Industrial Insight. Industrial Overview. Greater Montréal Area Q Economy. Quarter in review (Leasing market)

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1 Industrial Insight Greater Montréal Area Q4 Industrial Overview Economy Overall growth in the province remained flat in the fourth quarter of, however economic activity has seen signs of improvements and is expected to pick up in 16. Across the Greater Montreal Area (GMA), the unemployment rate has increased slightly since September, from 8.0 percent to 8.2 percent at the end of the fourth quarter. On a positive note, the province made huge strides in job gains during the fourth quarter with the addition of 12,700 jobs in December alone. The most notable sectors of employment increase were the health care and construction sectors, with 8,300 and 6,700 jobs created, respectively. After making significant bounds in the third quarter, the trade and manufacturing sectors were the losing sectors with 14,900 and 5,000 jobs lost. Key Market Indicators Total inventory (s.f.) 317,857,829 Light industrial Supply Demand Total availability (%) 7.30% Under construction (s.f.) 1,170,1 Total net absorption (s.f.) 1,862,186 YTD net absorption (s.f.) 1,668, Month Forecast The improved labour market should carry on into 16 which will support domestic activity in the province, especially in the retail sector. The manufacturing and transportation industries in Eastern Canada will continue to further benefit from decreased gasoline prices. Pricing Average net rental rate $5.82 p.s.f. 12-month forecast 12-month percent change +1.9% Quarter in review (Leasing market) The leasing fundamentals of GMA s industrial market have continued to improve since September. Over 1.3 million square feet of new industrial space was completed in the fourth quarter with another 1.1 million square feet slated to be completed in the coming year; an indication of continued market recovery and developers market optimism. Moreover, just shy of 1.9 million square feet were absorbed in the fourth quarter which brought the availability rate to 7.3 percent or down by basis point quarter-over-quarter and up basis points year-over-year. The positive change in occupancy levels and lower availability adds to the notion that Montreal s industrial market has seen an encouraging amount of activity this quarter. Source: Desjardins Economics, RBC Economics, Institut de la Statistique du Québec

2 Landlord leverage Industrial Overview Cont d Quarter in review (Leasing Market) A total of 168 spaces were fully or partially leased this quarter. The trend of off-island markets such as the North & South Shores putting forward strong leasing demand continued this quarter. More notably, the East End, which is notorious for its older buildings and lower clear heights, showed strong leasing activity in the last three months. Some of the notable spaces leased include 00 de Boucherville in Hochelaga-Maisonneuve (176,1 square feet), 117 Hymus in Pointe- Claire (194,000 square feet) and Laval Autoroute in Laval (130,130 square feet). The amount of available sublet spaces increased by 45 percent during the quarter. There were 257,133 square feet, across nine buildings, of new sublease space added to the market with the majority of sublet spaces located in Saint-Laurent and range from 4,000 to 24,000 square feet. The largest and most notable sublet space available is 16 de Montarville in Boucherville, on the South Shore. Greater Montréal Area Property Clock Laval Vaudreuil South Shore North Shore West Island Peaking market Rising market Lachine Falling market Bottoming market Midtown South East End & Midtown North Tenant leverage There are currently 23 million square feet available space for lease in the GMA, a decrease of 4.8 percent since last quarter. Fifty-seven percent of available spaces are multi-tenant buildings, percent are single-tenant and 2 percent are industrial condos. Net rental rates have made a slight increase, up 0.2 percent quarterover-quarter. The average rental rate now stands at $5.82 per square foot net and $9.08 per square foot gross. Vaudreuil remains the most expensive submarket, with an average gross rent of $11.74 per square foot while the East End continues to be the least expensive submarket of the GMA with $8.01 gross per square foot on average. Although they are still the lowest in the GMA, rental rates in the East End are continuing their trend upward, up almost 4 percent from the same time last year. The Midtown North & South submarkets continue their downward slope, with average rental rates dropping 8.2 and 9.3 percent, respectively. This can be attributed to both submarkets having older industrial infrastructure with low clear heights, minimal shipping doors, that were catered to Montreal s once thriving textile manufacturing sector. Distribution of Availabilities for Lease by Submarket North Shore 1,3,702 s.f. Laval 1,850,606 s.f. South Shore 2,125,963 s.f. 8.0% 17.3% 2.9% Vaudreuil 3,623 s.f. 9.2% 1.4% 10.3% Midtown North 2,382,756 s.f. 3.7% Midtown South 849,244 s.f. 17.7% East End 4,5,428 s.f. St-Laurent 3,998,352 s.f. 6.8% Lachine 1,558,668 s.f. 19.7% West Island 4,542,843 s.f. JLL Greater Montréal Area Local Industrial Insight Report Q4 2

3 Industrial Overview Cont d New developments / under construction This quarter was one of the busiest in terms completed industrial projects in a very long time. Five industrial buildings were built for a total of 1,347,500 square feet in the Greater Montreal Area. Broccolini completed a 287,000 square foot project at 20 Aviation Road in Dorval in November for Cardinal Health. Also completed was Montoni s 893,000 square foot project for Jean-Coutu s Headquarters in Varennes, on Montreal s South Shore. The company opened its headquarters in December with full operations beginning in January. Triovest is currently working on a 0,000 square foot built-tosuit project on F.X. Tessier in Vaudreuil set to be finished between the first and second quarter of 16 and have begun Phase II of their F.X. Tessier project which is slated to add another 500,000 square feet to the project. Broccolini is also working on their F.X. Tessier project (144,000 square feet) which should be competed in 16 also. Broccolini is also building a 300,000 project for ABB in Saint-Laurent s Technoparc. Staying in Saint-Laurent, Vista properties is working on a distribution facility at 2985 Douglas B. Floreani (65,000 square feet) which has finally broke ground and is expect to be delivered by summer 16. Outlook As market supply continues to be scarce on the leasing side, landlords (especially on the island of Montreal) with older properties must continue to reinvent themselves to stay competitive. The continuing drop in oil prices and the falling Canadian dollar will do wonders for distribution companies, especially foreign ones, who previously shied away from the move North. We can expect conditions in the industrial market to shift from tenant-favorable market to more balanced conditions. Market statistics Average Lease Rental Rates by Submarket Net Asking Rent Additional Rent $12.00 $11.74 $9.78 $10.29 $10.00 $9.21 $8.73 $8.82 $8.95 $9.25 $8.43 $3.19 $3.65 $8.01 $8.00 $3.86 $2.96 $2.72 $3.16 $3.55 $3.14 $2.74 $6.00 $4.82 $4.00 $2.00 $6.59 $6.64 $5.35 $5.78 $5.28 $6.23 $6.09 $5.29 $5.27 $6.92 $- Historical Greater Montréal Area Total Net Absorption and Total Availability s.f. GMA Net Absorption GMA Total Availability 2,500, % 2,000, % 1,500, % 1,000, % 500, % 0 5.0% -500, % -1,000, % -1,500, % -2,000, % -2,500, % Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Submarket Total inventory (s.f.) Number of buildings Under construction (s.f.) Total availability Quarterly absorption (s.f.) Average net asking rent ($ p.s.f.) QoQ % change in net rent YoY % change in net rent Midtown North 50,476,292 1, % 284,988 $ % -8.22% Midtown South 23,826, % 74,062 $ % -9.26% East End 69,552,289 2, % 339,741 $ % +3.94% West Island 44,959, , % -5,889 $ % +0.38% Lachine 21,791, % -127,099 $ % +5.59% Saint-Laurent 62,602,655 1,011 65, % 1,669 $ % -0.56% Laval 18,229, % 190,214 $ % +0.91% Vaudreuil 896, ,1 1.39% -3,569 $ % South-Shore 17,801, % 577,258 $ % +8.94% North Shore 7,721, % 411,811 $ % +2.70% Greater Montréal Area 317,857,829 6,770 1,235,1 7.30% 1,862,186 $ % +1.93% Source: certain numbers come from Altus Insite JLL Greater Montréal Area Local Industrial Insight Report Q4 3

4 Millions of square feet ($/s.f.) Industrial Sales Overview Across the GMA, industrial sales decreased again in the last three months with 1.07 million square feet sold, a decrease of 52 percent from the previous quarter. The actual amount of industrial sale transactions climbed to 22 this quarter, up from 17 last quarter. The average transaction price for non-investment deals was of $78.39 per square foot. The most notable transaction of the quarter was the sale of 2185 Francis-Hughes, a 95,137 square foot property located in the Laval submarket. The vendor was CH 2A Capital Inc. and the transaction closed at $7.95 million or $84.03 per square foot to AGT Clic Foods Inc. Throughout the quarter, there were approximately 12.5 million square feet of industrial space available for sale in the GMA, of which 8.3 million square feet were on the island of Montréal. The East End accounts for nearly one-fifth of the market s availability with almost 2.4 million square feet available for sale. Industrial space available for sale is becoming more and more scarce across the Greater Montreal Area which is leading to the continuing upward slope in asking sale prices. The average asking sale price now stands at $71.51 per square foot. Vaudreuil and Laval continue to boast the highest average asking sale prices, due to their newer inventory compared to the rest of the GMA, at $ and $96.35, respectively. Larger clear heights continue to be all the rage in the industrial market, indicative of this is the increase of 4 percent in asking sale prices of industrial buildings quarter-over-quarter with a clear height of 28 feet and higher. On the flipside, average asking sale prices of buildings with clear heights of 18 feet and lower have dropped 21 percent over the same period. Average Asking Sale Prices by Clear Height (GMA) <18 feet feet feet >28 feet $56.80 p.s.f. $71.44 p.s.f. $75.49 p.s.f. $81.31 p.s.f. Average Asking Sale Prices by Submarket Submarket Average Asking Price ($/s.f.) Vaudreuil-Dorion $ Laval $96.35 Midtown North $79.87 Saint-Laurent $71.93 West-Island $79. South Shore $77.35 North Shore $67.07 East End $62.00 Midtown South $53.64 Lachine $57.88 Montérégie $65.34 Current Space Available for Sale in the Greater Montréal Area Submarket Available space (s.f.) Proportion of the Market Sales Transactions (Square feet traded and average $/s.f.) Square feet sold Average transaction value Midtown North 1,244,7 9.93% 4 $90.00 Midtown South 183, % $80.00 East End 2,397, % West Island 1,572, % 3 $70.00 $60.00 Lachine 621, % Saint-Laurent 2,256, % 2 $50.00 $.00 Laval 1,279,6 10.% $30.00 North-Shore 1,811, % 1 $.00 South Shore 1,025, % $10.00 Vaudreuil-Dorion 143,560 1.% Greater Montréal Area 12,535, % 0 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 Q2 Q3 Q4 $0.00 JLL Greater Montréal Area Local Industrial Insight Report Q4 4

5 Quarterly Market News Greater Montréal Area Côte-des-Neiges Nôtre-Dame-de-Grâce has approved a zoning change to build a 10-floor building that will eventually house a,000 square foot supermarket. Provigo, which owns the land, would like to build on the land, but is facing opposition from nearby residents who oppose the project. November marked the inauguration of Cardinal Health`s 287,000 square foot building on chemin de l Aviation built by Broccolini. To meet the needs of Quebec s market for collection, transportation and processing of waste, Derichebourg Environment announced the establishment of its North American headquarters in Montreal. The French company plans to create 500 jobs in Quebec over the next five years. After over a century of operating business, Quebec s retail chain, Bovet, closed its doors. It decided to remain open throughout the holidays and keep its doors open until January 16, to liquidate all of its inventory. Orginial developer of Quartier Dix30 in Brossard, Devimco, plans to build another large-scale development in the same area. This project will focus more on the residential market and will cost approximately $1 billion. The Fonds immobilier de solidarité FTQ and contractor Grilli Samuel Consortium immobilier announced a partnership agreement for the acquisition of 4.3 million square feet of land in the City of Contrecoeur, on Montreal s South Shore. The land will be used to develop two major industrial and commercial hubs. The project is evaluated at $0 million. CarbonLeo, who announced its plan to big a mega-mall in the Town of Mount-Royal, has continued to purchase old industrial buildings in the city s aging industrial park, where the site is slated to be built. Quarterly Leasing Activity by Submarket (s.f.) Negative Absorption Positive Absorption GMA Laval Lachine North Shore South Shore East End Vaudreuil Midtown South West-Island Midtown North Saint-Laurent (500) (300) (100) Thousands Submarket Conditions Market History and Forecast Submarket Midtown North Midtown South East End Saint-Laurent West island Lachine Vaudreuil Laval North-Shore South-Shore Landlord/Ownerfavorable conditions Balanced conditions Tenant-favorable conditions JLL Greater Montréal Area Local Industrial Insight Report Q4 5

6 Greater Montréal Area Q4 Highlights Lease Transactions Sale Transactions Large Blocks Available for Lease Large Blocks Available for Sale 1 0 Montreal-Toronto, Lacine Tenant: Mega-Brands Inc. Lease Renewal: 360,239 s.f de Boucherville, Hochelaga Tenant: Sogefi Lease Renewal: 176,1 s.f Aut. Laval, Laval Tenant: Wolsely Canada Inc. New Lease: 130,130 s.f Hymus, Pointe-Claire 241,929 s.f. Buyer: 0 Carter Street Investements Inc. Seller: Sonepar Canada Inc. Sale Price: $12,500,000 ($51.66 p.s.f.) Cypihot, Saint-Laurent 2,318 s.f. Buyer: Dario Montoni Seller: Abbott Laboratories Inc. Sale Price: $7,0,000 ($47.27 p.s.f.) Trans-Canada, Baie-d Urfé Direct: 235,626 s.f. Asking Rent: $4.95 p.s.f Anderson, Terrebonne Direct: 233,000 s.f. Asking Rent: $5.50 p.s.f Trans-Canada, Pointe-Claire Direct: 218,259 s.f. Asking Rent: $3.75 p.s.f Langelier, Saint-Léonard 248,327 s.f. Asking Price: $12,000,000 ($48.32 p.s.f.) Bethany, Lachute 238,6 s.f. Asking Price: $13,500,000 ($56.58 p.s.f.) Rivière-du-Nord, Saint-Jérôme Tenant: Autobus Lion Inc. Lease Renewal: 64,565 s.f Stinson, Saint-Laurent Tenant: Linus Shops Inc. New Lease: 60,000 s.f Francis-Hughes, Laval 95,1 s.f. Buyer: AGT Clic Food Inc. Seller: CH 2A Capital Inc. Sale Price: $7,994,577 ($84.03 p.s.f.) Cypihot, Saint-Laurent 80,000 s.f. Buyer: Hovannes Properties Seller: Nova Scotia Company Sale Price: $4,085,000 ($51.06 p.s.f.) St-Martin West, Laval Direct: 185,936 s.f. Asking Rent: $5.00 p.s.f Aviation, Pointe-Claire Direct: 183,385 s.f. Asking Rent: $5.75 p.s.f Transcanadienne, Pointe-Claire 224,130 s.f. Asking Price: $12,000,000 ($53.54 p.s.f.) Henri-Bourassa, Montréal-Nord 183,650 s.f. Asking Price: $8,500,000 ($46.28 p.s.f.) 10 5 du Tremblay, Boucherville,0 s.f. Buyer: Placements GMJ Lague Inc. Seller: Placements Nogared Inc. Sale Price: $2,994,506 ($ p.s.f) Clark-Graham, Baie d Urfé (Also available for lease) 162,000 s.f. Asking Price: $9,362,000 ($57.79 p.s.f.) JLL Greater Montréal Area Local Industrial Insight Report Q4 6

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