Third Quarter 2017 / Industrial Market Report. Market Overview

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1 Greater Toronto Area Market Facts 2.7% Availability rate in the Greater Toronto Area $6.63 psf Average asking net rent in the Greater Toronto Area 18 Number of properties in the Greater Toronto Area with more than 250,000 sf available 3.4 msf Industrial space under construction in the Greater Toronto Area Market Overview Leasing activity in the Greater Toronto Area (GTA) industrial market continued to accelerate in the third quarter of The overall availability rate across the market ticked down quarter-overquarter by 50 basis points (bps) to 2.7%, maintaining the positive momentum experienced last quarter. More than 6.7 million square feet (msf ) of new supply has been added to the market during the past five quarters but nonetheless, availability has decreased 70 bps in that time period. The market experienced almost 4 msf of positive absorption in third-quarter Three deals, each over 250,000 square feet (sf ) accounted for 42% (1.7 msf ) of all positive absorption during the quarter. Developers are purchasing blocks of land and proposing new buildings to meet the steady demand for new product. Notably, Oxford Properties Group announced its acquisition of 242 acres of industrial land in Milton near James Snow Parkway North, with the ability to build up to 3.3 msf. In addition, First Gulf and Sun Life Investment Management recently announced their Metro East Business Park located in the northeast end of Toronto. The park is 64 acres with the ability to accommodate flexible building options up to 1.5 msf with delivery in The roster of third-quarter completions totalled 370,000 sf. Most of this new space (203,800 sf ) is in Kuehne + Nagel s new facility at 6280 Millcreek Dr. in Mississauga, with the remainder (114,000 sf ) at Anatolia Capital Corp. s 6500 Kitimat Rd. (also in Mississauga), and 53,000 sf at 525 Cochrane Dr. in Markham, owned by Cesaroni Holdings Limited.

2 GTA Market Monitor Availability in each of the GTA s four districts continued to decrease in the third quarter, with the West showing the greatest relative change dropping 90 bps to 3.3%. The overall GTA availability rate now measures 2.7% down 50 bps quarter-overquarter, and 70 bps year-over-year. GTA Central posted the lowest availability rate at 2%. Average net asking rents ticked up slightly quarter-over-quarter, to $6.63 per square foot (psf ) across the GTA. However, average net asking rents appear steadier in the longer term, marginally higher than one year ago. The highest average net asking rent was found in GTA North at $6.99 psf. GTA East continued to be the most economical market with an average net asking rent of $5.36 psf. Market Inventory Total Available Area Average Net Asking Rent ($psf ) Construction Pipeline 874 msf 23.3 msf $6.63 psf 3.4 msf / 12 buildings Availability Trends Occupancy Cost Trends 50 5% $12 Total Available Area (msf) % 2% 1% Availability Rate Avg. Gross Rent $10 $8 $6 $4 $2 0 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 0% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate ($psf ) Avg. Additional Rent ($psf ) Market Inventory Direct Avail. Area Sublet Avail. Area Total Avail. Area Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing GTA Central 262,787,316 4,885, ,861 5,319, % $6.46 $3.99 $ ,577,301 GTA East 48,266,736 1,026,739 3,000 1,029, % $5.36 $3.08 $ , ,000 GTA North 182,684,150 3,192,334 1,252,310 4,444, $6.99 $3.32 $ , ,503 1,481,566 GTA West 380,290,114 11,160,471 1,368,849 12,529, % $6.68 $3.51 $ ,526 2,953,959 6,209,146 GTA Overall 874,028,316 20,264,834 3,058,020 23,322, % $6.63 $3.77 $ ,092 3,382,830 9,945,013

3 GTA Central Market Monitor Available space in the Central market decreased by 201,000 sf, pushing the overall availability rate down a further 10 bps quarterover-quarter to 2%. The average net asking rent of $6.46 psf has climbed considerably from $6.10 psf in the first quarter, but closely reflects the year-ago rate of $6.49 psf. Demand was strongest in the Scarborough market, where the availability rate dropped 40 bps to 2.3% quarter-over-quarter. North York continued to offer the most economical average gross asking rent in the Central market at $10.16 psf. Notable lease transactions included Storage Centre inking a new deal at 190 Carrier Dr. in Etobicoke (100,405 sf ), and Supreme Packaging signing a new lease in North York for 22,050 sf at 425 Norfinch Dr. On the sale front, RICE Group and Graystone purchased 2250 Islington Ave. from Postmedia Network for $30.5 million, representing $110 psf. Following the completion of Prologis Business Park on Tapscott in Scarborough, First Gulf and Sun Life are offering a design-build opportunity (Metro East Business Park) located at Steeles Ave. E. and Tapscott Rd. With 64 acres, the partners have the capacity to build up to 1.5 msf of industrial space with a 2019 delivery date. No new construction was completed during the quarter; five buildings totalling approximately 1.6 msf remain in the preleasing pipeline. Market Inventory Total Available Area Average Net Asking Rent ($psf ) Construction Pipeline 263 msf 5.3 msf $6.46 psf 0 sf / 0 Buildings Availability Trends Occupancy Cost Trends 7 5% $12 Total Available Area (msf) % 2% 1% Availability Rate Avg. Gross Rent $10 $8 $6 $4 $2 0 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 0% Q3'16 Q4'16 Q1'17 Q2' 17 Q3' 17 Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate ($psf ) Avg. Additional Rent ($psf ) Market Inventory Direct Avail. Area Sublet Avail. Area Total Avail. Area Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing East York 9,655, , , % $6.45 $ Etobicoke 75,933,270 2,034, ,690 2,239, % $6.42 $3.85 $ North York 69,604,219 1,205,541 29,985 1,235, % $6.67 $3.49 $ ,118,730 Scarborough 65,959,942 1,295, ,168 1,487, % $6.52 $3.75 $ ,571 Toronto 41,250, ,322 7, , % $7.72 $4.07 $ GTA Central 262,787,316 4,885, ,861 5,319, % $6.46 $3.99 $ ,577,301 * Total figures for the GTA Central include additional submarkets not listed above (i.e. York).

4 GTA East Market Monitor Overall, availability in the East market decreased 70 bps to 2.1% during the third quarter, continuing a steady decline that began in the first quarter of Whitby experienced the most significant drop 290 bps to 3.. The average net asking rent of $5.36 psf in the East market is at its lowest point since the first quarter of 2016 (when it was $5.25 psf ), which can largely be attributed to a.13-psf drop in Whitby s average net asking rent. The largest lease signed during the third quarter was Keystone Automotive Industries 140,523-sf deal at 185 William Smith Dr. in Whitby. On the sale front, PIRET purchased 1865 Clements Rd. in Pickering (181,850 sf ) from Sapphire Swan Ventures Corp. for $24 million, representing $124 psf at a reported cap rate of 5.3%. 105,368 sf of speculative construction is underway at KingSett s 185 William Smith Dr. in Whitby, an expansion to the existing 113,408-sf facility. The finished building totals 218,776 sf, of which Keystone Automotive Industries has leased 140,523 sf as mentioned above. Four buildings were in the preleasing stage, which would add upwards of 677,000 sf to the East market s inventory. Market Inventory Total Available Area Average Net Asking Rent ($psf ) Construction Pipeline 48 msf 1.0 msf $5.36 psf 105,398 sf / 1 Building Availability Trends Occupancy Cost Trends 3 5% $10 $9 Total Available Area (msf) 2 1 3% 2% 1% Availability Rate Avg. Gross Rent $8 $7 $6 $5 $4 $3 $2 $1 0 0% Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate ($psf ) Avg. Additional Rent ($psf ) Market Inventory Direct Avail. Area Sublet Avail. Area Total Avail. Area Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing Ajax 7,280, , , % $4.97 $ ,000 Oshawa 13,587, , , % $5.88 $3.07 $ ,000 Pickering 11,178,377 98,042 3, , % $5.50 $ Whitby 10,308, , , $5.58 $3.19 $ ,368 67,000 GTA East 48,266,736 1,026,739 3,000 1,029, % $5.36 $3.08 $ , ,000 * Total figures for the GTA East include additional submarkets not listed above (i.e. Brock, Clarington, Scugog and Uxbridge).

5 GTA North Market Monitor The availability rate in the North market declined 20 bps quarter-over-quarter to 2. a new historic low. Subleases made up 28% of the total available area in the North market, representing more than 1.2 msf. The average net asking rent in the North market increased.09 psf quarter-over-quarter to $6.99 psf, which remains the highest among the GTA s districts. Significant lease transactions during the third quarter included RM2 Canada Inc. signing a sublease at 81 Royal Group Cres. in Vaughan for 83,625 sf, and Steel Art Signs inking a new deal at 130 Performance Dr. in Richmond Hill for 38,650 sf. On the sales front, PIRET purchased 2777 Langstaff Rd. in Vaughan from Toys R Us for $73.4 million, representing $156 psf. One building, 525 Cochrane Dr. in Markham, was completed during the quarter, adding 52,566 sf to the inventory. Two speculative buildings are under construction: ZZen Group s 150 New Huntington Rd. in Vaughan, and Andrew Vincent Holdings 235 Pony Dr. in Newmarket, at 300,503 and 23,000 sf, respectively. Seven buildings are in the preleasing mode, with the potential of adding close to 1.5 msf to the North market s inventory. Market Inventory Total Available Area Average Net Asking Rent ($psf ) Construction Pipeline 183 msf 4.4 msf $6.99 psf 323,503 sf / 2 Buildings Availability Trends Occupancy Cost Trends 7 $12 Total Available Area (msf) % 2% Availability Rate Avg. Gross Rent $10 $8 $6 $4 1 $2 0 1% Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate ($psf ) Avg. Additional Rent ($psf ) Market Inventory Direct Avail. Area Sublet Avail. Area Total Avail. Area Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing Aurora 6,157, , , % $9.19 $ Markham 40,374, , , , % $6.97 $3.46 $ , Newmarket 9,032, , , , % $6.44 $3.78 $ ,000 0 Richmond Hill 14,252, ,045 13, , $7.29 $3.45 $ ,000 Vaughan 107,260,147 1,945, ,267 2,778, % $6.73 $3.25 $ ,503 1,401,566 GTA North 182,684,150 3,192,334 1,252,310 4,444, $6.99 $3.32 $ , ,503 1,481,566 * Total figures for the GTA North include additional submarkets not listed above (i.e. East Gwillimbury, Georgina, King and Whitchurch-Stouffville).

6 GTA West Market Monitor Availability in the GTA West market decreased 90 bps during the third quarter, to 3.3% the lowest rate in more than 10 years driven by the take-up of three large blocks of space in Halton Hills and Caledon, each more than 250,000 sf, which accounted for over 1.7 msf of positive absorption. Halton Hills (13.9% drop) and Caledon (3.2% drop) both posted significant reductions in availability quarter-over-quarter. Large transactions included Kraft Canada Inc. leasing 775,000 sf at 7951 Fifth Ln. in Halton Hills and SDR Distribution Services 630,000-sf lease at 86 Pillsworth Rd. in Caledon. Milton continued to post the highest average net asking rents in the GTA West market at $6.98 psf, closely followed by Mississauga with $6.81 psf, and the lowest rents were found in Halton Hills at $5.67 psf. The development pipeline increased during the quarter, with almost 3 msf under construction in nine buildings. This accounts for more than 87% of the overall underconstruction figure for the GTA. Market Inventory Total Available Area Average Net Asking Rent ($psf ) Construction Pipeline 380 msf 12.5 msf $6.68 psf 3 msf / 9 Buildings Availability Trends Occupancy Cost Trends 30 6% $12 Total Available Area (msf) % 3% 2% Availability Rate Avg. Gross Rent $10 $8 $6 $4 1% $2 0 0% Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate ($psf ) Avg. Additional Rent ($psf ) Market Inventory Direct Avail. Area Sublet Avail. Area Total Avail. Area Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing Brampton 95,248,873 1,837, ,497 2,072, % $6.34 $3.23 $ ,840 1,702,831 Burlington 26,701, ,923 16, , % $6.22 $2.98 $ Caledon 14,106, , , $6.45 $2.60 $ ,103 2,518,392 Halton Hills 8,041,924 1,244, ,244, % $5.67 $ ,000 0 Milton 21,579,312 2,246,722 72,200 2,318, % $6.98 $3.11 $ ,121,782 Mississauga 186,094,441 3,982, ,662 4,976, % $6.81 $3.77 $ ,526 1,768, ,927 Oakville 28,517, ,571 51, , % $6.67 $3.03 $ ,214 GTA West 380,290,114 11,160,471 1,368,849 12,529, % $6.68 $3.51 $ ,526 2,953,959 6,209,146

7 Summary of Tenant Options Available Space No. of Bldgs. with Avail. Space More than 250,000 sf 249, ,000 sf 99,999-50,000 sf 49,999-20,000 sf Less than 20,000 sf East York GTA GTA West GTA North GTA East GTA Central Etobicoke North York Scarborough Toronto Market Total* Ajax Oshawa Pickering Whitby Market Total* Aurora Markham Newmarket Richmond Hill Vaughan Market Total* Brampton Burlington Caledon Halton Hills Milton Mississauga Oakville Market Total Overall Total * Total figures for the GTA Central, GTA East and GTA North include additional submarkets not listed above.

8 Lake Simcoe Georgina Brock East Gwillimbury Caledon King Newmarket Aurora Whitchurch- Stouffville Uxbridge Scugog Halton Hills GTA WEST 1 Milton 407 Brampton 410 Mississauga 403 QEW Vaughan Etobicoke York Toronto GTA NORTH Richmond Hill 2 North York GTA CENTRAL East York 3 Markham Scarborough Pickering Ajax 412 GTA EAST Whitby Oshawa Clarington Burlington Oakville Lake Ontario Significant Lease Transactions by Market # Address Market Tenant Size Lease Type Fifth Line Halton Hills Kraft Canada Inc. 775,000 sf New Carrier Road Etobicoke Storage Centre 100,405 sf New Rodick Road Markham William Smith Drive Whitby Goodman Company Canada Keystone Automotive Industries 105,443 sf New 140,523 sf New

$924M Total industrial sales volume for transactions greater than $1 million during the third quarter 100 Sandalwood Pkwy. W.

The average price per square foot, however, reached an all-time high of $162 psf, continuing the steady upward trend. Capitalization Rates Average Cap Rate 10% 9% 8% 7% 6% 5% 5.1% 4.

Meanwhile, multi-tenant capitalization rates held steady at 5.1%, but were down 50 bps year-over-year.

million. The Region of Peel captured the lion s share of the GTA s investment dollar volume (46%) once again in the third quarter.

The City of Toronto nudged out York Region as the second-place contender in total dollar volume with $197 million traded for an average of $210 psf.

9 $924M Total industrial sales volume for transactions greater than $1 million during the third quarter 100 Sandalwood Pkwy. W. in Brampton GTA Industrial Investment Market Highlights After rising for seven consecutive quarters, industrial investment volume activity declined a modest 5% in the third quarter to $924 million. The average price per square foot, however, reached an all-time high of $162 psf, continuing the steady upward trend. Capitalization Rates Average Cap Rate 10% 9% 8% 7% 6% 5% 5.1% 4.8% Capitalization rates for single-tenant properties retreated 20 bps to 4.8% from the second quarter, and have compressed 60 bps year-over-year. Meanwhile, multi-tenant capitalization rates held steady at 5.1%, but were down 50 bps year-over-year. PIRET accounted for three of the top five transactions by dollar volume during the quarter, including a singletenant, 764,000-sf warehouse and distribution centre (leased to Kellogg s) for $101 million. The Region of Peel captured the lion s share of the GTA s investment dollar volume (46%) once again in the third quarter. Mississauga and Brampton contributed $256 million and $143 million, respectively, at a combined average per-square-foot price of $180. The City of Toronto nudged out York Region as the second-place contender in total dollar volume with $197 million traded for an average of $210 psf. '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1'17 Q2'17 Q3'17 Single Tenant Industrial Multi Tenant Industrial Investment Volume and Sale Price (Transactions over $1M) Investment Volume ($ millions) $1,400 $1,200 $1,000 $800 $600 $400 $200 Q1'08 Q1'09 Q1'10 Q1'11 Q1'12 Q1'13 Q1'14 Q1'15 Q1'16 Q1'17 Q3'17 Significant Sale Transactions Investment Volume ($ Millions) Average Sale Price ($psf ) Market Address Total Price Total Area Sale Price Mississauga TFI International PIRET Portfolio $104,000, ,568 $364 Brampton 100 Sandalwood Pkwy. W. $101,000, ,000 $132 Vaughan 2777 Langstaff Rd. $73,400, ,000 $156 Etobicoke 2250 Islington Ave. $30,475, ,914 $110 Richmond Hill Investors Group Berkshire Axis Portfolio $28,025, ,819 $145 $150 $120 $90 $60 $30 Average Sale Price

10 For more information, contact: Bill Argeropoulos Principal & Practice Leader, Research (Canada) Warren D'Souza Research Manager, Toronto Suburban Markets Avison Young Commercial Real Estate (Ontario) Inc., Brokerage. 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. Acknowledgment: Data for graphs, charts and tables used in this report are sourced from Avison Young, Altus InSite and Realnet. Some of the data in this report has been gathered from third party sources and has not been independently verified by Avison Young. Avison Young makes no warranties or representations as to the completeness or accuracy thereof. Anthony Hong Research Analyst City Centre Drive East Tower, Suite 301 Mississauga, ON L5B 1M Charles Torzsok Research Analyst Commerce Valley Drive West Suite 501, Mailbox #7 Markham, ON L3T 7V

First Quarter 2017 / Industrial Market Report. Market Overview

First Quarter 2017 / Industrial Market Report. Market Overview Greater Toronto Area Market Facts 3.4% Availability rate in the Greater Toronto Area vs vacancy rate of 2.2% $6.53 PSF Average asking net rent in the Greater Toronto Area 18 Number of properties in the