Industrial Insight Report. Greater Toronto Area Q2 2016

Transcription

1 Industrial Insight Report Greater Toronto Area

2 Table of Contents Greater Toronto Area Overview 1 Greater Toronto Area Map 2 Submarkets Brampton 3 Burlington 6 Etobicoke 8 Milton / Halton Hills 10 Mississauga 12 Oakville 14 Vaughan 16 Statistics 18 Contacts 19 JLL Greater Toronto Area Industrial Insight

3 Pricing Demand Supply Market Update Greater Toronto Area Developers and landlords remain bullish as new construction pipeline continues Lease activity Although total leasing volume slowed in the second quarter, the Greater Toronto Area (GTA) industrial market continued its momentum with 1.7M square feet of net in the second quarter despite 1.8M square feet of new construction deliveries over the same period. Notably, there were only ten lease deals greater than 100,000 square feet and none of the existing big box developments in Milton or Halton Hills were leased this quarter. While leasing activity has slowed compared to the first quarter, there are numerous tenants in the market such as Gordon Food Service, Hopewell Logistics and Celestica looking for space greater than 100,000 square feet with an aggregate requirement in excess of 1.5M square feet. Rents Currently at $6.03 per square foot, average net rental rates continue their steady march upwards, bolstered by vacancy and availability rates at record lows. The only submarket where rental rates remained flat was the GTA East. Sales and Construction While users and investors alike are willing to purchase well situated buildings at historically high prices, institutional owners remain reluctant to sell given the difficulty of replacing assets in the current tight market. The $100M sale-leaseback of the Sears Canada distribution centre to Metrus Properties and the $56M sale-leaseback of Sobeys distribution centre to Crombie REIT are two major examples of users capturing value from their real estate holdings in the current market while still retaining the functional space they require for their business. There were twenty-nine investor sales in the second quarter with an average price/sf of $112, representing a year over year (YOY) increase of 10.2 percent. There were fifty-four user sales with an average price/sf of $121 in the second quarter, a massive 57.1 percent YOY increase highlighting the tightness of the sale market. Twenty-six projects 19 on spec and 7 design-builds totaling 7.7 million square feet are under construction in the GTA, with 4.3 million square feet on track to be delivered by the end of the year. Speculative construction is booming in Halton Hills and Milton, with seven projects totaling 3.3 MSF currently under construction, including 2.7 MSF of available speculative product set to deliver by the end of. Economic outlook Canada ranked third globally in the Global Real Estate Transparency Index compiled by JLL and Lasalle Investment Management*, further reinforcing Canada s image as a safe haven for capital in a turbulent global economy. The GTA is the third largest industrial real estate market in North America after Chicago and Los Angeles*. Key market indicators 12-month rent growth 2.6% Arrows represent change from prior quarter Net new supply, net, vacancy 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 sf Average rental rate $6.20 $6.00 $5.80 $5.60 $5.40 inventory 777,722,137 vacancy 2.8% availability 3.7% net 1,735,135 YTD net 6,519,741 Average rental rate (nnn) $6.03 Net new supply vacancy 2,257 Net RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location Municipality Size Date Price / sf Metrus Properties Sears Canada Highway No. 50 Vaughan 994, $101 Crombie REIT Sobeys Capital Incorporated 8265 Huntington Road Vaughan 510, $110 Dymon Storage Mylex Furniture 1460 The Queensway Etobicoke 344, $56 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Landlord Location Intersection Size A&P Orlando 6175 Edwards Blvd, Mississauga Kennedy/Edwards 244,995 Crownhill Packaging Metrus 8905 Goreway Dr, Brampton Queen/Goreway 208,147 Future Shop Orlando 6110 Cantay Rd, Mississauga Cantay/Britannia 181,178 *Global Real Estate Transparency Index **City of Mississauga Market conditions JLL Greater Toronto Area Industrial Insight Page 1 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% $6.03

4 Property Clock MARKET STATISTICS Property type Warehouse / Distribution inventory vacancy availability total net YTD total net Average net rent ($ psf) Under construction YTD 481,069, % 4.2% 1,082,573 5,012,834 $5.87 7,564,901 1,820,935 2,962,233 Manufacturing 189,274, % 2.1% 477, ,177 $ , ,666 Industrial 777,722, % 3.7% 1,735,135 6,519,741 $6.03 7,682,668 1,820,935 3,212,899 JLL Greater Toronto Area Industrial Insight Page 2

5 Pricing Demand Supply Brampton Lease activity Leasing activity remained steady in the second quarter, with consistent positive net driving down vacancy and availability rates. Metro Canada Logistics, which had preleased 241,762 square feet of 9 West Drive prior to its delivery early this quarter, expanded its footprint to lease the whole 454,040 square foot building. GWL s recently delivered 3495 Steeles Ave E development is still vacant, although GWL is reportedly close to signing a tenant for the space. Carttera s 899,330 square foot distribution building at 8875 Torbram which delivered at the end of is still fifty percent vacant. There are currently six properties greater than 100,000 square feet available on the Brampton market. Key market indicators inventory 92,652,965 vacancy 3.1% availability 4.5% net 926,469 YTD net 1,919,446 Average rental rate (nnn) $ month dollar change 5.4% Arrows represent change from prior quarter Rents Solid leasing fundamentals have seen average rental rates continue their consistent upwards trajectory. Current construction projects are set to deliver with asking rates in the low seven range. Sales and Construction Ten of the eleven market sales in Brampton this quarter were to users of industrial space rather than investors, averaging a price per square foot of $116, including two manufacturing buildings for the first time this year. Metrus Properties 84,318 square foot multi-tenant speculative development at 545 Deerhurst Dr will be delivering 68.8% preleased in August. Orlando is currently expanding 7825 Winston Churchill Blvd from 377,078 square feet to 799,809 square feet and will soon begin construction on a 219,078 square foot speculative development at 7855 Heritage Road South, both of which will deliver in the first half of Panattoni in conjunction with Artis REIT has begun construction on 175 Westcreek Boulevard in the Westcreek business park, a speculative 130,000 square foot big box development which is set to deliver in Economic outlook The City of Brampton benefits from an excellent transportation network, competitive tax rates, and a predictable local government with an AAA Standard & Poor s credit rating*. Brampton issued $82M worth of industrial building permits in the period from January through May and added 78 new businesses**. RECENT SALES COMPARABLES (sorted by square feet) Net new supply, net, vacancy 2,000,000 Net new supply 1,500,000 vacancy 1,000, ,000 sf 0-500,000 Average rental rate $8.00 $6.00 $4.00 $2.00 $0.00 2,257 Net Buyer Seller Location Intersection Size Date Price / sf The Taylor Group Debro Steel GP Inc. 7 Blair Drive Hwy 410/Steeles 174,668 06/24/ $59 Odomatic Inc. Crosby Canada Inc. 145 Heart Lake Road South Queen St E/Hwy ,880 06/29/ $114 Lo Curto Denison Square Inc Arc Properties Ltd 45 Armthorpe Road Steeles/Goreway 42,579 04/28/ $110 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Landlord Location Intersection Size Metro Canada Logistics Anatolia Capital 9 West Drive West/Steeles 212,278 Crownhill Packaging Metrus 8905 Goreway Dr Queen/Goreway 208,147 SDR Distribution Services Bentall Kennedy 30 Pedigree Crt Steeles/Airport 120, % 6.0% 4.0% 2.0% 0.0% $6.02 * Standard & Poor Brampton ** Brampton Economic Indicators May JLL Greater Toronto Area Industrial Insight Page 3

6 SUBMARKET CHARACTERISTICS High velocity market for both lease and sale activity 1 Lack of available land has prompted numerous redevelopment projects 2 Numerous bulk distribution spaces 3 The 3 rd largest city in the GTA featuring CN Rail s largest intermodal terminal 4 SUBMARKET STATISTICS Property type Warehouse / Distribution inventory vacancy availability total net YTD total net Average net rent ($ psf) Under construction YTD 68,766, % 5.4% 810,908 1,692,488 $6.04 1,013, , ,840 Manufacturing 19,509, % 1.6% 115, ,958 $ Industrial 92,652, % 4.5% 926,469 1,919,446 $6.02 1,013, , ,840 JLL Greater Toronto Area Industrial Insight Page 4

7 Pricing Demand Supply Burlington Lease activity After a strong finish to, Burlington has now posted negative net two quarters in a row for the first time in three years although vacancy rates still sit at a relatively healthy 4.7 percent. Smaller lease sizes make up the majority of lease activity in Burlington, with twenty-four of the twenty-seven lease transactions recorded in the second quarter being smaller than 20,000 square feet. Rents Lack of demand will likely keep rental rates stable in Burlington despite low vacancy and availability rates. Sales and Construction Users acquiring manufacturing facilities accounted for three of the four market sales in the second quarter with an average sale price of $92 per square foot. The only investor purchase was the Thomson Metals and Disposal property which forms a contiguous scrap yard and recycling facility. With the April delivery of 1105 Clay Ave, Fengate s multi-tenant 67,000 square foot fully preleased speculative property, there are no current construction projects ongoing in Burlington. Economic snapshot Burlington contains a higher ratio of dated industrial buildings but benefits from its proximity to the port of Hamilton and low municipal tax rates and development charges. The four key sectors in Burlington are advanced manufacturing, financial and business services, life and earth sciences, and ICT*. While Burlington s population growth has been consistent with other municipalities in the region, it has the oldest median age in the Halton and Peel regions at 41.8 years old** as of the 2011 census. Key market indicators 12-month dollar change 7.3% Arrows represent change from prior quarter Net new supply, net, vacancy 300, , ,000 sf 0-100,000 Average rental rate $6.50 $6.00 $5.50 $5.00 $4.50 inventory 23,710,352 vacancy 4.7% availability 6.5% net (84,368) YTD net (114,185) Average rental rate (nnn) $5.35 Net new supply vacancy 2,257 Net 8.0% 6.0% 4.0% 2.0% 0.0% $5.35 RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location Intersection Size Date Price / sf Accurcast Inc An individual 2247 Harold Road QEW/Guelph Line 27,250 05/06/ $59 Casing Service Inc Ontario Ltd 5510 Harvestor Road Harvester/Burloak 17,995 05/13/ $ Zelco Drive Thomson Metals and Ontario Ltd 971 Zelco Drive QEW/Appleby Line 12,300 06/03/ $81 Disposal 4425 South Service Road RECENT LEASE COMPARABLES (sorted by square feet) Type Landlord Location Intersection Size New Harvester Group 1770 Appleby Line Appleby Line/Upper Middle 76,960 Renewal PIRET 2247 Harold Rd Guelph Line/Mountainside 26,000 New, Sublease Bentall Kennedy (Sun Life) 3100 Harvester Rd Guelph Line/Harvester 15,059 * BEDC Invest Profile **Statistics Canada, National Household Survey (NHS) Profile, 2011 National Household Survey, Statistics Canada Catalogue no XWE JLL Greater Toronto Area Industrial Insight Page 5

8 SUBMARKET CHARACTERISTICS Low velocity market for both lease and sale activity 1 Ninety-four percent of all industrial and flex properties are located within two kilometers of Highway Limited bulk distribution spaces 3 Well educated and diversely skilled workforce 4 SUBMARKET STATISTICS Property type Warehouse / Distribution inventory vacancy availability total net YTD total net Average net rent ($ psf) Under construction YTD 15,658, % 5.0% 15,270 75,489 $ ,749 67,749 Manufacturing 3,519, % 9.3% (77,948) (80,298) $ Industrial 23,710, % 6.5% (84,368) (114,185) $ ,749 67,749 JLL Greater Toronto Area Industrial Insight Page 6

9 Pricing Demand Supply Etobicoke Lease activity Etobicoke is posting one of the lowest vacancy rates in the GTA after net has steadily increased over the last three quarters. With no new speculative construction over the past two years, modern distribution facilities remain elusive. There are currently three properties available for lease over 100,000 square feet, all with clear heights of less than twenty-two feet. Rents Etobicoke benefits from its proximity to the Toronto core and to the Pearson International airport but the lack of new construction is keeping rental rates stable. Key market indicators inventory 65,283,344 vacancy 2.0% availability 5.1% net 278,783 YTD net 549,436 Average rental rate (nnn) $ month dollar change 10.1% Arrows represent change from prior quarter Sales and Construction There were seven user sales greater than 10,000 square feet with an average price per square foot of $110 and three investor sales with a price per square foot of $55. The largest sale in Etobicoke was the $19.5M purchase of the 344,716 square foot manufacturing facility at 1460 The Queensway in a redevelopment play by Dymon Storage, an upscale self storage company based out of Ottawa. The Etobicoke location is the second of eighty storage facilities Dymon plans to build in the GTA over the next ten years, having also acquired a two acre development site in Brampton in January. Although Dymon plans to redevelop the 1460 The Queensway site into up to a 500,000 square foot storage facility, there are no current construction projects ongoing in Etobicoke. Net new supply, net, vacancy 400, ,000 Average rental rate Economic outlook Etobicoke contains a high ratio of dated industrial product with low clear heights and restrictive shipping design layouts. Despite this there has been no new construction or infill redevelopment for the last two years. Etobicoke will benefit from its infill location close to the Toronto core as self storage companies such as Dymon Storage and U.S. based Strategic Storage Trust II attempt to position themselves close to population clusters. $8.00 $6.00 $4.00 $2.00 $0.00 2,257 RECENT SALES COMPARABLES (sorted by square feet) sf 0-200,000 Net new supply -400,000 vacancy Net Buyer Seller Location Intersection Size Date Price / sf Dymon Storage Mylex Furniture 1460 The Queensway Gardiner/Kipling 344,716 05/02/ $56 Gramercy Property Trust AGNL KIK Enterprises Inc 2000 Kipling Avenue & 13 Bethridge Road Kipling/Rexdale 267,299 04/27/ $70 Dynevor Express Ltd L-3 Communications Electronic Systems Inc 19 City View Drive Hwy 27/Dixon 93,514 06/23/ $31 RECENT LEASE COMPARABLES (sorted by square feet) Transaction Type Landlord Location Intersection Size New Ontario Inc. 230 New Toronto St Kipling/Horner 75,900 New Mantella Corporation 70 Carson St Horner/Carson 25,333 New KingSett Capital 22 Huddersfield Rd Humberline/Huddersfield 22, % 3.0% 2.0% 1.0% 0.0% $5.67 JLL Greater Toronto Area Industrial Insight Page 7

10 SUBMARKET CHARACTERISTICS Older industrial stock with lower clear heights and constrained shipping yards 1 Adjacent to Pearson International Airport in the West and the Toronto Core to the East 2 Higher ratio of smaller and midsized manufacturing 3 Vast labour pool and public transit amenities 4 SUBMARKET STATISTICS Property type Warehouse / Distribution inventory vacancy availability total net YTD total net Average net rent ($ psf) Under construction 30,415, % 5.2% 123, ,650 $ Manufacturing 27,585, % 4.9% 87, ,527 $ Industrial 65,283, % 5.1% 278, ,436 $ YTD JLL Greater Toronto Area Industrial Insight Page 8

11 Pricing Demand Supply Milton / Halton Hills Lease activity Milton and Halton Hills recorded no lease transactions over ten thousand square feet in the second quarter. With Milton s recent explosion of speculative big box construction there are only three freestanding properties available for lease in the 20,000 to 100,000 square foot range but twelve available in the 100,000 square foot and greater range. Although there are numerous 100,000 square foot plus tenants in the market, large corporate occupiers have delayed in committing to space. With no new leases this quarter and the development pipeline continuing to deliver speculative big box properties the vacancy and availability rates in this node are the highest in the GTA West. Rents The higher rents commanded by quality new construction in this area of lower inventory are having a much larger effect on the average rental rate compared to other submarkets but have remained steady from last quarter. Sales and Construction There were only two market sales in Milton and Halton Hills, which is inline with normal activity for this lower velocity sales market. Vacancy rates look set to spike further as there will be 2,743,283 square feet of available speculative product delivering by the end of. The only current project in Halton Hills is Broccolini s 639,839 square foot Gateway Distribution Center at Steeles Ave. East, on the border of Milton just North of Highway 401. Triovest has plans in place to begin construction on 2 Cleve Court in Halton Hills, a 564,824 square foot speculative project that will be built in two phases and is expected to deliver by the end of Economic outlook Milton has decreased its industrial development charges within the Town of Milton to $3.03 per square foot*. Milton is the fastest growing community in Canada with a 56.5 percent growth rate**. The Canadian National Railway Company (CN) is currently undergoing an environmental assessment of its planned $250 million intermodal and logistics hub which will be built along the main CN line in the southwest portion of urban Milton, on a 400-acre parcel of CN owned land***. Key market indicators 12-month dollar change 10.6% Arrows represent change from prior quarter Net new supply, net, vacancy 1,000, ,000 sf 0-500,000-1,000,000 Average rental rate $8.00 $6.00 $4.00 $2.00 $0.00 inventory 23,218,452 vacancy 9.4% availability 20.5% net 65,876 YTD net 370,035 Average rental rate (nnn) $6.55 Net new supply vacancy 2,257 Net 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% $6.55 RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location Intersection Size Date Price / sf Bid Express Ltd Sl Special Laboratories 290 Bronte Street South Bronte/Derry 22,150 05/09/ $ Ontario Inc Williamson Real Estate Holdings Ltd 102 Armstrong Avenue Guelph/Mountainview 16,099 06/30/ $124 * Town of Milton Development Charge Rates **Miltonthiswayup Milton Fast Facts ** CN Rail Proposal: Milton Logistics Hub JLL Greater Toronto Area Industrial Insight Page 9

12 SUBMARKET CHARACTERISTCS Almost exclusively warehousing and distribution properties 1 Speculative building boom along the Highway 401 corridor 2 Proposed site of new CN rail intermodal logistics hub 3 Fastest growing community in Canada with a projected labour force of 81,106 by SUBMARKET STATISTICS Property type Warehouse / Distribution inventory vacancy availability total net YTD total net Average net rent ($ psf) Under construction YTD 19,270, % 22.8% 81, ,087 $6.63 3,285, , ,948 Manufacturing 3,247, % 9.9% (15,352) (19,652) $ Industrial 23,218, % 20.5% 65, ,035 $6.55 3,285, , ,948 JLL Greater Toronto Area Industrial Insight Page 10

13 Pricing Demand Supply Mississauga Lease activity Although year to date net remains a healthy 959,622 square feet, the second quarter did see negative net of 318,948, leading to a slight easing of vacancy rates. This may indicate that this higher velocity leasing and sales node is approaching its equilibrium point as has swung back and forth over the past year. Rents Rental rates continued to rise in Mississauga as underlying market fundamentals remained steady. Prologis is leading the market with asking rates of $7.50 for its distribution facility at 7385 Bren Rd in the Prologis Pearson Logistics Center. Key market indicators inventory 170,096,495 vacancy 3.5% availability 4.4% net (318,948) YTD net 959,622 Average rental rate (nnn) $ month dollar change 4.1% Arrows represent change from prior quarter Sales and Construction There were eleven user sales and two investor market sales with an average price per square foot of $148 and $93 respectively. The largest construction project underway is the 450,000 square foot Orlando design build for Unisource Canada on 125 Madill Boulevard. Orlando is also behind the only other current construction project underway, the 183,258 square foot speculative development at 3075 Carravelle Dr, which is slated to deliver by the end of the year. With the rising cost and scarcity of developable land in the GTA, Orlando plans to redevelop and modernize any dated facilities in its extensive portfolio of center ice in locations such as Mississauga and Brampton, rather than moving into tertiary markets. Panattoni has broken ground but hasn t officially begun construction on 2020 Logistics Drive, a big box speculative development up to 765,000 square feet in size and with a clear height ranging to forty feet. Economic outlook With a population of 757,000 as of, Mississauga is the second largest city in the GTA by population and it has the largest industrial inventory in the region*. Mississauga has 15.2% of its 29,212 hectares devoted to industrial land, but this percentage will likely not rise much further as in the period of the city only added six hectares of industrial land**. In the period from January to April of the only building permit issued was for 3185 American Dr, an 124,183 square foot speculative development by Orlando Corporation***. RECENT SALES COMPARABLES (sorted by square feet) Net new supply, net, vacancy 1,500,000 1,000, ,000 sf 0-500,000 Net new supply -1,000,000 vacancy Average rental rate $6.20 $6.00 $5.80 $5.60 $5.40 $5.20 2,257 Net Buyer Seller Location Intersection Size Date Price / sf Kingsett Capital Mermaid Investments Ltd 1290 Blundell Road Dundas/Dixie 97,550 05/26/ $ Ontario Ltd Innovative Trailer Design Industries 1770 Britannia Road East Hwy 401/Dixie 66,486 04/01/ $113 Bell Lifestyle Products 3155 Pepper Mill Investments 3155 Pepper Mill Court Hwy 403/Winston Churchill Blvd 41,498 05/30/ $125 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Landlord Location Intersection Size A&P Orlando 6175 Edwards Boulevard Kennedy/Edwards 244,995 Future Shop Orlando 6110 Cantay Road Cantay/Britannia 181,178 Delmar Logistics Inc Orlando 600 Suffolk Ct Cantay/Mclaughlin 133, % 4.0% 2.0% 0.0% $6.13 * City of Mississauga Population, Demographics & Housing ** City of Mississauga Existing Land Use ***City of Mississauga New Industrial & Commercial Building Permits JLL Greater Toronto Area Industrial Insight Page 11

14 SUBMARKET CHARACTERISTICS Higher ratio of bulk distribution and warehousing spaces compared to other GTA industrial submarkets 1 Contains Pearson International Airport and access to all major transportation arteries 2 Strong labour pool and public transit amenities 3 Second largest population base in the GTA after the City of Toronto 4 SUBMARKET STATISTICS Property type Warehouse / Distribution inventory vacancy availability total net YTD total net Average net rent ($ psf) Under construction YTD 116,122, % 4.3% (279,912) 1,075,585 $ ,258 70,227 70,227 Manufacturing 32,589, % 4.0% 21,266 1,242 $ Industrial 170,096, % 4.4% (318,948) 959,622 $ ,258 70,227 70,227 JLL Greater Toronto Area Industrial Insight Page 12

15 Pricing Demand Supply Oakville Lease activity Oakville reversed the negative net of the previous quarter by posting positive net of 51,069 square feet which included tenants vacating 33,101 square feet of sublet space. The only lease deal greater than 10,000 square feet was Integra LifeSciences leasing 22,633 square feet in 2590 Bristol Circle in the Winston Business Park. Rents Oakville s rental rate of $6.46 is inflated by the large number of smaller industrial properties with higher rents. Sales and Construction There were only two market sales in Oakville in the second quarter, with the investor sale of 2908 & 2924 Portland Dr. recording a cap rate of 3.7 percent on two fully occupied income producing properties built in Oakville has averaged three 10,000 square foot plus market sales per quarter for the past three years, with the previous quarters outlier of eight sales being inflated by self storage portfolio purchases. Blackwood Partners have phase three of their Great Lakes Business Park at 3421 Superior Ct under construction, a 95,666 square foot flex building which should deliver by the end of the year. Melrose Investments has finished earthworks but has not yet started construction on 3266 South Service Rd building A, a 100,000 square foot manufacturing building which should deliver midway through Economic outlook development charges have increased to $21.58 per square foot within the Oakville built boundary, the highest in the Halton region*. Oakville appeals to employers looking to provide work-life balance; the key industries are advanced manufacturing, life sciences, professional services, and digital media and animation*. Key market indicators 12-month dollar change 1.4% Arrows represent change from prior quarter Net new supply, net, vacancy 200, ,000 sf 0-100, ,000 Average rental rate $7.00 $6.50 $6.00 $5.50 $5.00 inventory 23,690,939 vacancy 3.5% availability 7.9% net 51,069 YTD net 4,549 Average rental rate (nnn) $6.46 Net new supply vacancy 2,257 Net 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% $6.46 RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location Intersection Size Date Price / sf Fedar Investments Ltd Babel Investments Ltd 2908 Portland Drive & 2924 Portland Drive Dundas/Winston Churchill Blvd 46,282 06/17/ $163 Westport Auto Edsco Construction Ltd 1393 Wallace Road QEW/Third Line 17,810 04/28/ $112 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Landlord Location Intersection Size Integra Canada K. Tool & Die 2590 Bristol Circle Bristol/Winston Park 22,633 *Oakville- ecdev- Annual Report JLL Greater Toronto Area Industrial Insight Page 13

16 SUBMARKET CHARACTERISTICS Warehousing and distribution facilities concentrated along Hwy 403 corridor 1 Limited modern distribution product 2 Lower velocity market for both lease and sale 3 Well educated and available workforce 4 SUBMARKET STATISTICS Property type Warehouse / Distribution inventory vacancy availability total net YTD total net Average net rent ($ psf) Under construction YTD 15,331, % 8.4% (39,538) 127,707 $ ,760 Manufacturing 5,720, % 1.5% - - $ Industrial 23,683, % 7.9% (46,520) 184,592 $ ,666-57,760 JLL Greater Toronto Area Industrial Insight Page 14

17 Pricing Demand Supply Vaughan Lease activity Net continued to pick up in steam in the second quarter with the only speculative construction which has delivered so far this year, 625 Zenway Boulevard phase 1, coming to market fully preleased. Average lease sizes remain small with only seven leases greater than 20,000 square feet recorded in the second quarter out of a total of sixty-eight. Rents Rental rates continue to rise with asking rates for new construction ranging between $6.50 and $6.95. Sales and Construction There were five user sales with an average price/sf of $124, all of which were for warehouse and distribution space with the exception of one self-storage facility. There were five investment sales with an average price/sf of $148, although this average was inflated by the $197 and $169 sales of 21 Alex Ave and 491 Bowes Rd. respectively, both of which were smaller than 20,000 square feet. The $100M sale-leaseback of the Sears Canada distribution centre to Metrus Properties and the $56M sale-leaseback of Sobeys distribution centre to Crombie REIT were by far the largest sales in the GTA this quarter, and may represent a growing trend of owners capitalizing on high market values. There is 355,047 square feet of warehousing and distribution space under construction which will deliver by the end of and is 35.6 percent preleased. Economic outlook The city of Vaughan issued forty seven industrial building permits with a value of $19.2M in the period from the beginning of till March 31 st, roughly on par with the same period in *.The planned northward expansion of Highway 427 through the Vaughan enterprise zone to Major Mackenzie Drive will likely spur industrial development in the municipality. The 3,800 acre Vaughan Enterprise Zone is one of the largest employment areas in the GTA and is centered around the Canadian Pacific intermodal rail yard with direct access to Highway 407 and 427 and Highway 7, 27, and 50. Key market indicators 12-month dollar change 7.9% Arrows represent change from prior quarter Net new supply, net, vacancy 1,000,000 Net new supply vacancy 800, , , ,000 0 sf Average rental rate $6.50 $6.00 $5.50 $5.00 $4.50 inventory 94,949,425 vacancy 2.6% availability 4.3% net 913,353 YTD net 1,423,371 Average rental rate (nnn) $6.08 2,257 Net 4.0% 3.0% 2.0% 1.0% 0.0% $6.08 RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location Intersection Size Date Price / sf 9501 Highway No. 50 Metrus Properties Sears Canada Inc 9501 Highway No. 50 Rutherford/Hwy ,942 04/01/ $101 Crombie REIT Sobeys Capital Inc 8265 Huntington Road Hwy 7/Hwy ,000 06/29/ $ Aviva Park Drive Jan K. Overweel Ltd Investment Ltd 106 Aviva Park Drive Hwy 407/Weston 111,350 06/30/ $108 RECENT LEASE COMPARABLES (sorted by square feet) Transaction Type Landlord Location Intersection Size New Zzen Group 625 Zenway Boulevard II Hwy 50/Zenway Boulevard 67,500 New Metrus Properties 1380 Credistrone Road Locke/Creditstone 58,927 New Quality and Company 360 Spinnaker Way Langstaff/Spinnaker 41,905 * Vaughan Building Standards Department Summary of Construction Activity to March 31, JLL Greater Toronto Area Industrial Insight Page 15

18 SUBMARKET CHARACTERISTICS Higher ratio of Flex, R&D, and Manufacturing industrial product when compared to other GTA industrial submarkets 1 Currently most industrial product is clustered around the CN rail yard east of Highway Vaughan retains a large number of available development lands 3 Vaughan s industrial development charges are among the highest in the GTA at $ per-square-foot 4 SUBMARKET STATISTICS Property type Warehouse / Distribution inventory vacancy availability total net YTD total net Average net rent ($ psf) Under construction YTD 60,895, % 5.0% 764, ,424 $ , , ,946 Manufacturing 22,789, % 3.1% 103, ,022 $ Industrial 94,949, % 4.3% 913,353 1,423,371 $ , , ,946 JLL Greater Toronto Area Industrial Insight Page 16

19 Greater Toronto Area Industrial Statistics Property type inventory vacancy availability total net YTD total net Average direct asking rent ($ psf) Under construction YTD Brampton Warehouse / Distribution 68,766, % 5.4% 810,908 1,692,488 $6.04 1,013, , ,840 Manufacturing 19,509, % 1.6% 115, ,958 $ Industrial 92,652, % 4.5% 926,469 1,919,446 $6.02 1,013, , ,840 Burlington Warehouse / Distribution 15,658, % 5.0% 15,270 75,489 $ ,749 67,749 Manufacturing 3,519, % 9.3% (77,948) (80,298) $ Industrial 23,710, % 6.5% (84,368) (114,185) $ ,749 67,749 Etobicoke Warehouse / Distribution 30,415, % 5.2% 123, ,650 $ Manufacturing 27,585, % 4.9% 87, ,527 $ Industrial 65,283, % 5.1% 278, ,436 $ Milton / Halton Hills Warehouse / Distribution 19,270, % 22.8% 81, ,087 $6.63 3,285, , ,948 Manufacturing 3,247, % 9.9% (15,352) (19,652) $ Industrial 23,218, % 20.5% 65, ,035 $6.55 3,285, , ,948 Mississauga Warehouse / Distribution 116,122, % 4.3% (279,912) 1,075,585 $ ,258 70,227 70,227 Manufacturing 32,589, % 4.0% 21,266 1,242 $ Industrial 170,096, % 4.4% (318,948) 959,622 $ ,258 70,227 70,227 Oakville Warehouse / Distribution 15,331, % 8.4% (39,538) 127,707 $ ,760 Manufacturing 5,720, % 1.5% - - $ Industrial 23,683, % 7.9% (46,520) 184,592 $ ,666-57,760 Vaughan Warehouse / Distribution 60,895, % 5.0% 764, ,424 $ , , ,946 Manufacturing 22,789, % 3.1% 103, ,022 $ Industrial 94,949, % 4.3% 913,353 1,423,371 $ , , ,946 GTA West Warehouse / Distribution 245,447, % 4.9% 453,706 3,385,766 $6.16 4,326,542 1,077,923 1,597,064 Manufacturing 66,249, % 3.7% 129, ,773 $ , Industrial 345,289, % 4.7% 484,616 3,395,414 $6.15 4,960,591 1,153,623 1,672,764 GTA North Warehouse / Distribution 99,300, % 3.7% 958, ,536 $ , , ,446 Manufacturing 35,374, % 1.4% 32, ,354 $ Industrial 163,098, % 3.1% 1,136,902 1,654,591 $ , , ,446 GTA Central Warehouse / Distribution 114,768, % 5.5% (203,471) 244,312 $ ,091 20,779 - Manufacturing 67,520, % 4.2% 65, ,330 $ Industrial 218,128, % 4.8% 4, ,681 $ ,091 20, ,062 GTA East Warehouse / Distribution 21,909, % 7.4% (126,375) 450,220 $ , ,486 Manufacturing 20,129, % 1.2% 250, ,720 $ Industrial 51,563, % 5.2% 109, ,055 $ , ,486 JLL Greater Toronto Area Industrial Insight Page 17

20 About JLL JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in. Its investment management business, LaSalle Investment Management, has $55.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit About JLL Research JLL s research team delivers intelligence, analysis, and insight through market-leading reports and services that illuminate today s commercial real estate dynamics and identify tomorrow s challenges and opportunities. Our 415 professional researchers track and analyze economic and property trends and forecast future conditions in over 75 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions. For further information, visit Office locations: TORONTO 199 Bay Street, Suite 4610 Toronto, ON M5L 1G3 Tel: Fax: TORONTO NORTH 251 Consumers Road, Suite 900 Toronto, ON M2J 4R3 Tel: Fax: MISSISSAUGA 110 Matheson Blvd W, Suite 107 Mississauga, ON L5R 4G7 Tel Fax MONTRÉAL 1, Place Ville Marie, Suite 3838 Montréal, QC H3B 4M6 Tel Fax OTTAWA 275 Slater Street, Suite 1004 Ottawa, ON K1P 5H9 Tel Fax EDMONTON Street NW, Suite 502 Edmonton, AB T5J 3G1 Tel Fax CALGARY 301-8th Avenue SW, Suite 500 Calgary, AB T2P 1C5 Tel Fax VANCOUVER 355 Burrard Street, 14 th Floor Vancouver, BC V6C 2G6 Tel Fax For more information, please contact: Thomas Forr Research Manager thomas.forr@am.jll.com Eric Sweeney Associate eric.sweeney@am.jll.com Ben Wedge Industrial Research Coordinator ben.wedge@am.jll.com Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. *Sales Representative