Point of View - Cresa

POV Q2 Point

of

View 2 0 1 8

Downtown and Beltline Office Market Report

Market OVERVIEW

Downtown Market Unless the function of an office as we know it is eliminated entirely, any commercial office market will never reach full vacancy. Despite advances in technology, artificial intelligence, and work structure, the presence of the office appears to be a very secure one. On the other hand, what is to stop a market from cratering to 30% vacancy? Or worse? Five years ago in Calgary, when office occupancy neared 97.5%, you would have been hard pressed to find anyone who foresaw a vacancy rate near 25% in the downtown core, but alas, here we are at the end of the second quarter of 2018 with a vacancy rate of 24.95%, having edged up 0.5% higher from the previous quarter.

Table ONE

BUILDING TRANSACTIONS Sale 441 - 5 Avenue SW

Fourth & Fourth

622 - 5 Avenue SW

IBM Corporate Campus

840 - 7 Avenue SW

Joffre Place

1035 - 7 Avenue SW

Lavalin Building

Alpine Building

Life Plaza

Atrium I & II

McFarlane Tower

Keeping such a dramatic swing in mind, we find ourselves asking: where is the bottom of the market and how will we be certain when we find it? In the first quarter, vacancy declined by a mere 0.14%. This quarter, it increased by an almost equally slim margin. With plenty of churn, but no meaningful growth, are the modest changes we have experienced thus far in 2018 an indication of what is in store for the rest of the year?

Centennial Place

Mount Royal Place

Dominion Centre

Northland Building

Eau Claire Place II

Prospect Place

Eau Claire Tower

Roslyn Building

F1RST Tower

Scotia Centre

Five Ten Fifth

TransCanada PipeLines Tower

What we can say for certain is that there are signs the market is reaching the bottom. Without question, most of the bleeding has stopped; near the end of 2017, the downtown and fringe markets started to plateau, and that trend has become more obvious given the absorption numbers in the first half of 2018. Now the toughest two questions remain – where is “absolute zero” for vacancy, and what drives growth to start the steep climb out of the current environment?

Ford Tower

One natural indicator of the low point of a market trough is the presence of large commercial transactions, or in this case, office towers changing ownership. Over the past two years, the following downtown and Beltline properties either changed hands (partially or fully), changed use (i.e. conversion to hotel or residential), or were put on the market for sale:

630 - 4 Avenue SW

Sierra Place

Barron Building

Stephenson Building

Demolition Barclay Square

Sam Livingston Building

Re-Zoning/Proposed Re-Zoning

Lougheed Building

Market OVERVIEW These transactions represent activity from several separate institutional holders of commercial real estate, including four entirely new entrants to the local market. It would seem to say that some landlords are viewing now as the time to enter the market, which is an indication of opportunistic mindsets and differing approaches with regards to the future of Calgary’s office market. Of the above list, five of these buildings (Sierra Place, 630 – 4 Avenue SW, Stephenson Building, Barron Building, and Lougheed Building) were slated for redevelopment or re-zoning, while two other buildings (Sam Livingston Building and Barclay Square) were scheduled for demolition. Re-zoning and demolition are, in our opinion, one of the strongest indicators that select landlords believe the market has bottomed out and will stay there for a very long time, as buildings that were difficult to lease for their existing landlords are being taken out of the vacancy equation entirely. While some indicators are suggesting that Calgary is finally reaching a vacancy peak, others paint somewhat of a different story. Further consolidation amongst energy players, coupled with a significant balance of ghost space still floating around downtown, indicates that there is enough outstanding space to potentially step vacancy 1-3% higher from its current level. While signs may suggest we can see the bottom, it is hard to say if we are actually there, especially with respect to lower class product. The bleeding may have slowed, but that does not mean it has stopped entirely. Looking at each market segment, we can draw the following conclusions from the second quarter of 2018: AA Class – vacancy increased this quarter by a meager 23,918 square feet, bringing AA Class vacancy to 16.8%, which is the lowest of any class. Demand in this market segment remains the most active. A Class – vacancy increased by 143,432 sf, hiking A Class vacancy an additional percentage point to 26.7%. Many tenants are upgrading to AA Class space and we expect this trend to continue driving vacancy higher in the A Class.

B Class – the B Class continues to lead all classes with respect to percentage vacancy, at 38.7%; it was the largest mover again this quarter, climbing by 147,531 sf, or approximately two percent. The previously mentioned flight to quality continues to punish the B Class market segment. C Class – the C Class saw a rise in vacancy of 52,905 sf, which is somewhat of a misnomer, given that 158,400 sf of space was removed from C Class inventory after two buildings were re-zoned from office use; C Class vacancy sits at 24.65%.

Beltline and Fringe Markets Beltline – Progressively edging closer and closer to downtown’s vacancy rate, the Beltline is now 22.63% vacant. Many tenants, who moved to the Beltline from downtown in the last leasing cycle, are relocating back to the downtown core given there is little, if any, economic benefit to remaining in the Beltline. Given proposed re-zoning for the Stephenson Building, as well as the demolition of the Sam Livingston Building and Barclay Square, there are clear signs that landlords are concerned about the long-term vacancy outlook in the Beltline. Kensington – One of the tightest markets in the city saw another quarter-to-quarter decline in vacancy. Kensington vacancy edged down to 9.63% from 10.09% in the second quarter. Inglewood – Inglewood took the mantle this quarter as the lowest vacancy region in the city, as the vacancy rate plummeted over 5% to 8.14%. The drop can be credited to full leasing of the Dominion Bridge building. Mission – Positioned near the Beltline, Mission still finds itself somewhat a victim of downtown’s pull, and as such, saw its second quarter vacancy figures climb to 16.04% from Q1’s 12.47%. As one moves further south down 4th Street SW, occupancy climbs as the demand for space gets higher.

Market FORECAST It is never easy, or for that matter overly exciting, to forecast the market when the market itself is flat. Big swings – whether positive or negative – create a lot of interest for both the invested and casual reader. Be it the opportunity for arbitrage, or maybe the basic human habit of chasing drama, activity breeds interest. On the other hand, when the numbers are not changing, the story tends to require a nuanced approach. The current market in downtown Calgary is one of nuance. While void of vacancy swings and moving rates, there are several phenomena in the local market worth paying attention to. As mentioned in the Market Overview, acquisitions, dispositions, and re-zonings are tangible changes within the commercial office sector, but there are indirect events that will impact the long-term market outlook as well. The first notable trend in Q2 2018 was consolidation within Calgary’s local energy industry. Following the merger of Tervita and Newalta earlier in the quarter, Vermilion Energy proceeded to acquire Spartan Energy, and Baytex Energy acquired Raging River Exploration. These three transactions, all of which were similarly sized and of reasonable complexity, broke a long drought of sizeable merger and acquisition activity in the city1. While the effects of these mergers are yet to fully unveil themselves, we can glean some information early in the process: a) There is still room for additional consolidation in the energy industry, perhaps even on a scale well in excess of the above transactions; b) Interest in Western Canadian assets appears to be primarily driven by local market participants, which is likely due to US and international entities having better investment opportunities abroad; and c) Mid-cap companies are looking to diversify or bolster their asset bases. Given the conclusions considered above, let us look at how energy industry consolidation may continue going forward and attempt to forecast what impact the mergers may make over the back half of 2018. With each of the three abovementioned mergers, a locally operated entity purchased another local operated entity. For the

sake of the office market, if there is any operational overlap at a corporate level – be it in auxiliary functions like accounting and human resources, or core functions like geology and engineering – personnel redundancies will open up desks. Those open desks should hit our vacancy figures, given that they create a volume of space, which, when coupled with existing pockets of “ghost” vacancy, equate to enough space to list independently. What may come as a bit of a saving grace with respect to these particular transactions, is that the asset overlaps between acquirer and the acquired are for the most part, limited. Should similar transactions follow, expect further consolidation of office space. Realistically, future acquisitions may involve more obvious staffing redundancies, which would further bring space to market. Hypothetically, the opposite could happen if an entrant from outside of the province elected to acquire Western-Canadian based assets. While office consolidation is a necessary outcome of M&A activity, we cannot ignore what is driving the change, as there is enthusiasm within Alberta’s energy industry as it pertains to oilweighted entities. New drilling activity in the Duvernay creates reason for optimism. Expanding oil sands operations should create project-based employment in downtown Calgary. Higher oil prices allow for new drilling activity in several existing plays and give companies a financial buffer. The combined impact of these activities should start to counter the impact of consolidation on our office market. Looking outside of the energy industry, new activity in the city, largely driven through new entrants into the technology and cannabis sectors, will provide a positive – albeit smaller – bump to overall vacancy projections. Hard work from the City of Calgary and Calgary Economic Development is starting to pay off, as they are successfully encouraging new entities to test Calgary for their next development hub. Maybe – just maybe – the bottom is near. While this is a market of nuance and we cannot say for sure that we have reached the bottom, from where we sit, the signs are starting to point towards a plateau in vacancy and eventual turnaround. Come the beginning of 2019, we hope we can point to a new trend of concrete positive absorption.

We acknowledge that Altagas purchased WGL Holdings at the start of 2018, but we do not expect the result of that transaction to impact Calgary’s local office market in a material way.

1

Market FORECAST

Graph ONE

FORECASTED VACANCY 500,000

30.00%

450,000 25.00%

Telus Sky

400,000

350,000 20.00%

Tenant Market 300,000

250,000

15.00%

200,000 10.00%

100,000 5.00% 50,000

0

0.00% 2008

2009

2010

2011

2012

New Inventory

2013

2014

2015

Historical Vacancy (%)

2016

2017

Forecast 2018

Forecast 2019

Forecasted Vacancy (%)

Forecast 2020

Forecast 2021

Forecast 2022

Vacancy (%)

New Inventory (sf)

150,000

Table TWO

Click here to view vacancy details

Q2 2018 VACANCY SUMMARY BUILDING CLASS

TOTAL INVENTORY HEADLEASE SUBLEASE TOTAL (sf) (sf) (%) (sf) (%) (sf) (%)

Downtown AA

16,376,291

1,132,931

6.92%

1,620,098

9.89%

2,753,029

16.81%

A

17,035,786

3,134,386

18.40%

1,420,839

AA/A

33,412,077

4,267,317 12.77% 3,040,937

9.10% 7,308,254 21.87%

8.34%

4,555,225

26.74%

B

7,529,304

2,725,654

36.20%

188,706

2.51%

2,914,360

38.71%

C

2,584,781

547,767

21.19%

89,308

3.46%

637,075

24.65%

Total Downtown

43,526,162

7,540,738 17.32% 3,318,951 7.63% 10,859,689 24.95%

Beltline and Fringe Area Beltline

6,986,799

1,039,025

14.87%

542,384

7.76%

1,581,409

22.63%

Kensington

604,702

52,336

8.65%

5,915

0.98%

58,251

9.63%

Inglewood

461,985

28,174

6.10%

9,427

2.04%

37,601

8.14%

Mission

917,600

147,185

16.04%

0

0.00%

147,185

16.04%

8,971,086

1,266,720

14.12%

557,726

6.22%

1,824,446

20.34%

Total Beltline & Fringe Area

Graph TWO

Graph THREE

SUBLEASE VACANCY INDEX

Vacancy Rate Q2 2014 - Q2 2018 COMPARATIVE Comparative VACANCY

Sublease Vacancy Index

45.00%

80.00%

40.00%

70.00%

35.00%

AA = 58.85%

60.00% 30.00%

50.00%

25.00%

40.00%

20.00% A = 31.19%

15.00%

30.00%

Vacancy Rate

C = 14.02%

10.00% B = 6.48%

0.00% Q2 2014

Q2 2015 Class AA

Q2 2016 Class A

Q2 2017 Class B

Vacancy %

10.00%

20.00%

5.00% 0.00%

Q2 2018 Class C

Class AA

Class A

Class B

Class C

Table THREE

LARGE BLOCKS OF AVAILABLE CONTIGUOUS SPACE, DOWNTOWN CALGARY Buildings

Type

Area (sf)

Building

Type

Area (sf)

The Bow

Sublease

321,077

F1RST TOWER

Headlease

177,352

Brookfield Place - East

Upcoming Sublease

320,869

Scotia Centre

Headlease

163,341

Telus Sky

Upcoming Headlease

286,172

BP Centre

Headlease

134,796


Headlease

265,000

Hanover Place

Headlease

126,211

707 Fifth

Headlease

264,400

Lavalin Centre

Headlease

119,366

Penn West Plaza - East

Sublease

196,539

The Edison

Headlease

118,826

Gulf Canada Square

Sublease

193,604

The Bow

Sublease

116,165

Condo Rest.

Condo Condo Princeton l & II

Eau Claire

Future Development

The Waterfront Y.M.C.A.

Cond o

P

Site

Millennium Tower

The Bow Claire Apt

P

Condo

Future Development

Joe Phillips Building

Fav Claire Apt

P

Indian Friendship Bowside Manor Centre

P

Eau Claire Tower

Court

Devon Tower

P

Prince’s Crossing

Barclay Mall

Shaw

ExecSuite

Future Development Site

Calgary City Centre

Livingston Place Sout h

Rest .

ront

P

Waikwan Manor

NG Tower

P

P

China

615 3rd Ave.

Apt.

Five Harvest Plaza

Apt.

Summit Bldg

Westin

Shell

Hotel

Centre

Regency

McFarlane Tower

P

P

II

I

Altius

Retail

Bldg

BP

Jamieson Place

4P

Centre

City Plaza


Brookfield Place Calgary - West

Aven

ue

Gov’t of Canada

P

Opulence Centre

The Riverfront

Harry Hays Bldg.

Sun Life Plaza

West

2

Landlord: Telus, Westbank & Allied REIT Office Floors: 26 Office Area: 430,000 sf Ave. Floor Plate: 16,500 sf Est. Completion: 2019 Percentage Leased: 36% Anchor Tenants: Telus

Apt.

North

Asia Pacific Centre

P Optima Place

Eau Claire Place

P

Internationa l Hotel

Pavillion

TELUS Sky

Town

3 Avenue S.E. Churchill Estates

1

2 Avenue S.E.

Riverf

Centre Centennial Place East

DOWNTOWN

Rive

Broadview Centre Hong Kong Plaza

P

Daqing Avenue

Livingston Place West

Eau Claire Manor Centennial Place West

New DEVELOPMENTS

Calgary Chinatown Seniors Centre

Condo

P

Rest .

Cultural LaCaille Park Place

ive

Bow

Chinese

Rest.

l Dr

R iverfront Avenue

Sheraton Suites

Eau Claire Avenue S.W.

mo ria

r

Eau Claire Market

Rest .

Me

P

7

Rest .

Condo

Condo

Site

t

Riverfront Pointe

First Street Plaza

Dragon City

East

P

Pacific Parkade

Future Dev Site

639 5th Ave.

Bantrel Tower

P

Britannia Bldg

Terrace Gardens

P

Iveagh House

Elveden House

Calgary Courts Centre

P

P

444 Seventh

First Canadian Centre

S.W.

6

P


P

City of Calgary Electric Substation # 1

South

Northwest Travellers Bldg.

The Core Shopping

The Core Shopping

Shaw Bldg.

Eighth Avenue Place West

HSBC Bldg.

Canaccord Bldg.

Eighth Avenue Place East

P

6 Avenue Lougheed Block

119-6th Ave


Telus Bldg

Telus Bldg

Home Tower

TELUS Sky

Royal Bank Bldg Bankers Hall West

P

Canada

Gulf

Retail

National Bank

Retail

Bankers Court

East

P

Grain Exchange

Retail

East

Sprin t Canada

Retail

Place 10 West

Alberta Boot Co.

City

Place 10 East

Centre

Parkade

P

Mount Royal House

P

P

Palliser West and East

6

First Canadian Centre - East

7

Eau Claire Market Redevelopment

P

P

Landlord: Floors: Building Area: Ave. Floor Plate: Est. Completion: Anchor Tenants:

Olympic

Bldg. Calgary Public Building

Arts Commons

Burns Bldg.

Edward’ s Place

P

Museu m

5


P

9 Avenue S.E . Calgary Tower Centre

Fording Place

Palliser One

Future Dev. Site

P

303 9th Av e

C.P.R . Palliser South

P

P

P

Th e Vintage II

P

The Paserium

The Vintage I

Apt.

MacCosham Block

Lewi s Lofts

11th Avenue Place

Paramount Building

Carbon Copy

Square

Bromley Office Retail

Clennan Square

Mustard Seed

Mustard Seed

P

MEG Place

134 - 11th Ave. S.E.

Future Dev. Site

The Brownstone

Demcor

P

P

Centre Street

Genco Place

P

1 Street S.W.

101 5 4th St.

4 Street S.W.

P 5/5

Rest. & Retail

Butcher Block

2 Street S.W.

Hudson Condo

Kipling Annex

5 Street S.W.

6 Street S.W.

7 Street S.W.

Sunrise Square

Centre 10

Louis Blk.

Braemar Bldg.

Alberta Self Trade Storage Centre

P

Ribtor I

3 Street S.E.

Kipling Square

Macleod Trail

Joffre Place

Retail

Bottle Depot

P

1 Street S.E.

P

707 10th Ave

Ribtor II

11 Avenue S.E.

P

Sport Swap

Fairmore Bldg.

p

Barnhart Xenex Condos

P

Atrium on 11th Foundation Lorraine Block Bldg

Roberts Block

Parkside Place

P

525 11th Ave.

Retail Citadel West

Castello

P

Sam Livingston Bldg.

Future Development Site 1122 4th St. S.W.

Lacey Cour t

333 -11th

P Can-am Bldg.

Masoni c Templ e

301 11th Ave

P

ta Al ns g ra Bld

T

IBM C

Anticipated Completion

Office

IBM B IBM Bldg. Manhattan Lofts

GWL Realty Advisors 27 698,000 sf 27,400 sf n/a n/a

P

10 Avenue S.E.

P

Aspen Properties 29 each 620,000 sf each 23,500 sf n/a n/a

City Hal l

Plaza

Dominion

Telus Convention Centre South

Marriott Hotel

Future Dev. Site

Oxford Properties 47 1,200,000 sf 26,000 sf n/a n/a

Municipal

Le Germain

Palliser Hotel

Penn West Plaza

Square

Telus Convention Centre North

Court Centre

H.Q.

Glenbow The Edison

4 5


Valley

LR T

8 Avenue S.E.

Retail

Oxford Tower

College

City Police

Bank Bldg.

Tower

P

Rocky Mountain

LR T

Royal Bank

Mall Alberta Hotel Building

Prov . Remand

Plaza

Hyatt Hotel

P

Avenue

West

Retail

Rocky Mountain (Apt.) Court

Anglican Cathedral

P

4 P

Carber Place

Police

LR T

140 - Winner 8th Ave Dept. Store

Lancaster Bldg.

Hollingsworth Building

P

1

Brookfield Properties 41 1,000,000 sf 27,500 sf n/a n/a

S.E.

P

Hanover Place

Central United Church

Scotia Centre

Devonian Gardens

Worker’s Compensation Board


3 Bow

Budget

LR T

Dome Tower

Calgary Board of Education

The Bow

West Tower

I

Baker House

Fire Hal l #1

S.E.

East Tower

The Bay

P

Plains Midstream Plaza

Centennial Parkade

Ubridge College

Delta Hotel

Bow Parkade

Holt Renfrew

Watermark Tower

F1RST Tower

5 Avenue

LR T

TD Canada Trust Tower

City TV

Barron Building

635 8th Ave.

Western Canadian Place

P

Suncor Energy Centre

Bow Parkade

East

Stephen

Alberta Place

P

Square

Valley

IV

P

Intact Place

LR T

707 Fifth

North

First

James Short Parkade

1 Street

S.W.

S.W.

S.W. 2 Street

444 5th Ave.

3 Street Centrium Place


II

III

Club

West

Harley Hotchkiss Gardens

Historic Court of Appeal

Place

Petrofina Bldg.

404 6th Ave.

Fifth Ave. Place East

2

Encor

Ramada Hotel

Prospect Place

Bow

606 Fourth

Western Thorburn Union Bldg. Bldg.

Stock Exchange Tower

Petroleum

333 5th Ave.

Petex Bldg

John J. Bowlen Bldg

Metropolitan Centre Calgary Place I

505 3rd

Knox United Church

P

LRT

Guinness House

4 Street

5 Street S.W.

Calgary House

Roslyn Building

441 5 Ave.

Future Oxford Tower Development Site

P

Alpine For d Bldg Tower

Sierra Place

P

Chevron 520 5th Ave. Plaza

Calgary Place II

Fifth Ave. Place West

Public Librar y

Life Plaze

Five Ten Fifth

Fifth & Fifth

634 Bradie 6th Bldg Ave.

Aquitaine Bldg

Fourth & Fourth

Barclay Mall

736 6th

Chateau Apt.

715 - 5th Ave.

P

Hawthorn Hotel 622 5th & Suites Ave.

640 5th Ave.

6 Street S.W.

7 Street S.W.

P

P

London House Centre

Canada Place

3 Street S.E.

P

Centre

Northland Place

Macleod Trail

McDougall

555 4th Ave.

Centre Street

4 Avenue S.E. Phillips Bldg

1 Street S.E.

k

Centre Street Bridge

Prince’s Island Estates

Future Development Keynote

Site Office

P Future Development Site

2019

Pending P


Harvard Developments 40 555,000 sf 13,800 sf n/a n/a

II

I

Summit Bldg

Westin

Shell

Hotel

Centre

Regency

McFarlane Tower

P

7444th Ave.

P

Eau Claire Place

P

P

United Neff Apts Place

Altius Centre

Retail

Bldg

BP

Jamieson Place

Centre

City Plaza


Sun Life Plaza

West

East

Atrium II

Edinburgh Place

P 736 6th

Place 800

P

715 - 5th Ave.

Pacific Parkade

639 5th Ave.

P

Fifth & Fifth

634 6th Bradie Ave. Bldg

Bantrel Tower

Five Ten Fifth

P

Knox United Church

P

Club

Centre Street

S.W.


James Short Parkade

1 Street

P

P

IV

Ubridge College

Suncor Energy Centre

Guinness House

Nexen Tower

Century Gardens

Historic Court of Appeal

Iveagh House

Elveden House

City TV

707 Fifth

Place Western Thorburn Union Bldg. Bldg.

Ramada Hotel

P

Petrofina Bldg.

First Canadian Centre

Barron Building

Dome Tower

P

Scotia Centre

The Bay

Stephen

Future Mixed Use Development

Century Century Park Place Garden

Eight West

Panarctic Plaza

APS Bldg.

Continental Apt.

The Taylor Building

North

First

Western Canadian Place

Alberta Place

P

City of Calgary Electric Substation # 1

Plains Midstream Plaza

635 8th Ave.

Centennial Parkade

South

Canaccord HSBC Bldg. Bldg.

Shaw Bldg.

Eighth Avenue Place West

Eighth Avenue Place East

P

National Bank

CIBC Tower BankersHall West

P

140 - Winner 8th Ave Dept. Store

Bankers Court

East

Retail

Grain Exchange

P

The Edison

6

Penn West Plaza

P

P


Mountain Equipment Coop

999 8th St.

Sprint Canada

P

P

Retail

P

Retail

P

2

1

Place 10 West

Alberta Boot Co.

Canada

Gulf

City

Place 10 East

Square

Centre

West

Palliser Hotel

East

Parkade

Calgary Tower

Future Dev. Site

Mount Royal House

P

P

P

Tower

Centre

1015 4th St.

5/5

The Paserium

Atrium on 11th

Safeway

Dominion Place

Xenex Condos

P

Barnhart Foundation Bldg

Lorraine Block

P Retail Citadel West

Parkside Place

P

525 11th Ave.

Sam Livingston Bldg.

Castello

The Vintage I

Lewis Lofts

Paramount Building

11th Avenue Place

Bromley

Office Retail

Mustard Seed

Clennan Square

Future Dev. Site

1122 4th St. SW

Lacey Court

P

301 11th Ave

333 - 11th

Mustard Seed

Can-am Bldg.

P

Masonic Temple

1201-5 St S.W.

P

P The Adair Apt.

Prestige Apt.

Exud

ta Al s an dg Tr Bl

The Estate Apt.

Cambridge Gate Apt. Condo

Hull Estates

Sheldon Chumir Health Centre

The Seville

Apt.

Apt.

Colonel Belcher

Park Estates

P

Hotel Arts

Centre Twelve



Ribtor I

Ribtor II

409 10th Ave.

P

Future Development

5

P

White-WainApt. Hill Apt.

Yellowstone Apt.

Rosewood Estate

P

P Westbury The Kildare House Apt. Apt.

Emerald Stone Condo

Apt.

Apt.

Apt.

Apt.

Grandville House Apt. Apt. Condo

o

Apt. Cypriana Towers Apt.

St. Moritz Apt. Apt.

Park 300

Dunhill Estates

Prada Apt.

Park Place

Pallisades

Apt.

Esso Gas Station

P

Future Development

Sandstone School

Future Development

P

Site

Paris Apt.


P Kingston Towers

Apt. Retail

P

Retail

Park & Playground

Scenic Place

P

3

Condo

Polo Terrace Condo

Balmoral Manor

6

Apt.

14 Avenue S.E.

P

Alberta Manor Apt.

Coronation Place

Haultain House Apt. Apt.

Apt.

Madison Court Apt.

Church

Apt.

Laurekka Apt.

P

P

Retail

Haworth Estates Apt. Church Hath Away Place Apts

Carlyle Ashbury Condos

The MacKenzie Condo

Richmond Condo

P

Retail

Condo

Apt. Apt.

Retail

Apt.Apt.

Office / National Retail Block

Apt.

Office

17 Avenue S.W.

Retail Retail Retail Retail

Shoppers Drug Mart

Bank of Montreal

Western Canada High School

Rose & Crown

P

Randel House

P

P

Executive Manor Funeral Home

The Courtyard

Retail

P Retail

P

Retail

Thomkins Park

Devenish Bldg.

Future Dev.

Sonesta Apt. House Condo

Condo The Conservatory

1520 4th St.

Chateau Falls Condo

Fire Hall

Shell Station

Opus Stratford Towers

Triovest Realty 18 340,000 sf Future 20,900 sf n/a n/a

Alex Walker Apt.

Condo

Main Street Apt.

Retail Retail

P Iona Building

Notre Dame Place

Vet

Retail

P

Rouleauville Square

Office

Superior Paint

Office

Park

Church

Retail

Apt.

Car Rental

La Chaumiere

Retail

Economy Glass

Calgary Stamp Centre of Positive Living

P

Vetro

Roundup Centre

Triovest Realty 13 Calgary Exhibition 224,000 sf Grounds & Stampede 16,800 sf n/a n/a 14 Avenue S.E.

P

Rest.

Elbow River Casino

Stampede

Retail

Anticipated Completion Pending

Corral Trail S.E.

Corral

Calgary Exhibition & Stampede Grounds

P

Parking

Scotiabank Saddledome

P



Saddledome RS

Alpha House

Grandel Bldg

13 Avenue S.E .

Commissary Future Development Site

17 Avenue S.E. Office

Funeral Home

Centre 15

P

Development Site


999, Phase II Landlord: Floors: Calgary Exhibition No Building Area: & Stampede Grounds rendering Ave. Floor Plate: Est. Completion: available Anchor Tenants:

Sasso

Office

16 Avenue S.W.

College Lane

Mt. Royal Centre

Queenswood Apt.

Office/Retail

Blockbuster

Future Dev.

Panorama Court Apt.

The Pillars

Murdoch Manor

1108 - 4th Street SW Arriva Landlord: Genco Development Future Floors: 13 Dev. Site Building Area: 186,600 sf 12 Avenue S.E. Ave. Floor Plate: 15,400 sf Est. Completion: n/a Anchor Tenants: n/a

Trail S.E.

P

Mt. Royal Village

Apt.

Apt.

Orange Lofts

Coyotes

LRT

Apt.

Apt. Retail

Montana

P

Stampede Station

Nuera

15 Avenue S.E. The Residences of Mount Royal

The Biscuit Block


Site

Bernard Callebaut

Retai

P

Future Development Victoria Square

Apt.

Colours

Apt.

Trump Gardens Beltline Tower

Sony

Place

Evergreen Estates

nd

Lincoln Towers The Diplomat Apt.

Centro

Co

Colonial House

Ashwood Apt.

Granada Apt.

The Avenue

Mount Royal

Abugov Kaspar

Pilkington Building

Site

Site

P

Retail

Church

Keynote 4 Landlord: Floors: Building Area: Ave. Floor Plate: Est. Completion: Anchor Tenants:

Stampede

Gas

Retail

Louis Blk.

Retail

P

15 Avenue S.W.

Calmar Apts.

Alberta Self Trade Storage Centre

P

4

Office

Beulieu Gardens

P

P

The Findlay

Sherman Oaks Apt. Chelesa Apt. Apt.

Birkenshaw Apt

Wexford Place Apt.

Hargrave House

High Street House

Braemar Bldg.

Keynote

Site

Retail

Chocolate Condos

Wesley United Church

Lougheed House

Moxam

Centra Towers

Union Square

Landing Condos

Best Western Hotel

Apt.

Office

Stratto Oak Apt.

Canadian Blood Services

Darlington Arms Condo

P

St. Elizabeth Church

Exeter Square Retai

Barclay Square

Van Helden Bldg.

Congress

Full Gospel Church

Centennial Apt.

Retail

The Brownstone

Office

Rest

Beltline Pool

BJ’s Gym

11 Avenue S.E.

Future Development

Manhattan Lofts

IBM C

Memorial Park Library

Central Memorial Park

14 Avenue S.W.

Apt.

134 - 11th Ave. S.E.

P

Future Dev. Sit

Office

IBM B

IBM A

P


4

13 Avenue S.E.

Aldrin House

Dorchester Square Office Apt. Tower

P

P

P

MEG Place

Carbon Copy

Square

13 Avenue S.W.

The Savoy

303 9th Ave

11 Avenue S.E.

Radio Block

Retail

P

Marlhurst Apt.

Stonehaven Condo

Future Dev.

Education

Renoir Suites

Ranchman’s Club

Apt.

Place Came Helene

Board of

Grace Manor

Palliser South

P

Apt.

MacCosham Block

P

Assoc. Firefighters

5 Street S.E.

Sutton Plac Apt.

Calgary

Apt.

P

12 Avenue S.E. Petrowest Plaza

P

Fording Place

Demcor

P

The Vintage II

P

5 Retail

P

Roberts Block

Genco Place

P

Centron Developments 14Calgary Hostel 300,000 sf 23,3507 Avenue sf S.E. n/a n/a

East Village Place

Olympic Way S.E.

Sport Swap

Fairmore Bldg.

Rest. & Retail

.E.

C.P.R.

P

Centre Street

P

Butcher Block

1 Street S.W.

Hudson Condo

Kipling Annex

Sunrise Square

Centre 10

2 Street S.W.

Retail

P

Kipling Square

4 Street S.W.

Joffre Place

Bottle Depot

5 Street S.W.

P

6 Street S.W.

7 Street S.W.

8 Street S.W.

Glenbow Building Retail

707 10th Ave

P

Retail Bike Shop

P

Retail

9 Street S.W.

P

The Cooperblok

Atco Centre I

Atco Centre II

Horizo Apt.

P

3 Street S.E.

GM Building

P

P

P

Stampede Station, Phase 8IIAvenue S.E. Gas Landlord:Hillier Artis REIT P Floors: 19 Building Area: 315,400 sf Ave. Centre Floor Plate: 22,600 sf King Hope Edward Est. ofCompletion: n/a Commisionaires Hotel Anchor Tenants: n/a 9 Avenue S.E.

3

Edward’s Place

P

Arts

Palliser One

Future Dev. Site

12 Avenue S.W.

Rivera Apt.

Center for

Macleod Trail

Tenth Avenue House

Retail/ Rest.

11 Avenue S.W.

Future Dev. Site

Bldg.

Burns Bldg.

Epcor

the Performing

1 Street S.E.

902 11 Ave.

P

P

P P

10 Avenue S.E. Mark on Tenth

Retail

P

P

City Hall

Plaza

Museum

10 Avenue S.W. Astoria

Place 10 - West Landlord: Rick’s Floors: P Auction Building Area: LRT Ave. Floor Plate: Est. Completion: P Anchor Tenants:

9 Avenue S.E.

C.P.R.

P

Calgary Public Building

Glenbow

9 Avenue S.W.

P

P

Municipal

Le Germain

nue S

Alberta Locker Service

Olympic Dominion

Telus Convention Centre South

Marriott Hotel

2

Calgary Police Service

Police Parking Structur

H.Q.

8 Avenue S.E. Retail

Retail

Court Centre

City Police

Plaza

Bank Bldg.

Mall Alberta Hotel Building

Retail

Telus Convention Centre North

Royal Bank

Simmons Bldg

5 Ave

Police Association Site

Site

LRT LRT

Hyatt Hotel

P

Avenue Hollingsworth Building

Royal Bank Bldg

Rocky Mountain

Anglican Cathedral

P

Prov. Remand

LRT

Central United Church

Lancaster Bldg.

Home Tower

Rocky Mountain Court (Apt.)

Bow Parkade

Devonian Gardens

The Core Shopping

The Core Shopping

TELUS Sky

Centron Developments 14 316,500 sf 24,850 sf 2017 n/a

6 Avenue S.E. Carber Place

Police

LRT

8 Avenue S.W.

P

Telus Bldg

Telus Bldg

P

Valley College

Place 10 - East Landlord: P Floors: Building Area: Ave. Floor Plate: Future Est. Completion: P Development Anchor Tenants:

S.E.

P

Hanover Place

119-6th Ave

LRT

TD Canada Trust Tower

Holt Renfrew

Watermark Tower

Lougheed Block



LRT

Encor

Bow Parkade

Intact Place

Mall

444 Seventh

East

M-tech

9 Street S.W.

John J. Bowlen Bldg LRT

University of Calgary Downtown Campus

P

Sierra Place

P

LRT

LRT

Garden Tower Apts.

O’Neil Tower Apts.

Life Plaza

P

Harley Hotchkiss Gardens

Barclay

Dominion Centre

Nexen Atrium

840 7th Ave.

Calgary Courts Centre

West

Bow Worker’s Compensation Board

Calgary Drop in Centre

5 Street S.E.

Sandman Hotel

606 Fourth

Court of Appeal

Calgary Board of Education

Cecil Hotel

4 Street S.E.

Northland Place

AMEC Place

Alpine Ford Bldg Tower

1

Public Library

Pentland Place Apts.

P

Apt.

Britannia Bldg

Terrace Gardens

Fire Hall #1

Budget

6 Avenue Future Dev Site

Baker House

Northwest Travellers Bldg.

West Tower

I

Delta Hotel

S.E.

The Bow

6 Avenue S.W. Calgary Place Apartments

F1RST Tower

5 Avenue

Square

Valley

P

East Tower

II

III Bow

Centrium Place

Petex Building

S.W.

S.W.

404 6th Ave.

Prospect Place

Petroleum

333 5th Ave.

2 Street

505 3rd

3 Street

S.W.

Calgary House

P

4 Street

Oxford Tower Development Site

441 5 Ave.

Stock Exchange Tower

Fifth Ave. Place East

E.

P

Chateau Apt.

Calgary Place I

Fifth Avenue Place West

e Trail S.

Place 9-6

Diversified Staffing

Roslyn Building

Canada Place

Metropolitan Centre

Agricultur

P

Atrium I

Chevron 520 5th Ave. Plaza

Aquitaine Bldg

Calgary Place II

St. Louis

Lavalin Centre

Hawthorn Hotel 622 5th Ave. & Suites

640 5th Ave.

Northland Place

Fourth & Fourth 444 5th Ave.

5 Avenue S.W. Rimbey House

5 Street S.W.

P

McDougall Centre

6 Street S.W.

7 Street S.W.

8 Street S.W.

P

London House

3 Street S.E.

808 5th Ave.

P

555 4th Ave.

Macleod Trail

Heritage Place

The Sundance

Bookers

4 Avenue S.E. Phillips Bldg

Prince’s Island Place

S.E.

5 West Apt. West East

Place 926

Riverfront Pointe

P

1 Street

P

The Riverfront Condo

BELTLINE

First Street Plaza

Dragon City

4 Avenue S.W. Canadian Centre

Electric Substation

P

Opulence Centre

Harry Hays Bldg.

Calgary Eagle Bldg

Columbia Apts

615 3rd Ave.

Gov’t of Canada

Brid ge

Pavillion

North

Asia Pacific Centre

P

Eau Claire Retirement

New DEVELOPMENTS

Apt.

3 Avenue S.E. Churchill Estates

International Hotel

P

Livingston House

Apt.

in

3 Avenue S.W. Sonoma Place

r

Apt.

Five Harvest Plaza

ng ev

P

La

P

ue

Bridg e

Livingston Place South

Rest.

t Av en

Town

gevin

ExecSuite

China

La n

Devon Tower

P

Prince’s Crossing

NG Tower

ov e

Court

Liberte Eau Claire

P

Calgary City Centre

Waikwan Manor

Rive

rfron

P

Old

Eau Claire Tower


Livingston Place West

2 Avenue S.E.

eF ly

Shaw

Centennial Place East

Centennial Place West

Centre

nu

Eau Claire Manor

Barclay Mall

Eau Claire Lookout

The Point on the Bow

Daqing Avenue

Cultural LaCaille Rest. Park Place

4A ve

Chinese

2 Avenue S.W.

Graph FOUR

HISTORICAL DOWNTOWN OFFICE ABSORPTION 1,600 1,400 1,200 1,000 800 600 400 200

Absorption (000's sf)

0 (200) (400) (600) (800) (1,000)

Q2 2016 (451,937) (282,819) (88,211) (822,967)

Class A/AA Class B Class C Quarterly Absorption All Classes

Q3 2016 150,619 (298,043) 26,658 (120,766)

Graph FIVE

Q4 2016 (386,460) (172,839) (18,156) (577,455)

Q1 2017 1,208,884 92,659 21,133 1,322,676

Q2 2017 53,141 (338,892) (26,730) (312,481)

Q3 2017 (353,265) (11,534) (52,035) (416,834)

Q4 2017 397,059 (25,370) 45,431 417,120

Q1 2018 72,310 (31,381) 21,461 62,390

Q2 2028 (167,350) (147,531) (52,905) (367,786)

Average Net Rental Rates, All Classes 2012 - 2017 YTD

AVERAGE HEADLEASE NET RENTAL RATES PER SF, ALL CLASSES $50.00 $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00

Net Rate per sf

$10.00 $5.00 $2013

2014

2015

Class AA Net Rent

Class A Net Rent

Graph SIX

2016

2017

Class B Net Rent

2018 YTD

Class C Net Rent

Average Operating Cost per sf

AVERAGE OPERATING COSTS PER SF $25

$20

$15

Cost per sf

$10

$5

$0

Class AA Class A Class B Class C

2012 $19.21 $17.60 $15.43 $14.60

2013 $21.23 $18.76 $16.22 $14.50

2014 $22.60 $20.25 $18.44 $16.07

2015 $23.58 $21.54 $19.38 $16.74

2016 $23.67 $21.51 $18.96 $16.94

2017 $22.79 $20.77 $17.79 $16.89

2018 $22.74 $20.06 $16.86 $16.29

CONTACT INFORMATION OFFICE ADVISORY TEAM Donna Lea Banks 403.571.6018 [email protected]

Josh Hamill 403.539.0889 [email protected]

Gary Jones 403.571.8081 [email protected]

Adam Stewart 403.590.5704 [email protected]

Nicole Bennett 403.258.1872 [email protected]

Damon Harmon, CPA, CGA 403.571.8221 [email protected]

Josh Manerikar 403.571.8227 [email protected]

John Stones 403.571.8086 [email protected]

Jessica Downie 403.537.2393 [email protected]

Adam Hayes 403.571.8222 [email protected]

Doug Pilip 403.571.8228 [email protected]

Willem Thoma 403.539.0894 [email protected]

John Engbloom 403.571.6016 [email protected]

Dan Houston 403.539.0893 [email protected]

Kendra Pinder 403.571.8085 [email protected]

INDUSTRIAL ADVISORY TEAM Greg Albright 403.571.8223 [email protected]

David Miles 403.571.8088 [email protected]

Donna Lea Banks 403.571.6018 [email protected]

PROJECT MANAGEMENT ADVISORY TEAM Janet Hewitt 403.571.6019 [email protected]

Syeda Ahmad 403.571.8082 [email protected]

Cresa

Cresa is an international corporate real estate advisory firm that exclusively represents tenants and specializes in the delivery of fully integrated

606 - 4 Street SW, Suite 1400 Calgary, AB T2P 1T1 403.571.8080

real estate services, including: Transaction Management, Project Management, Strategic Services, Corporate Solutions, Site Selection, Lease Administration, Capital Markets, Mission Critical Solutions, Relocation Management, and Facilities Management. For more information, visit www.cresa.com/alberta

Even though obtained from sources deemed reliable, no warranty or representation, express or implied, is made as to the accuracy of the information herein, and it is subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. All material in this publication is, unless otherwise stated, the property of Cresa Alberta. Copyright and other intellectual property laws protect these materials. Reproduction or retransmission of the materials, in whole or in part, in any manner, without the prior written consent of Cresa Alberta is strictly prohibited.