tenants 38,77 sf - Spaces 28,69 sf - Finning International 28,69 sf - Blackbird Interactive 2,2 sf -Samsung Strata No tenant at this time No tenant at this time 47, sf - SEGA (Relic Entertainment) Occupancy 73% 87.5% sold % % 67% Kings Crossing 735 Edmonds Street the Beltline off Broadway 224 West 8th avenue GTC Professional Building rd Street CityCentre th Avenue ifortune Centre, 686 No. 3 Road Q2 219 Q3 219 Q4 219 Q3 22 Q4 22 City Burnaby Vancouver-Broadway Surrey Surrey Richmond Developer Cressey Development Group Rendition Developments Landview Construction Lark Group ifortune Homes Storeys office sf 7,43 32,898 1,55 18,5 (office) 15,42 (office) tenants Strata Strata No tenant at this time Strata No tenant at this time Occupancy 3% sold % sold % % sold % 14 Partnership. Performance

15 BC Growth to slow in 218 but still lead canada special feature British Columbia s economy will slow in 218 compared with 217 but will still lead all provinces in terms of GDP growth despite facing local and international headwinds, according to Central 1 Credit Union, the Business Council of British Columbia (BCBC) and the Conference Board of Canada. The provincial economy expanded by 3.2% in 217, according to the Conference Board of Canada s Provincial Outlook Economic Forecast: BC Autumn 217 published January 2, and will grow by another 2.7% in 218. While growth will be weaker than the gains of 3% or more recorded from 215 to 217, B.C. will lead the country in growth in 218. A slump in the BC housing sector will be the main factor behind the slower growth, according to the Conference Board of Canada. Housing starts are expected to drop by close to 2% in 217 and only negligible growth is anticipated in 218. Other factors slowing economic growth in BC include U.S. duties on imports of Canadian softwood lumber, which are a key factor behind the anticipated drop of nearly 2% in real forestry output in 218. The BC Economic Review and Outlook published by the BCBC on January 18 forecasted a similar economic future for the province in 218 with higher commodity prices providing a boost to BC s export sector even as the economy is poised to downshift in 218 after real GDP growth of 3.1% in 217. BCBC anticipated real GDP growth to be 2.3% in 218, lower than the Conference Board s estimate. Modest interest-rate increases and a tightening of mortgage lending standards will act as headwinds for residential real estate activity, according to the report. Real estate has been a substantial growth driver for the province in recent years so the anticipated downshift will spill over to retail sales and others linked to real estate sales and construction. The report continues: BC s job market remains healthy, although there is some early indication that the pace of job growth is moderating. Some slowing is inevitable as the unusually strong gains earlier in 217 were not sustainable. With both the export sector and domestic activity still expanding, BC economy is in good shape. While there are risks to the outlook, there is nothing on the horizon to derail BC s expansion. BCBC predicts real GDP growth of 2.3% in 218 and 2.4% in 219 with both the unemployment rate and housing starts dipping in 218/19. Retail sales are also forecasted to decline from current levels in that period. Central 1 Credit Union s Economic Analysis of British Columbia (Volume 37, Issue 3) published in September 217, reported that BC s economy expanded by 3.5% in 217, higher than both the BCBC and the Conference Board estimates. It predicts the BC economy will expand by 2.5% in 218. Robust consumer demand continues to support the economy thanks to surging employment, combined with strong exports and government support, said Bryan Yu, deputy chief economist at Central 1. Housing activity will remain elevated but will not be a significant Housing Starts for British Columbia , , , 22 37, Source: Central 1 Credit Union driver of growth over the next few years, he added. BC s important forestry sector continues to face potential headwinds to growth due to softwood lumber trade disputes, this summer s record wildfire season, and long-term timber availability. The report goes on to add: Provincial growth will continue to fare well compared with other provinces and will meet or exceed the national growth rate over the period. Housing market has outperformed early-year expectations with housing starts forecast to decline only 6% in 217 following the 33% surge in 216. Growth in employment has supported growing population and high consumer demand, but should stabilize. Despite this, unemployment will trend lower due to changing demographics. A low Canadian dollar, combined with economic growth and investment, will continue to drive goods and services exports higher. Softwood lumber trade negotiations are a risk for the forestry sector and will combine with production impacts from wildfires to drag on growth. Central 1 predicts real GDP growth of 2.5% in 218 and 3% in 219, but also highlights declines in both the unemployment rate and housing starts out to 219. Growth in goods exports, tourism, film industry, technology and business investment will be steady due to a favourable currency, Yu said. Government investments also remains high with large utility, transportation and public works projects. 15