First Quarter 2017 / Industrial Market Report. Market Overview

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1 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 Greater Toronto Area with more than 250,000 sf available 2.9 MSF Industrial space under construction in the Greater Toronto Area Market Overview The new year opened relatively quietly for the Greater Toronto Area (GTA) industrial market. Availability ticked up in each GTA market, with the overall availability rate for the GTA up 10 basis points (bps) quarter-over-quarter to 3.4% though this is 50 bps less than a full year ago. As upward pressure on rents remains in most markets and with few options available, it is expected that many tenants will take a wait-and-see approach, hoping that landlords will become more willing to demise vacant spaces to suit smaller tenants needs. Much of the space under construction in 2016 was completed during the first quarter of 2017, bringing 3.3 million square feet (msf ) in new supply and with only approximately 37.5% preleased, about 2.1 msf of this new space remains available. Speculative development continues to favour the largest and tallest configurations observed in recent years more than half of the total area completed in the past twelve months offers clear heights of at least 30 feet. Infill and redevelopment sites in Mississauga account for 1.5 msf of construction activity, including 114,000 square feet (sf ) at 6500 Kitimat Rd. in Meadowvale and 770,000 sf at 2020 Logistics Dr. (0% preleased). Orlando Corporation is building in Brampton at 7845 and 7855 Heritage Road (150,000 sf and 219,000 sf, respectively). Uncertainty surrounding the new U.S. administration s protectionist trade policies could pose some risk to the GTA industrial market. Barring any unexpected changes, prevailing trends will continue to define the market in the near term.

2 GTA Market Monitor Availability in each of the GTA s four markets increased in the first quarter, with the East market posting the largest relative change quarter-over-quarter up 60 bps to 3.3%. Overall, the GTA availability rate now stands slightly above where it was last quarter at 3.4%, though it is down from 3.9% year-over-year. Average asking rents ticked down, to $6.53 per square foot (psf ) across the GTA. The highest average net rents are found in the North market ($7.17 psf ), though additional rents slightly below the overall GTA average give tenants a slight break in terms of their overall occupancy costs. New development continues to offer taller buildings with larger footprints, though supply of these spaces has outpaced demand in recent quarters. Current construction activity is focused in the West market, where ongoing transportation infrastructure improvements appeal to logistics and distribution users. Market Inventory Total Available Area Asking Net Rent Construction Pipeline 877 msf 30.2 msf $6.53 psf 2.9 msf / 11 buildings Availability Trends Occupancy Cost Trends Total Available Area (msf) Availability Rate Avg. Gross Rent Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate Avg. Additional Rent Market Inventory Direct Avail. Sublet Avail. Total Avail. Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing GTA Central 264,155,594 5,732, ,755 6,233, % $6.10 $4.35 $ , ,655,442 GTA East 48,065,489 1,573,152 21,510 1,594, % $5.91 $3.43 $ ,000 GTA North 183,130,652 3,952,994 1,390,706 5,343, % $7.17 $3.59 $ ,737 52,566 1,366,669 GTA West 381,176,555 13,840,399 3,168,531 17,008, % $6.60 $3.97 $ ,325,426 2,818,864 6,575,278 GTA Overall 876,528,290 25,098,972 5,081,502 30,180, % $6.53 $3.95 $ ,314,977 2,871,430 10,207,389

3 GTA Central Market Monitor Availability increased in the Central market, as an additional 222,000 sf came to market, pushing the availability rate up to 2.4% (+10 bps). The average asking rent of $6.10 psf has climbed year-over-year, up from $5.95. Demand remains strong in Scarborough, where availability rates have dropped to 3.2% (-30 bps) quarter-over-quarter. Etobicoke has the greatest total available area, offering 2.4 msf at the lowest average asking rate ($5.89 psf ) in the Central market. The only new construction completions during the quarter were in Scarborough, where Prologis completed two 160,000- sf buildings on spec along Tapscott Rd., adding 320,000 sf to the inventory. This adds the second and third buildings to the company s Tapscott Distribution Centre, which was the scene of the largest deal of the quarter as Technicolor Canada Inc. leased 158,500 sf. Six buildings are proposed in the Central market, which would add nearly 1.7 msf to the inventory. Market Inventory Total Available Area Asking Net Rent Construction Pipeline 264 msf 6.2 msf $6.10 psf 0 sf / 0 Buildings Availability Trends Occupancy Cost Trends Total Available Area (msf) Availability Rate Avg. Gross Rent Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate Avg. Additional Rent Market Inventory Direct Avail. Sublet Avail. Total Avail. Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing East York 9,690, , , % $6.64 $5.99 $ Etobicoke 76,010,876 2,213, ,304 2,412, % $5.89 $4.47 $ ,819 North York 69,705,169 1,180, ,665 1,389, % $6.48 $3.98 $ ,446,052 Scarborough 66,364,232 2,023,071 93,786 2,116, % $5.91 $4.41 $ , ,571 Toronto 42,001, , , % - - $ GTA Central 264,155,594 5,732, ,755 6,233, % $6.10 $4.35 $ , ,655,442 * Total figures for the GTA Central include additional submarkets not listed above (i.e. York).

4 GTA East Market Monitor Availability in the East market increased 60 bps from the fourth quarter of 2016, though the overall availability rate remains low at 3.3%, with the lowest availability seen in Ajax (2.2%), and the highest in Whitby (6.7%). The average asking rent in the East has risen $0.66 year-over-year to $5.91 psf, with the highest rent seen in Ajax at $6.39 psf. One of the largest deals of the quarter was a 39,440-sf lease to Integrated Freight Networks at 1845 Clements Rd. in Pickering. On the sale front, LaSalle Investment Management purchased 1601 and 1635 Tricont Ave. in Whitby from KingSett Capital for $21.1 million, representing a combined 259,181 sf at $81 psf. No buildings were completed during the quarter; however, three multi-tenant buildings are proposed between Ajax and Oshawa which would add 610,000 sf to the market. Market Inventory Total Available Area Asking Net Rent Construction Pipeline 48 msf 1.6 msf $5.91 psf 0 sf / 0 Buildings Availability Trends Occupancy Cost Trends Total Available Area (msf) Availability Rate Avg. Gross Rent Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate Avg. Additional Rent Market Inventory Direct Avail. Sublet Avail. Total Avail. Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing Ajax 7,292, ,897 21, , % $6.39 $ ,000 Oshawa 13,862, , , % $6.03 $3.07 $ ,000 Pickering 10,997, , , % $5.39 $3.45 $ Whitby 10,006, , , % $6.09 $ GTA East 48,065,489 1,573,152 21,510 1,594, % $5.91 $3.43 $ ,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 increased 20 bps to 2.9%. Rents in the North market increased $0.28 since last quarter to $7.17 the highest in the GTA. The most expensive node has consistently been Markham, where the average asking rate at the end of the first quarter stood at $7.76 psf. Newmarket has the highest availability rate at 6.1%, with 550,000 sf available for lease. 14 buildings in the North market offer more than 100,000 sf for lease, mostly in Vaughan. Toro Aluminum inked a deal during the quarter for 129,200 sf at 388 Applewood Cres. Two buildings were completed during the first quarter: 250 Don Hillock Dr. in Aurora (93,737 sf ), and 8682 Highway 27 in Vaughan (572,000 sf ) Costco Wholesale Canada Ltd. s new distribution centre. One building is under construction 525 Cochrane Dr. (52,566 sf ) in Markham. Market Inventory Total Available Area Asking Net Rent Construction Pipeline 183 msf 5.3 msf $7.17 psf 52,566 sf / 1 Building Availability Trends Occupancy Cost Trends Total Available Area (msf) Availability Rate Avg. Gross Rent Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate Avg. Additional Rent Market Inventory Direct Avail. Sublet Avail. Total Avail. Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing Aurora 6,091, ,751 30, , % $ , Markham 40,562, , ,410 1,199, % $7.76 $3.72 $ ,566 0 Newmarket 9,089, , , , % $6.46 $3.78 $ Richmond Hill 14,243, ,744 38, , % $7.45 $3.94 $ Vaughan 107,529,409 2,236, ,307 2,996, % $6.60 $3.37 $ , ,366,669 GTA North 183,130,652 3,952,994 1,390,706 5,343, % $7.17 $3.59 $ ,737 52,566 1,366,669 * 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 After several consecutive quarters of falling availability, a number of new completions in the West market have pushed the availability rate up slightly to 4.5% just above the record-low 4.4% rate recorded at the end of However, steady demand in Brampton and Mississauga the two largest west-end markets by industrial space has pushed availability still lower to 2.2% and 3.4%, respectively. Newell Rubbermaid recently renewed at 6 Manchester Ct. in Caledon (576,000 sf ), highlighting the demand for space in this established market. Completion of three new speculative buildings comprising 2 msf in Halton Hills (about one-quarter of Halton Hills total existing inventory) has pushed availability there up to almost 30%. Most of the new space under construction is found primarily along the Highway 401 or 407 corridors, including Anatolia Capital Corp. s redevelopment of 6500 Kitimat Rd. (114,000 sf ), and Panattoni Development s 2020 Logistics Dr. (770,000 sf ). Asking net rents remain above the overall GTA average, at $6.60 psf in the first quarter. The highest average rates are found in Milton, driven by relatively newer spaces, at $6.80 psf this quarter. Market Inventory Total Available Area Asking Net Rent Construction Pipeline 381 msf 17 msf $6.60 psf 2.8 msf / 10 Buildings Availability Trends Occupancy Cost Trends Total Available Area (msf) Availability Rate Avg. Gross Rent Direct Available Area (sf ) Sublet Available Area (sf ) Availability Rate (%) Avg. Net Asking Rate Avg. Additional Rent Market Inventory Direct Avail. Sublet Avail. Total Avail. Avail. Rate (%) Avg. Net Asking Rent Avg. Addt'l Rent Avg. Asking Sale Price Current Completions Under Construction Preleasing Brampton 95,633,325 1,698, ,206 2,111, % $6.50 $3.09 $ , ,158 1,702,831 Burlington 26,794, , ,419 1,086, % $6.20 $3.51 $ Caledon 14,155, , ,791 1,120, % $5.94 $2.63 $ ,103 2,338,057 Halton Hills 8,006,216 2,388, ,388, % $6.09 $2.57 $ ,979, ,000 0 Milton 21,555,000 2,590, ,392 3,165, % $6.80 $2.93 $ ,121,782 Mississauga 185,988,779 4,969,096 1,306,727 6,275, % $6.69 $4.10 $ ,548,603 1,216,943 Oakville 29,042, , , , % $6.59 $4.21 $ ,665 GTA West 381,176,555 13,840,399 3,168,531 17,008, % $6.60 $3.97 $ ,325,426 2,818,864 6,575,278

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 Significant Lease Transactions by Market # Address Market Tenant Size Lease Type 1 6 Manchester Court Caledon Newell Rubbermaid 576,000 sf Renewal Applewood Crescent Vaughan Toro Aluminum 129,200 sf New Tapscott Road Scarborough Technicolor Canada Inc 158,500 sf New Clements Road Pickering Integrated Freight Networks 39,400 sf New

9 $625M Total investment volume for transactions greater than $3M sold during the first quarter Alfred Kuehne Boulevard, Brampton (City of Brampton, 2016) GTA Industrial Investment Market Highlights The sales momentum seen across the GTA since the fourth quarter of 2015 has begun to plateau. Total dollar volume was $625 million, down $50 million compared with the fourth quarter. Average price per square foot decreased to $126 psf after holding steady for the previous two quarters at $140 psf. Brampton experienced the lion s share ($184 million) of total dollar volume in the first quarter (29% of the GTA total). The West market as a whole accounted for just over 61% of the total volume, at an average price of $128 psf. Capitalization rates for both single- and multi-tenant industrial building sales each compressed by 20 bps, continuing the downward trend of the last several years. Capitalization Rates Average Cap Rate Single Tenant Industrial Multi Tenant Industrial Investment Volume and Sale Price (Transactions over $3M) Investment Volume ($ millions) Average Sale Price The largest transaction was the sale of a two-building portfolio in Brampton (100 & 107 Alfred Kuehne Blvd.) by KingSett Capital to the Healthcare of Ontario Pension Plan for $113 million. Significant Sale Transactions Investment Volume ($ Millions) Average Sale Price ($psf ) Market Address Total Price Total Sale Price Brampton Alfred Kuehne Boulevard $113,000,000 1,000,080 $95 Scarborough 400 Nugget Avenue $49,500, ,124 $78 Brampton 8495 Goreway Drive $35,000, ,000 $97 Oakville 2335 Speers Road $28,200, ,830 $108 Whitby 1601 & 1635 Tricont Avenue $21,100, ,181 $81

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. Greg Smith Research Coordinator 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