RENTAL RATES 1,600,000 1,400,000 1,200,000 1,000, , , , , , ,000

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1 Metro Vancouver Office Market Report Year-End 215 Vacancy rate December 31, 215 1% Vacancy rate June 3, % ABSORPTION (DEMAND) DISTRICT INVENTORY (SF) VACANCY (SUPPLY) Metro Vancouver - Vacancy and Absorption Trends Vacancy Rate 12.% 1.% 8.% 6.% 4.% 2.%.% 7.4% 532, % 7% 64,19 Vacancy -158,95 92,87 9.4% 1,334,64 1% Absorption 1.5% 397, F Metro Vancouver Office Vacancy Summary (Year-End 215) HEAD LEASE RENTAL RATES 1,6, 1,4, 1,2, 1,, 8, 6, 4, 2, -2, -4, 12-month projection based on 1-year average absorption and known net absorption in new inventory SUBLEASE Metro Vancouver market remains balanced as new supply supports the most positive annual absorption recorded in a decade Significant additions to Downtown Vancouver s inventory of office towers contributed to regional vacancy rising to 1% at year-end 215 from 9.4% at year-end 214, but the development boom also helped accommodate more than 1.3 million square feet (msf ) of annual absorption the most recorded in Metro Vancouver in a decade. More than 1.7 msf of new office space was delivered in Downtown Vancouver in 215, and Downtown absorption of more than 1.1 msf significantly impacted the region s annual absorption. While regional vacancy reached 1.3% at midyear 215 (due in part to the delivery of new Downtown office buildings in the first half of 215), vacancy tightened in the second half despite the addition of new buildings in the Downtown core as well as the suburbs. Most suburban submarkets in Metro Vancouver recorded positive annual absorption in 215, led by the ongoing recovery of Richmond s office submarket, while Vancouver-Broadway and Yaletown were the only submarkets to register negative annual absorption. The Vancouver-Broadway and Yaletown submarkets are both located within Vancouver city limits. Volatility in the Yaletown submarket in 215 was tied directly to tenants relocating to occupy larger Downtown premises. In the Vancouver-Broadway submarket, a number of tenants chose to search for office space efficiencies in an attempt to reduce costs which subsequently led some to downsize or relocate, resulting in slight negative annual absorption. Surrey registered the most positive annual absorption since 21. Burnaby, New Westminster and the North Shore registered minimal positive absorption in 215. The Burnaby and Surrey submarkets also recorded elevated vacancy rates. continued on back page VACANCY RATE (%) 12-MONTH ABSORPTION (SF) Downtown 22,825,576 1,878, ,851 2,128, % 1,11,41 Yaletown 2,29,244 82,797 82, % -2,91 Broadway 5,849,95 256,718 6, ,84 4.5% -38,637 Burnaby 9,1,255 1,55,445 12,44 1,175, % 32,637 Richmond 4,215,8 443,61 61,359 54,42 12% 186,883 Surrey 2,851,67 471,912 28,178 5,9 17.5% 36,751 New Westminster 1,688, , ,682 15% 29,444 North Shore 1,372,98 82,276 18,34 89,28 7.3% 6,576 Absorption Rate (sf) 49,932,247 4,524, ,12 5,8,935 1% 1,334,64 Partnership.Performance. I 1

2 Downtown Positive annual absorption highest since 25 accounting for 11.7% of overall vacancy, down from 12.9% a year earlier and significantly off the 19.9% recorded at year-end 213. Much of the potential sublease space vacated by tenants moving into the new towers was backfilled and a significant increase in sublease space did not materialize. The Downtown market remains fairly balanced overall and while there was an increased number of large-block vacancies or availabilities, they remain limited in absolute numbers. With the space availability factor (SAF) at its lowest since mid-year 212, vacancy is less likely to increase in the short term. Vacancy Trends Downtown vacancy peaked at 9.8% at mid-year 215 before tightening to 9.3% at year-end 215, which was up from 6.8% a year earlier. Despite the delivery of more than 1.7 msf of new office space in 215, vacancy had already started to tighten by the end of the year as tenants occupied the new inventory. Despite substantial absorption in class AAA assets, vacancy more than doubled to 1.5% from 5% a year earlier primarily due to the delivery of new inventory that contained limited vacancy. Class A vacancy also climbed to 1.8% from 5.5% year-over-year as the flight to quality began to impact existing inventory. Class B and C vacancy declined year-over-year, dropping to 7.5% and 7.9% at year-end 215 from 8.3% and 9.6%, respectively. Vacancy is expected to remain stable even decrease incrementally through 216 as minimal new inventory is scheduled to be delivered and significant occupancies still remain in the new towers. Even while tenants continue to search for space efficiencies to reduce occupancy costs, there was solid deal activity with a good cross-section of new leases, expansions, renewals and new tenants in the Downtown market. Available sublease space continues to decrease with sublease vacancy 2 I Bentall Kennedy continues to work on the development permit application for 19 West Pender, a new 415,92-sf office tower. Vacancy with Space Availability Factor (SAF) and Absorption: Vacancy Rate / SAF 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% 373, % 3.9% 3.3% 7, % 3.4% 5.7% 3.4% 6.8% -27,56-39,835 1,11,41 2.8% 2.4% 9.3% 9.2% 134, F 1,2, 1,, 8, 6, 4, 2, -2, -4, Vacancy Absorption SAF* Space Availability Factor 12-month projection based on 1-year average absorption and known net absorption in new inventory, and 1-year average SAF Absorption Rate (sf) Absorption Trends Positive annual absorption of more than 1.1 msf in 215 marked the most annual absorption recorded since year-end 25, which had marked the end of a four-year run during which time Downtown absorption was at least 2 msf annually. Positive absorption in 215 also marked a reversal in a four-year slide towards negative absorption, starting in 211 when absorption reached 373,425 sf before dropping to just 7,753 sf of positive absorption in 212 and then registering negative annual absorption in 213 and 214. Almost three-quarters of positive absorption in 215 occurred within class AAA properties. Positive class A absorption of 172,762 sf in 215 marked the first positive annual absorption recorded in class A Downtown properties since 212. Recent Lease Deals Year-End 215 TENANT BUILDING SF PwC (renewal) PwC Place 11, Absolute Software (renewal & expansion) Bentall 4 46, Rocky Mountaineer 98 Howe Street 36,4 Kabam Inc. (sublease & head lease) 745 Thurlow Street 32, Provincial Health Services Authority (renewal) 138 Burrard Street 31, Boughton Law Corp. (renewal) Bentall 3 3, The Profile 375 Water Street 3, Impark (renewal) The Station 25, Impark (renewal) 515 West Hastings Street 23, Copeman Healthcare Centre 88 Nelson Street 2,4 Stemcell Technologies Inc. Pender Place II 18,9 Hostway (renewal) Bentall 5 17,5 Lululemon Athletica (expansion) 138 Burrard Street 17,3 Pacific North West LNG (expansion) Park Place 17, GE Capital 155 Dunsmuir Street 16,8 College of Massage Therapists of BC 15 West Pender Street 15,7 Securiguard Services 1445 West Georgia Street 15,3 FullyManaged/ITG Software 128 West Pender Street 14,58 AXIM Royal Centre 14,2 Western Forest Products Royal Centre 14,2 IIROC (renewal) Royal Centre 13,8 CanWell Building Materials Group (sublease) Royal Centre 13,8 Wavefront Wireless (renewal) Guinness Tower 12,4 Simon Fraser University Harbour Centre 12, JH Investments Inc. 745 Thurlow Street 12, Agricultural Bank of China Telus Garden 12, Sandstorm Gold (renewal) Commerce Place 11,5 Pacific Future Energy 71 West Georgia Street 1, Accenture Telus Garden 1, Esri Canada (renewal) 113 West Pender Street 1, Partnership.Performance.

3 Downtown Vacancy elevated but market remains balanced Space Availability Factor (SAF) 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. The space availability factor, or SAF, slipped to 2.8% (65,435 sf ) at year-end 215, its lowest point since mid-year 212 when the indicator reached 2.6% (511,283 sf ). Hence, the actual amount of space currently being marketed (occupied and vacant) in the Downtown core is 12.1% or approximately 2.8 msf. New Construction The podium at Telus Garden, which features 48,5 sf of office space, is planned to be completed in the first quarter of 216 and remains available for lease. Serracan Properties FiveTen Seymour development is 98% preleased by the Adler School of Professional Psychology, OnlineShoes.com, Hardy Capital and Serracan Properties, and is anticipated to be finished by the third quarter of 216. Century Group s Ormidale Block redevelopment is under construction and is scheduled for completion by the end of 216. No tenants have been announced. The largest office tower under construction in the Downtown core, the 31-storey, 372,-sf Exchange building being developed by Credit Suisse AG and SwissReal Group Canada, is 1% preleased and scheduled for completion in the second quarter of 217. National Bank Financial preleased 45, sf of office and retail space. Construction of Aquilini Development s east tower at 777 Pat Quinn Way is scheduled to break ground in the summer of 216 and anticipated to be complete in the fourth quarter of 218. Construction on the long-planned Burrard Place development is scheduled to start in the second quarter of 216. Development proposals for Carrera Management s site at 32 Granville and Cadillac Fairview s proposed Waterfront Tower at 555 West Cordova remain in process as the City of Vancouver decides how to proceed with the associated development permit and rezoning applications in relation to its Central Waterfront Hub Framework, which city council had adopted in 29 to provide development guidelines in the area. Bentall Kennedy continues to work through the development permit application for 19 West Pender. Oxford Properties is reviewing its overall development plan for 1133 Melville after the city s urban design panel did not support the proposed 32-storey, 5,-sf office building. GWL Realty Advisors proposal for Vancouver Centre II at 753 Seymour and Bosa Properties proposal for a 26-storey, mixed-use building at 1575 West Georgia and 62 Cardero Street remain in the rezoning process. Low Tide Properties is working through its development permit application for a new sevenstorey office building at 155 Water Street, which requires the retention of the building facades of 151 and 157 Water Street among other conditions. Boffo Developments is proposing a 26-storey, mixed-use building at 225 Smithe Street that will include office space on three floors. CLASS Inventory Head Lease Vacancy (sf) Sublease Vacancy (sf) Total Vacancy (sf) Total Vacancy (%) Developer Building SF Prelease Prelease SF % Completion Westbank/Telus 51 Robson Street (Telus Garden podium) 48,5 % Q1 216 Serracan Properties FiveTen Seymour, 51 Seymour Street 68, (office) 66,6 98% Q3 216 Century Group Ormidale Block 151 West Hastings Street 23,6 (office) % Q4 216 Credit Suisse AG/ SwissReal Group Canada Jim Pattison Developments/ Reliance Properties Aquilini Development and Construction The Exchange, 475 Howe Street Burrard Place, 129 Burrard Street (mixed use) 777 Pat Quinn Way (residential/office) 362, (office) 35,75 1% Q , (office including tower & podium) 69,3 (office) (east tower) % Q4 218 (phase 1) % Q4 218 Bosa Properties West Georgia Street & 62 Cardero 45,346 (office) - - Proposed Street Carrera Management Corp. 32 Granville Street 35, - - Proposed Morguard 61 West Hastings Street 212,5 (office) - - Proposed GWL Realty Advisors Vancouver Centre II, 753 Seymour Street 368, Proposed Bentall Kennedy 19 West Pender Street 415,92 (office) - - Proposed Oxford Properties 1133 Melville Street TBD - - Proposed Cadillac Fairview Waterfront Tower, 555 West Cordova Street TBD - - Proposed Westbank Projects 72 Beatty Street 3, to 35, (office) - - Proposed Low Tide Properties 155 Water Street 69, (office) - - Proposed Boffo Developments 225 Smithe Street 28,11 (office) - - Proposed Canadian Metropolitan Properties Corp. 75 Pacific Boulevard TBD - - Proposed Market Forecast Rental rates remained stable in 215 due to landlords offering significant leasing inducements, but downward pressure on rates is likely to increase in 216. While a diminishing supply of high quality sublease space improved landlords negotiating leverage, a greater number of large-block lease opportunities in the market will allow larger tenants to negotiate with landlords from a position of strength. Smaller tenants may discover landlords to be less flexible on rental rates when it comes to the limited supply of high quality view premises, but more open to negotiation on mid- and lower-tower options. The leasing market is expected to remain stable in 216 with average deal velocity and incremental decreases in vacancy and availability rates until the next wave of new inventory nears delivery. Any recovery in the mining, energy and commodities markets will increase demand, likely decreasing vacancy and availability rates. The tenant mix in the Downtown office market will continue to diversify in 216 and remain balanced as landlords achieve reasonable rental rates and tenants have sufficient space alternatives to accommodate their needs. 12-month absorption (sf) SAF (sf) SAF (%) Net Rental Rate Range (psf) AAA 4,728, ,772 96, , % 818, , % $26 - $44 $46 - $69 A 7,983, ,475 47,28 865, % 172, , % $2 - $37 $39 - $61 B 6,829,25 412,296 97,476 59, % 54,244 12, % $18 - $31 $35 - $52 C 3,283, ,399 8, ,81 7.9% 55,74 4, % $14 - $25 $26 - $41 Total 22,825,576 1,878, ,851 2,128, % 1,11,41 65, % - - Gross Occupancy Cost (psf) Partnership.Performance. I 3

4 Downtown Development Timeline Downtown Development Timeline UPDATED JULY 216 Tenants (leased) Residential Q Robson St. (Telus Garden podium) Q3 216 FiveTen Seymour 51 Seymour St. Q4 216 Ormidale Block 151 West Hastings St. Developer Westbank/Telus Serracan Properties Century Group Q2 217 The Exchange 475 Howe St. Credit Suisse/ SwissReal Group Q4 218 Burrard Place 129 Burrard St. Reliance/Pattison Q4 218 East Tower 777 Pat Quinn Way Aquilini Development & Construction Storeys floors + 7-storey podium East Tower, Floors 5-13 O ffi c es f 48,5 68, 23,6 362, 129,1 + 1, 69,3 Tenants No tenants at this time 3, sf No tenants at this time 35,75 sf No tenants at this time No tenants at this time 25,5 sf 4,25 sf 4,25 sf Occupancy rates % 98% % 1% % % 216 Avison Young. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young Commercial Real Estate (B.C.) Inc.; DBA, Avison Young. 4 I Partnership.Performance.

5 Proposed Downtown Developments Downtown Proposed Developments UPDATED JULY Granville St. Developed by Carrera Management Corp. 25 / 35, sf UDP had supported the design on second review in May 213. Rezoning application for the proposed building was approved and the public hearing was held July 15, 214. A development permit application had still not been received by the City as of December 31, 215. The project is subject to the city s Central Waterfront Hub Framework, which remains under discussion. Waterfront Tower 555 W. Cordova St. Developed by Cadillac Fairview TBD UDP did not support the building design on January 28, 215. A development permit board meeting set for March 9, 215 was then cancelled. The architect subsequently presented nine alternative concepts in a UDP workshop in June 215, which received a warmer reception. The project is subject to the City s Central Waterfront Hub Framework, which remains under discussion. 61 W. Hastings St. Developed by Morguard 25 / 212,5 sf UDP supported the design in November 213 as part of the rezoning application, which was approved (with conditions) at a public hearing on September 16, 214. The project was supported by the UDP on July 15, 215, as part of its development permit application. Construction had been scheduled to start by year-end 215 with completion in 218, but did not commence. Vancouver Centre II 753 Seymour St. Developed by GWL Realty Advisors 32 / 368,115 sf UDP supported the design in September 213. A community open house was held in October 213. As of June 3, 215, the developer was still working on the rezoning application and the city was awaiting revisions to the rezoning application. The revisions were subsequently received and accepted by the City and the public hearing for the rezoning application will likely be scheduled for fall W. Pender St. Developed by Bentall Kennedy 31 / 415,92 sf 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, 215, the developer was working through development permit application requirements and anticipates that it will take six months to complete the process Melville St. Developed by Oxford Properties TBD Rezoning application was filed on July 8, 215. A community open house was held September 14, 215. The application went before the UDP during the week of October 19, 215. The UDP did not support the building as it was proposed. Oxford is currently reviewing its overall development plan for the site. While the rezoning process is ongoing, no deadline has been set to resubmit the application West Georgia & 62 Cardero St. Developed by Bosa Properties 26 / 45,346 sf Rezoning application was filed July 16, 214. UDP supported building design on October 22, 214. The staff report on the rezoning application was received by council on February 2, 216 and was referred to public hearing. The development features ground floor commercial space and three floors of office space in podium. 225 Smithe St. Developed by Boffo Developments 26 / 28,11 sf Rezoning application was filed May 5, 215 and the development received the support of the UDP on July 29, 215. The rezoning application was heard by council on December 15, 215 and the application has been moved to a public hearing in early 216. The building s podim will have ground-floor retail and three floors of office space totalling 28,11 sf. 155 Water St. Developed by Low Tide Properties 7 / 69, sf Picture not available The development was supported by the UDP on August 12, 215 and the rezoning application was subsequently approved directly by the director of planning with numerous signficant conditions that need to be met for the project to receive its development permit. The historic facades of 151 and 157 Water Street must be maintained and the seven-storey mixed-use building includes restaurant/retail on the ground floor and office space on floors Avison Young. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young Commercial Real Estate (B.C.) Inc.; DBA, Avison Young. Partnership.Performance. I 5

6 Vancouver - Broadway Negative annual absorption recorded only twice since 3 Vacancy and Absorption Graph: Vacancy Rate Vacancy Trends Vacancy remained virtually unchanged year-over-year, down slightly to 4.5% at year-end 215 from 4.6% at year-end 214. Deal velocity was reasonably strong throughout 215 and has been stable since 214. Sublease vacancy, primarily in class A and B space, dropped considerably year-over-year to the lowest point since mid-year 2. Class C vacancy dropped to 1.7% from 3% year-over-year, but that was primarily due to the demolition of two older office buildings for residential developments. While vacancy remained stable, several 1,-sf-plus opportunities became available for occupancy in early 216. Absorption Trends Negative annual absorption of 38,637 sf marked only the second time since 23 that the Broadway submarket registered negative annual absorption. The other occurrence was in 213 and was even less at negative 16,769 sf. While companies such as Active Network, Lululemon, Rogers Financial Group and PrimeFocus expanded and/or established operations in the submarket, others such as Hothead Games, Bell Canada, Coastal.com and Rainmaker Entertainment downsized or relocated, particularly during the second half of 215. New Construction Renfrew Centre, a seven-storey, 161,61-sf office building developed by Blackwood Partners and AIMCo Realty, is scheduled for completion in the first quarter of 216. The building is wholly available for lease. Construction continues on the Fifth, a four-storey, 76,-sf office/light industrial building developed by Cressey that will be occupied by DHX Media after construction is completed in the fourth quarter of 216. Phase two of Rize Alliance s Containers development, which features an eight-storey, 143,-sf office tower that will serve as the new home for the Canada Revenue Agency, is under construction and set for completion in the fourth quarter of 216. Construction on the Lightworks Building, a six-storey, 54,-sf office/ light industrial development in Mount Pleasant, is expected to break ground in the first quarter of 216 with occupancy set for the fourth quarter of 217. Construction is proceeding on a speculative basis as no tenants have been announced. PCI Group will kick off construction 6 I 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 4.6% 34, , % 5.1% -16,768 41, % 4.5% -38, % 96, F Vacancy Absorption 12-month projection based on 1-year average absorption and known net absorption in new inventory 45, 4, 35, 3, 25, 2, 15, 1, 5, -5, -1, Absorption Rate (sf) Mount Pleasant s light industrial/office district continues to evolve with PC Urban s new Lightworks Building, a 54,-sf, six-storey character development utilizing the former building facade. Recent Lease Deals Year-End 215 TENANT BUILDING SF Symcor (renewal) 111 East 5th Avenue 5, PrimeFocus World 149 West 4th Avenue 47, Rainmaker Entertainment Inc. (renewal) 225 West Broadway 45, Nicola Wealth Management (renewal/expansion) 158 West Broadway 29, PHSA/Information Systems Management 1885 West Broadway 25, Immigrant Services Society of BC (renewal) 333 Terminal Avenue 17,3 Kit & Ace Designs 159 West 7th Avenue 16,76 Copperleaf Technologies 292 Virtual Way 11,8 Vancouver Free Press Publishing Corp West Broadway 11,58 PHSA/Finance 1867 West Broadway 1,9 BC Public School Employers Association (renewal) 1333 West Broadway 1,8 Dorset College 1215 West Broadway 7,76 Rovio Entertainment Co. Ltd. (sublease) 555 West 12th Avenue 7,4 Trinimbus Technologies Inc. 141 West 8th Avenue 6,4 of a seven-storey, 165,-sf office tower at 565 Great Northern Way in spring 216 with completion scheduled for fall 217 to coincide with the opening of the new Emily Carr Institute of Art + Design campus. No prelease commitments have been announced. Construction on BlueSky Properties new 1-storey, 14,-sf office/ retail building at 988 West Broadway commenced near the end of 215. The building is primarily leased by Industrial Alliance, which is leasing approximately 75, sf and occupying all but two floors. The development permit application for phase one of Bentall Kennedy s new office campus at 33 East Broadway is nearing completion and will likely be filed in early 216. Five office buildings totalling 962,3 sf are proposed for the site. There are no prelease commitments at this time. A proposal from GNW Trust to build a new four-storey, 6,36-sf building at 1933 Fraser Street at Great Northern Way Campus needs a prelease agreement to kick off construction. Development of office/light industrial projects in the Mount Pleasant node remains active. Rendition Developments has two projects underway Partnership.Performance.

7 Vancouver - Broadway Vacancy remains among tightest in Metro Vancouver in the neighbourhood, including The Mirror, a three-storey, 18,-sf office/light industrial building at 7 West 6th Avenue, as well as a four-storey, 27,-sf office/light industrial building at 24 West 6th Avenue. Construction has started on the Mirror and the building is scheduled for completion in the third quarter of 216. A development permit application for 24 West 6th Avenue has been filed and construction is anticipated to start in the third quarter of 216 with completion tentatively planned for the third quarter of 217. Kevington Building Corp. had proposed the Q4 Block at 125 East 4th Avenue. However, the development has not gone forward as the owner evaluates the potential implications of the recent sale of the properties across the street to Hootsuite and Westbank and any associated zoning changes in the immediate vicinity that may come about as a result. Market Forecast Slight upward pressure on rental rates manifested in the submarket in the back half of 215 due primarily to Industrial Alliance committing to take approximately 75, sf at 988 West Broadway and effectively removing the only large-block opportunity on the Broadway corridor proper. While some tenants in the Broadway submarket sought to control rising overhead costs by relocating to less expensive space, downsizing or spending capital to improve office space efficiencies, others had trouble securing suitable premises for expansion. This dichotomy is expected to remain in 216. Lease rates are likely to remain stable in 216 albeit slightly elevated Mount Pleasant Employment Area (I-1 Zoning) Since 213, the emergence of the Mount Pleasant employment area has stimulated a number of value-add and redevelopment projects in the neighbourhood, resulting in the conversion of older industrial space to primarily office use or the redevelopment of industrial buildings to accommodate additional office uses. Many of the repositioned buildings are less than 2, sf and typically range from 5, sf to 18, sf. More developments are under way that have been preleased or presold. As a result, vacancy remains tight despite these additions as development boosts the total size of the market. Sublease space remains extremely limited in this area. Deal velocity picked up in 215 as the market became increasingly popular as a vibrant new office district and additional technology tenants made it home. Developers and value-add investors have been entering or expanding their holdings in this desirable node. Lease rates rose in 215 and this trend is expected to continue. New developments offer large inducement packages while repositioned assets offer less inducements as the space does not require a full buildout. Rents were in the mid $2s psf (with inducements) and that is expected to rise to the high $2s psf in the first half of 216. The market outlook is strong for 216 as new supply comes online and the City of Vancouver continues to encourage the shift in uses. from years previous. Leasing activity is forecast to remain strong due to new opportunities in the Mount Pleasant employment area and fresh vacancies along the Broadway corridor and at Broadway Tech Centre. Vacancy is anticipated to rise in 216 primarily due to the delivery of the wholly vacant Renfrew Centre. PCI Group is looking to deliver a seven-storey, 165,-sf office building adjacent to the new Emily Carr Institute of Art + Design in fall 217. Developer Building SF Completion Blackwood Partners/AIMCo Renfrew Centre, 2889 East 12th Avenue 161,61 (office) Q1 216 Rendition Developments The Mirror, 7 West 6th Avenue (Mount Pleasant) 18, Q3 216 Cressey The Fifth, 38 West 5th Avenue 75,69 (office) Q4 216 (Mount Pleasant) Rize Alliance Containers (phase II), 468 Terminal Avenue 143, Q4 216 PC Urban Properties Corp. The Lightworks Building, 22 East 5th Avenue 45,2 (office) Q4 217 (Mount Pleasant) PCI Group 565 Great Northern Way 165, Q4 217 BlueSky Properties Broadway Commercial, 988 West Broadway 94,12 (office) Q1 218 GNW Trust Rendition Developments Bentall Kennedy Kevington Building Corp. Westbank/Ivanhoé Cambridge Centre for Digital Media, 1933 Fraser Street 24 West 6th Avenue (Mount Pleasant) 33 East Broadway (five buildings) Q4 Block, 125 East 4th Avenue (Mount Pleasant) 6,36 Awaiting prelease commitment 27, Planning 973,35 Proposed 27,25 Proposed Oakridge Centre redevelopment TBD Proposed CLASS RENTABLE (SF) HEAD LEASE SUBLEASE VACANCY (%) 12-MONTH ABSORPTION (SF) AVERAGE NET RENTAL RATE (PSF) GROSS OCCUPANCY COST (PSF) A 3,64, ,792 1,39 15,11 4.1% 21,445 $22 -$3 $39 - $48 B 1,715,23 13,663 1,3 14, % 11,951 $18 - $23 $31 - $38 C 492,916 4,263 4,54 8, % -72,33 $15 - $19 $28 - $33 Total 5,849,95 256,718 6, ,84 4.5% -38, Partnership.Performance. I 7

8 Yaletown Volatile year reflects extensive tenant churn Vacancy with Space Availability Factor (SAF) and Absorption: Vacancy Rate / SAF 12.% 1.% 8.% 6.% 4.% 2.%.% 39,47 4% 4.3% Recent Lease Deals Year-End 215 TENANT BUILDING SF McElhanney Consulting Services Ltd. 858 Beatty Street 39,81 The Westside School 91 Mainland Street 2, Double Negative (expansion) 18 Homer Street 12,8 Eventbase Technology Inc Homer Street 12, Splunk Inc. 86 Homer Street 1,15 iamota corporation 86 Homer Street 3,3 Vacancy Trends 6,785.5% 5% 19,732 3% 4% Vacancy Absorption SAF* Space Availability Factor Vacancy in the Yaletown office market finished 215 at 4.1%, up from 3.1% at year-end 214, but down significantly from 7.5% at mid-year 215. A number of tenants vacated the market in the first half of 215, which led to a spike in vacancy to levels unseen since year-end 29. That spike was short-lived as demand from small technology-related companies and the ongoing lack of new supply drove deal velocity in the second half. Large lease deals completed in the second half of 215 at 858 Beatty, 1286 Homer and 91 Mainland should have an impact on vacancy in 216. Market volatility is expected to continue with noteworthy Yaletown tenants, Avigilon and Blast Radius, set to vacate larger blocks of space in 216. Vacant sublease space was non-existent at yearend 215 a marked decline from just six months earlier when more than 43, sf had been available. Space Availability Factor (SAF) The space availability factor (SAF) refers to head lease and/or sublease space that is being marketed, but is not physically vacant. The SAF slipped to 3.8% (76,365 sf ) at year-end 215 from 6.9% (139,11 sf ) at year-end 214, its lowest point since year-end 213 when the indicator reached 3% (61,439 sf ). Hence, the actual amount of available space currently being marketed (occupied and vacant) in Yaletown is 7.9% or approximately 159, sf. CLASS Inventory Head Lease Vacancy (sf) 6.9% 23, % 3.1% Sublease Vacancy (sf) 4.1% -2,91 2.6% 4.4% -6, F Total Vacancy (sf) 5, 4, 3, 2, 1, -1, -2, -3, 12-month projection based on 1-year average absorption and nine-year average SAF Absorption Rate (sf) Total Vacancy (%) Engineering consultant McElhanney has leased 39,81 sf in 858 Beatty Street as it sets to expand into the former Avigilon space. Absorption Trends Negative annual absorption of 2,91 sf at year-end 215 represented a significant shift in the Yaletown market, which had not recorded negative annual absorption since 29. A substantial uptake of office space in the second half helped to offset the significant negative absorption that characterized the first half of 215. More than 1, sf of positive absorption occurred in each of the following properties: 855 Homer Street, 18 Homer Street, 1286 Homer Street, 91 Mainland and 788 Beatty during the last six months of 215. The positive absorption in the second half was predominately driven by smaller technology-related firms. New Construction No new construction is currently planned for Yaletown. Market Forecast While rental rates softened slightly in 215 as the addition of new supply downtown combined with tenants relocating out of the submarket contributed to upward pressure on vacancy, lease rates should remain steady in 216. Vacancy will likely remain volatile with Blast Radius set to close its doors at 1146 Homer and vacate 24, sf in 216. Avigilon will vacate another 4, sf at 858 Beatty Street when it moves to its new downtown head office at 555 Robson Street in 216. These vacancies will create rare opportunities for larger tenants to enter the typically tight submarket or provide expansion space within the submarket. Yaletown remains a unique market that continues to attract tenants in the technology and creative sectors, both of which are thriving in Vancouver; however, these large pockets of space coming available could heighten concerns regarding rising vacancy. 12-Month Absorption (sf) SAF (sf) SAF (%) Net Rental Rate Range (psf) A 576,938 7,446 7, % 8,734 39, % $26 - $33 $41 - $49 B 998,357 53,989 53, % -32,228 1,93 1.1% $19 - $25 $33 - $4 C 453,949 21,362 21, % 3,43 26, % $14 - $2 $26 - $33 Total 2,29,244 82,797 82, % -2,91 76, % - - Gross Occupancy Cost (psf) 8 I Partnership.Performance.

9 Burnaby Vacancy stable as leasing drives positive annual absorption Cressey will include a six-storey, 7,-sf office building with retail space on the ground floor as part of the Kings Crossing development. Vacancy Trends Vacancy remained stable in Burnaby during 215 and finished the year at 12.9%, almost unchanged from the 12.6% recorded at year-end 214. Most of the major lease deals were renewals with a limited shuffling of smaller tenants already in the submarket making up the majority of lease activity. Telus continued to vacate the Burnaby market as it consolidates operations in its new head office in Downtown Vancouver. Current tenants in the market are taking on expansion space to capitalize on the favourable terms being given by landlords. Smaller tenants have been filling pockets of vacancy, particularly in class B space. Sublease availability remains primarily limited to Telus former space at 3777 Kingsway and in Willingdon Park. There were few new entrants to the submarket in 215. Tenants have a wide range of options to consider and landlords have had to provide inducements to attract new tenants and maintain face rates. Absorption Trends Positive annual absorption of 32,637 sf in 215 marked the second consecutive year of positive absorption recorded in the market. While Telus vacated more than 4, sf at 35 Gilmore Way, Thales Rail Signalling Solutions occupied 2, sf at 3555 Gilmore Way. Most absorption in 215 was attributed to the occupancy of small pockets of vacancy. New Construction The office component of phase two of Appia Development s SOLO District is scheduled for completion in the second quarter of 216. The 23,-sf office component, which consists of 12 floors in a 54-storey mixed-use tower, is approximately 18% preleased. Tenants include CMW Insurance (21, sf ), Bosa Development (11, sf ) and Embassy Properties (1, sf ). Cressey s Kings Crossing development near the Edmonds SkyTrain station will include a 7,-sf office/retail tower as part of the project and is set to break ground in fall 216. Market Forecast While rental rates remained stable in 215 with landlords offering inducements to maintain face rates, more of the same is anticipated for 216. Vacancy is expected to rise slightly due primarily to the delivery of the office component in SOLO District, which remains largely vacant. A more significant rise in vacancy will likely be offset by the removal of Metrotower III from the leasing CLASS RENTABLE (SF) HEAD LEASE SUBLEASE Vacancy and Absorption Graph: 16.% 3, 14.% 248, % 25, 12.% 212, % 12.9% 2, 15, 1.% 1.6% 8.% 1, 9.1% 52,757 34,39 32, % 5, 6.% 4.% -5, 2.% -1, -114,783.% -15, F Vacancy Absorption 12-month projection based on 1-year average absorption and known net absorption in new inventory Recent Lease Deals Year-End 215 TENANT BUILDING SF Microsemi Corp. (renewal) 8555 Baxter Place 125, Canadian Food Inspection Agency (renewal) 4321 Still Creek Drive 4, Crius Financial Services Corp. (renewal) 472 Kingsway 2, Shoeme.ca (sublease) 3777 Kingsway 18, Fortinet Technologies 419 Still Creek Drive 17,38 Konica Minolta Business Solutions (Canada) Ltd. 441 Still Creek Drive 17, (expansion) Solutre Inc. 92 Glenlyon Parkway 15, Kiewit & Co. 418 Lougheed Highway 15, Rising Star Learning 4664 Lougheed Highway 13,7 Regus Group (renewal) 417 Still Creek Drive 12,5 Mindfield RPO Group Inc. 348 Gilmore Way 11,5 Business Centre Solutions 3292 Production Way 11,5 Infoblox Canada Ltd. 471 Kingsway 11, Schweitzer Engineering Laboratories Inc Canada Way 1,5 Aerotek 4321 Still Creek Drive 8,2 Developer Building SF Completion Appia Group SOLO District (phase II) 23, (office) Q2 216 Cressey Kings Crossing, 735 Edmonds Street 63, (office) Q4 218 Kingswood Capital Discovery Place Business Park 5, Awaiting prelease commitment Sears Canada 475 Kingsway (Metrotown) Two office towers Proposed Shape Properties Brentwood Town Centre One/two office towers Proposed Onni Group Gilmore Station 996,9 (office) Proposed market as it will be primarily occupied by its new owner, Metro Vancouver, in the next 18 months. The regional authority s former head office will likely be redeveloped and subsequently removed from Burnaby s office inventory. It is anticipated that deal velocity will be slow as the majority of tenants in the market with lease expiries in 216 have already been addressed. Engineering firms with connections to the oil and gas industry may return additional space to the market, but it is expected that tech tenants will expand. Most deal velocity or growth will be organic through renewals or renewal/expansions. VACANCY (%) 12-MONTH ABSORPTION (SF) AVERAGE NET RENTAL RATE (PSF) GROSS OCCUPANCY COST (PSF) A 6,81, , , , % -24,972 $16 - $28 $3 - $42 B 2,81, , , % -225 $14 - $18 $27 - $31 C 937,68 83,284 1,65 84, % 57,834 $13 - $19 $24 - $3 Total 9,1,255 1,55,445 12,44 1,175, % 32, Partnership.Performance. I 9 Vacancy Rate Absorption Rate (sf)

10 Richmond Most positive annual absorption recorded since 1997 Vacancy and Absorption Graph 25.% 23.3% 167, ,883 2, 18, Vacancy Rate 2.% 15.% 1.% 19.3% 11, % 15.2% 12% 11% 16, 14, 12, 1, 8, Absorption (sf) 6, 5.% 1,124.% Vacancy Absorption 12-month projection based on 1-year average absorption Vacancy Trends Vacancy declined to its lowest level since year-end 27 as tenants renewed and/or expanded, capping off a five-year period of recovery during which vacancy fell to 12% at year-end 215 from 24.6% at year-end 21. Tenants are increasingly drawn to the No. 3 Road corridor due to its proximity to transit; however, available office space in the area is in short supply and high demand. Richmond s more traditional office parks have also recorded lower vacancy as businesses were increasingly attracted to the value proposition offered in the form of moderate rents and the ability to expand within the park. A lack of new supply has contributed to tenants absorbing existing space, particularly in class B assets. Vacancy is anticipated to continue to tighten through 216 as potential new supply is in process with the city, rental rates remain modest and landlords continue to offer generous tenant inducement packages. Absorption Trends Annual absorption in 215 was the most recorded since 25 and was the second highest achieved in Metro Vancouver. A combination of expansions and relocations contributed to positive absorption in all classes, including more than 122, sf of class A space. Modest rental rates remain a key factor in driving absorption, particularly in class B space, which has resulted in very few tenants relocating out of the market and subsequently generating positive organic absorption. This trend is anticipated to continue with no new supply likely to disrupt absorption in the next 12 months and rental rates that will help secure existing tenants and potentially attract new ones. New Construction 7,545 41, F 4, 2, A lack of new construction has been one factor contributing to the recovery of Richmond s office market, but that may soon change. An increasing number of rezoning and development permit applications have been filed with the City of Richmond since 214. All remain in process. Leasing activity in Crestwood Corporate Centre contributed to the recovery of Richmond s office market in 215. Recent Lease Deals Year-End 215 TENANT BUILDING SF Boeing Co. (renewal) Crestwood Corporate #5/#6 42,21 Wenco International Mining Systems Ltd. Crestwood Corporate #8 29,65 Sierrra Wireless Inc Wireless Way 23,6 Star Solutions International Inc. (renewal) 46 Jacombs Road 21,5 Clevest Solutions Inc. Crestwood Corporate #2 19,97 Syscon Justice Systems 36 Lysander Lane 17,92 Kahn Zack Ehrlich Lithwick LLP Airport Executive Park #7 13,8 Developer Building SF Completion Ampar Ventures Ltd. Ampri International Gateway Centre (office/hotel) 15, (office) Proposed New Continental Properties Inc. 832, 834 & 844 Bridgeport Way; and 8311 & 8351 Sea Island Way 11,54 (office/campus) Proposed Westmark Development Group 41, 412, 4126, 414, 418 & 422 Garden City Road and 9131, 9151 & 9191 Odlin Road 71,99 (office/ commercial) Proposed Bene Development Ltd. 47 No. 3 Road Nine-storey building (retail/office) Proposed Formation Project Mgmt. 874, 876, 878, 888 & 89 Charles Street 45,21 (office) Proposed ifortune Homes Inc. ifortune Center (684 & 686 No. 3 Road and 851 Anderson Road) 12,74 (office) Proposed Market Forecast Richmond s recovery is expected to slow in 216 as balance returns to the market and vacancy continues to tighten and absorption remains positive. Rental rates are forecast to remain largely unchanged, but some upward pressure on rents for office space located along the No. 3 Road corridor, particularly in Downtown Richmond, may begin to manifest. New office construction may also break ground in 216, which could lead to the delivery of new office product in 217/18, which would mark the first time new office supply had been delivered since 28. CLASS RENTABLE (SF) HEAD LEASE SUBLEASE VACANCY (%) 12-MONTH ABSORPTION (SF) AVERAGE NET RENTAL RATE (PSF) GROSS OCCUPANCY COST (PSF) A 2,895, ,574 53,542 41, % 122,765 $ $18 $27 - $29.5 B 972,346 31,834 7,817 39, % 42,115 $ $15 $25 - $26.5 C 348,198 54,653 54, % 22,3 $1.5 - $11.5 $ $2 Total 4,215,8 443,61 61,359 54,42 12% 186, I Partnership.Performance.

11 Surrey Positive annual absorption reducing elevated vacancy Vacancy and Absorption Graph Coast Capital vacated its former headquarters at st Avenue, which contributed to Surrey s elevated vacancy rate. Vacancy Trends Vacancy declined to 17.5% at the end of 215 from 22.1% a year earlier, but did rise from mid-year and remained elevated in all classes. Coast Capital vacated more than 1, sf when it relocated to The HUB at King George Station in fall 215. While approximately half of Coast Capital s former space will be backfilled by Westminster Savings, Coast Capital s old head office at st Avenue remains mostly vacant. Additional vacancy was also delivered in the HUB with two floors remaining to be leased. Surrey s office market has not recovered from the departure of a handful of large tenants in 213/14. The ongoing delivery of speculative office supply continues to exacerbate vacancy further. Absorption Trends Annual positive absorption of 36,751 sf represented the greatest amount of annual absorption recorded in Surrey since year-end 21, but was primarily due to activity that occurred in the first half of 215. The combination of Coast Capital s relocation and the delivery of The HUB at King George Station (which was partially vacant) in the second half impacted annual absorption negatively. Westminster Savings will occupy Coast Capital s former space at Central City in 216 when it relocates from New Westminster, a move that will contribute positive absorption to the Surrey market. Developer Building SF Completion Industrial Alliance Gateway Place, th Avenue (office/retail) 56, (office) Q3 216 Lark Group City Centre 2, A Street 172, (office) Q3 218 Landview Construction GTC Professional Building, rd Street 13,7 Awaiting prelease commitment PCI Group/Triovest Planned Avondale Development Corp. / Monark Group The Hub at King George Station (phase two), 99 King George Boulevard (office/retail) The Professional Centre@ South Point, nd Street 17, (office) 87,5 (office) Proposed Circadian Projects 9677/9681 King George Boulevard 178, Proposed Vacancy Rate 25.% 2.% 15.% 1.% 5.%.% - 47, % Vacancy Absorption 12-month projection based on 1-year average absorption New Construction Industrial Alliance s Gateway Place is under construction and is scheduled to be delivered in the third quarter of 216. Construction on Lark Group s City Centre 2 broke ground in January 216 and has no prelease commitments in place. PCI Group/Triovest is preparing for phase two of its mixed-use development near the King George SkyTrain station, which will include approximately 17, sf of office space. Avondale Development s The Professional South Point is proposed to start construction in 216. Circadian Projects proposed 18-storey office tower remains in process with the City of Surrey. Market Forecast - 6, % 17.3% -137, % 14,475 36, % 16, % F 6, 4, 2, -2, -4, -6, -8, -1, -12, -14, -16, Despite moderate leasing activity in the Surrey market in 215, absorption is anticipated to remain minimal (but positive) and vacancy is expected to rise slightly in 216 due in part to the delivery of vacant new supply. Rental rates will remain flat in 216 as a plentiful supply of options, both large and small, continues to provide tenants with a range of choices. Leasing activity will continue to be spread among Surrey s submarkets such as Guildford, Central City, Newton, etc. With Gateway Place currently scheduled as the only new supply to be delivered until late 218, organic absorption during the next two years may assist in lowering the elevated vacancy that has characterized the market since 213. Recent Lease Deals Year-End 215 TENANT BUILDING SF Westminster Savings Credit Union 1153 King George Boulevard 52,9 Village Church th Avenue 22, Frozen Mountain Software (sublease) nd Street 11,5 Dale Matheson Carr-Hilton Labonte LLP nd Street 11, Regus Group 153 Croydon Drive 11, Fraser Health th Street 6,5 Westland Insurance Morgan Creek Corporate 5,6 Direct Credit nd Street 4,5 Absorption (sf) CLASS RENTABLE (SF) HEAD LEASE SUBLEASE VACANCY (%) 12-MONTH ABSORPTION (SF) AVERAGE NET RENTAL RATE (PSF) GROSS OCCUPANCY COST (PSF) A 2,19, ,534 28, , % -22,748 $18 - $3 $32 - $43 B 626,1 118, , % 58,628 $13 - $18 $26 - $3 C 25,629 33,853 33, % 871 $9 - $13 $23 - $25 Total 2,851,67 471,912 28,178 5,9 17.5% 36, Partnership.Performance. I 11

12 New Westminster Positive annual absorption slowly chipping away at vacancy Vacancy and Absorption Graph 25.% 178,35 2, 2.% 2.8% 15, Vacancy Rate 15.% 1.% 11.8% 52, % 16.8% 15% 29, % 39,368 1, 5, Absorption Rate (sf) 5.% -1,478-33,147.% F Vacancy Absorption 12-month projection based on 1-year average absorption -5, The 137,-sf Anvil Centre office tower remains vacant and will continue to significantly impact vacancy and leasing activity in New Westminster. Developer Building SF Completion Bentall Kennedy Vacancy Trends Vacancy tightened to 15% at year-end 215, down from 16.8% 12 months earlier, and is the lowest recorded vacancy since the delivery of the stillvacant Anvil Centre office tower in the first half of 214. Deal velocity has been minimal in all classes with many tenants choosing to renew long-term lease deals as opposed to relocating. Class A vacancy of 24.5% represents a disproportionate share of overall vacancy in New Westminster when compared with vacancy in class B and C assets. Approximately 72% of New Westminster s class A vacancy is located in the Anvil Centre s office tower. The decline in vacancy recorded in 215 was the result of lower-cost sublease space being taken up accompanied by modest leasing activity in all asset classes. Absorption Trends 97 Braid Street (near Braid Street SkyTrain station) part of proposed Sapperton Green mixed-use development site Up to 4, (office) Proposed Annual positive absorption of 29,444 sf represented the greatest amount of positive absorption recorded in New Westminster since TransLink and its related companies occupied their new head office in Wesgroup s Brewery District development in 213. The potential for achieving substantial annual positive absorption moving forward remains largely limited until the fate of the 137,-sf office tower at the Anvil Centre is settled or a significant lease deal is announced. Recent Lease Deals Year-End 215 TENANT BUILDING SF Fraser Health 287 Nelson s Court 8, (TransLink building) Amix Group 625 Agnes Street 7,6 Sea To Sky Law Corp. 625 Agnes Street 6,17 Hanson International Academy 96 Quayside Drive 3,22 J.Y. Kim & Associates 8 McBride Boulevard 2, New Construction There is currently no new office construction underway in New Westminster. Strata office space and build-to-suit opportunities are available in the Brewery District. Redevelopment plans involving Bentall Kennedy s proposed mixed-use community, Sapperton Green, were postponed as a result of Amazon.com choosing to extend and expand its lease commitment to a warehouse located on a portion of the proposed redevelopment site. However, 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. Market Forecast Deal activity is forecast to remain nominal in 216 (as it was in 215) with limited positive absorption contributing to a slight decrease in vacancy. Rental rates are anticipated to remain flat. New construction will likely remain at a standstill unless accompanied by a significant prelease commitment. The departure of Westminster Savings from the submarket in 216, the result of combining of its operations at 422 Sixth Street and 96 Quayside Drive into the Central City office tower in Surrey, could exacerbate vacancy further and negatively impact absorption. The potential leasing (or stratification) of the office tower at the Anvil Centre, which was sold to private investors in February 214, remains the largest factor influencing the New Westminster office submarket moving forward. CLASS RENTABLE (SF) HEAD LEASE SUBLEASE VACANCY (%) 12-MONTH ABSORPTION (SF) AVERAGE NET RENTAL RATE (PSF) GROSS OCCUPANCY COST (PSF) A 78,114 19,91 19, % 14,337 $19 - $27 $32 - $41 B 7,684 48,28 48,28 6.9% 8,876 $13 - $17 $25 - $28 C 27,774 14,51 14,51 7% 6,231 $8 - $12 $2 - $24 Total 1,688, , ,682 15% 29, I Partnership.Performance.

13 North Shore Vacancy tightening due to absorption and limited supply Vacancy and Absorption Graph 12.% 4, Vacancy Rate 1.% 8.% 6.% 4.% 8.2% -56, % -8,891 16, % 7.8% 6, % % 2, -2, -4, -6, Absorption Rate (sf) 2.%.% Vacancy Absorption 12-month projection based on 1-year average absorption Recent Lease Deals Year-End 215 TENANT BUILDING SF Petitt and Company 269 Westview Drive 4,87 Everything Wine 758 Harbourside Drive 4,86 North Shore Heart Group 1133 Lonsdale Avenue 4,7 W.L. Macdonald Law Corporation 221 West Esplanade 3,1 Hanson & Co. Personal Injury Law Lonsdale Avenue 2,5 Developer Building SF Completion Harbourview Projects Polygon Onni Group Concert Properties Vacancy Trends -86, F East Esplanade, 35 & 37 East Esplanade West Quay, 26 West Esplanade (mixed use) CentreView, 138 Lonsdale Avenue (mixed use) 81, 889 & 925 Harbourside Drive and 18 Fell Avenue (mixed use) 22,443 (strata office/showroom) 38, (strata office/retail) -8, -1, Q1 217 Q ,8 (office) Q , (office) Proposed Hollyburn Legacy Prop Ltd. 131 Lonsdale Avenue 14,1 (office) Proposed Vacancy in the North Shore office market tightened to 7.3% at year-end 215, a drop from the 7.8% registered just 12 months earlier. Increased leasing activity in class A and B properties primarily small pockets of space being absorbed in multiple buildings along with a lack of new supply helped to push vacancy lower. With no new supply delivered until 217, vacancy is expected to continue to tighten. Preleasing activity has been limited in the market one of the smallest in Metro Vancouver and which is generally characterized by office tenants with small space requirements. The addition of Onni Group s CentreView development will have a significant impact on vacancy if delivered vacant in 217. Strata office projects under development may impact vacancy if tenants choose to become owners due to the lack of lease options and the low cost of capital. Sublease vacancy rose due to Newalta Corp. vacating 111 Forester Street. Harbourview Projects new East Esplanade strata light industrial/office development highlights the trend towards the mixed-use redevelopment of older single-use buildings. Absorption trends Positive annual absorption of 6,576 sf was recorded at year-end 215. The majority of absorption was registered in class B properties with minimal absorption in class A and C properties. Demand was strong in the first half of 215 with few lease options, but weakened in the second half. New Construction Harbourview Projects four-storey East Esplanade light industrial/office development will offer strata office space on its second and third (including mezzanine) floors. CentreView will offer 78,8 sf of office space on four floors as well as ground-floor retail when it is completed in 217. No office tenants have been confirmed for the project. Polygon s West Quay development will offer 38, sf of strata office/retail space when completed in the third quarter of 217. Concert Properties submitted its development permit application in January 216 for the first phase of its proposed mixed-use Harbourside development. The first phase, which includes 4, sf of retail space, could break ground by fall 216. The four-phase development will include 24, sf of office space when completed. Market Forecast Rental rates remained stable in 215 with some landlords providing inducements to tenants to ensure buildings remain fully occupied. Upward pressure on rates may start to manifest in 216 as vacancy tightens and the lack of new supply becomes more pronounced. The large blocks of space coming to market in CentreView have not been seen on the North Shore in years and will create new opportunities for tenants. For larger tenants, options are currently limited in the market, which has resulted in very few choices if expansion or relocation is necessary. Strata buildings will continue to have an impact on vacancy as some tenants embrace ownership opportunities. CLASS RENTABLE (SF) HEAD LEASE SUBLEASE VACANCY (%) 12-MONTH ABSORPTION (SF) AVERAGE NET RENTAL RATE (PSF) A 793,13 29,265 14,752 44,17 5.6% 1,694 $2 - $27 $31 - $43 B 481,395 41,36 3,552 44, % 3,63 $15 - $19 $23 - $31 C 97,69 11,75 11,75 12% 1,252 $13 - $16 $19- $26 Total 1,372,98 82,276 18,34 1,58 7.3% 6, GROSS OCCUPANCY COST (PSF) Partnership.Performance. I 13