POV Point of View 2 0 1 Q3 8 Downtown and Beltline Office Market Report Market OVERVIEW

Downtown Market ƒƒ Parkland Fuel Corporation ’s summer of 2018 was three things – hot, hazy, and ƒƒ BMO Financial Group short-lived. No, we are not talking about the weather, we are ƒƒ Sinopec Canada Energy Ltd. talking about the market for commercial real estate. We saw an Trinidad Drilling Ltd. uptick in absorption, increased uncertainty about the future of ƒƒ the market, and an increase in leasing activity that may be ƒƒ Pembina Pipeline Corporation short-lived. ƒƒ CES Energy Solutions Corporation While the city itself may have seemed sleepy through summer ƒƒ Serafina Energy Ltd. holidays, we just experienced one of the strongest quarters for office leasing since 2012. On the surface, 204,968 sf of positive ƒƒ Packers Plus Energy Services absorption – or approximately a 0.4% vacancy decrease – may ƒƒ MLT Aikins LLP not seem like much in the way of activity. However, there is far more to the leasing picture than what we can see on the surface. ƒƒ One of the biggest impacts to vacancy figures in Q3 was the ƒƒ Aviva Canada anticipation of 320,000 sf of sublease space from Cenovus in the What do these transactions say about the market? At first glance, new Brookfield Place Calgary - East Tower coming to market. it appears that the market is picking up. Oil prices seem to have Though we cautiously anticipated that this sublease vacancy stabilized, despite continuing differentials for Canadian petroleum could flood the market and impair absorption coming into the products, and we are seeing early signs of economic diversification fall – which was endorsed by historical trends showing Q3 as as firms from outside of the energy sector are moving to Calgary the slowest quarter for leasing (see: Cresa’s Q1 Point of View) or are entering into real estate transactions to facilitate growth. – our worry was fortuitously misplaced. While Cenovus’s space On the other hand, we are not seeing significant quantities of provided a bump in inventory, it was offset by a material quantity investment dollars entering from outside of the province, of leasing. Excluding the sublease space anticipated in Brookfield and the growth that we are experiencing looks to be primarily Place Calgary, which has existed as ghost space for some time, organic in nature. Without access to capital from both local and approximately 525,000 square feet of space was leased over foreign players, it should be difficult to fill any significant quantity the summer. of space in . The city needs major projects with Large, contiguous blocks of AA and A class space were leased real job creation in order to move the vacancy rate downwards at by companies from the energy and financial services sectors a material pace. That does not mean that we will not continue to in the third quarter. Some of these groups moved into the core see improvement, though. from suburban Calgary, lowering downtown vacancy while pulling These transactions also speak directly to the characteristics of tenancy away from other markets; others expanded their existing available commercial real estate in Calgary. Of the aforementioned footprint in the downtown core. Large transactions included: transactions, there was a fairly even split of sublease and Market OVERVIEW

headlease transactions. There are two easy explanations for the its greatest victim. Vacancy in the B class now stands at 39.32%. headlease-to-sublease ratio. The first is the availability – or lack Smaller tenants are exceedingly common in B class buildings, and there of – of “ready-to-go” sublease spaces; as the market has it is difficult for B class landlords to lease-up large chunks of space matured through the present downturn, the sublease spaces with the same frequency that AA and A class landlords are able to. that were completely move-in ready, with reception, appropriate C Class – The “discount class” still has an important niche in this meeting rooms, and other core features have garnered the most economy, providing ultra-low-cost options to tenants who are demand. The remaining spaces, which were typically “working looking for them. C class vacancy is slightly better than the market floors”, lacked the amenities that a single floor tenant requires. average, at 23.84%, and witnessed positive absorption in the The second explanation is the age of improvements within many third quarter to the tune of 20,843 sf, or approximately a raw 3%. of the remaining sublease spaces. Between the early 2000s and

2008, when commodity prices boomed, new office space was constructed throughout downtown Calgary. Space of that vintage Beltline and Fringe Markets is approaching an age of 10 to 15-years-old, and is outdated with Vacancy in the Beltline continued to trend higher in the third respect to the office designs of today. Now, as tenants search quarter, with the vacancy rate reaching 24.00% after last quarter’s for spaces that do not require their own investment on the front- rate of 22.63%. The migration of tenants from suburban Calgary – end of a real estate transaction, landlords are stepping up with and the Beltline – into downtown continues to drag on occupancy turn-key opportunities and major tenant inducement packages to figures. Fortunately for Beltline landlords, we did witness larger attract tenants. tenants from south and north suburban areas move into the Regardless, between tangible leasing and reduced market “slack”, Beltline in the third quarter. The Beltline continues to function as we saw a strong quarter for downtown leasing, particularly in the a central alternative for companies looking to stay out of the core, AA and A classes. Let us look at each market class separately: as it boasts greater access to parking and reduced commute times. Tenants in the Beltline can look for similar rates to those AA Class – The AA class continues to carry the lowest vacancy, found in downtown Calgary, in addition to competitive inducement currently sitting at 17.01%. The majority of AA class vacancy packages. remains as sublease vacancy, representing two thirds of the available space. Despite the addition of anticipated sublease Downtown’s other fringe areas are seeing more competition over space, large tenant transactions, and continued merger & space and rates. In Mission, Kensington, and Inglewood/Ramsay, acquisition activity, total AA class vacancy stayed flat, in part due vacancies between 5,000 and 10,000 square feet are few and far to our reclassification of Millennium Tower from AA class to A class. between. At the time of writing this report, each of those three markets only had two vacancies in the aforementioned size A Class – The A class segment saw the most leasing in Q3. While band. Smaller tenants have more optionality in the fringe markets it benefited from the Millennium Tower reclassification, some of – particularly those under 3,000 sf – but there are still very real the largest transactions of the quarter also occurred in the A class, limitations. Please refer to Table One for the current vacancy rates headlined by Parkland Fuel in BP Centre. for the fringe markets. B Class – The B class continues to bleed vacancy, as it has done since 2012. The “flight to quality” is very real, and the B class is Market FORECAST

Much like the weather, blanketing the city with smoke for most of B. Residual personnel adjustments with respect to large the third quarter, Calgary’s market for commercial real estate failed corporate transactions from the first three quarters of 2018, to provide us with any real clarity in the summer of 2018. Now, primarily pertaining to employment overlaps progressing through a cool “fall”, we are hoping that icy conditions C. The firstinvestments from the Opportunity Calgary Investment do not mimic our opportunities for absorption in the downtown Fund (OCIF), which should help local employers add new core. bodies to their teams As described in our market report, the third quarter was, D. Optimism over the confirmation of Shell’s LNG project in comparatively spending to recent years, a big quarter for Northern British Columbia, which has the potential to be a absorption. Keeping that in mind, consider the following: boon for Calgary employment Calgary’s unemployment rate climbed to 8.2% in August, ƒƒ International and national macro-economic forces will add up from 7.9% in July, and stands as the second highest further complexity to the economic picture in Calgary. Several municipal rate in the country economists cheered the resolution of the new USMCA trade ƒƒ The Conference Board of Canada is forecasting real GDP agreement, although its impacts remain to be seen. Tariffs on growth in Alberta at 2.2% in 2019, down from 2.6% in steel and aluminum are still in tact between the United States and 2018 Canada, and continue to be a point of contention between the ƒƒ Vacancy is still at 24.5%, despite the relatively active two countries. The Western Canadian discounts for both oil and quarter Calgary just experienced gas are near all-time highs, and we still do not have the answers we need on the TransMountain pipeline to have confidence that Take in the above. Now, not to dampen the mood, but we need we can solve our energy transportation issues. We are treading in tempered optimism. Yes, material leasing of commercial real uncertain times and repercussions of federal decisions remain to estate happened in the third quarter. Yes, the vacancy rate moved be seen with respect to Alberta’s and Calgary’s economies. in a positive direction for the first time in a long time. No, Cresa does not anticipate sustained quarters like the last one. Going forward, we are hesitant to predict a material decline in downtown vacancy over the course of the next six-to-twelve So, what can Calgary expect into the end of 2018 and the start of months. Expect modest fluctuations to the vacancy rate and 2019? While the future is difficult to predict, we have a few good a moderately flat leasing environment, strongly maintaining clues with respect to what to look for in the following months. Calgary’s standing as a “tenant’s market”. The cold weather may A. Further consolidation in the energy sector, leading to staffing have arrived early, but we expect market conditions to mirror a redundancies typical Calgary winter – cool, cloudy, and the beneficiary of the odd chinook breeze. ƒƒ The pending acquisition of Trinidad Drilling by Precision Drilling ƒƒ The proposed acquisition of MEG Energy by Husky Energy

500,000 30.00%

Graph ONE 450,000 25.00% FORECASTED VACANCY 400,000

350,000 20.00% Tenant Market 300,000

250,000 15.00%

200,000

10.00% 150,000 f)

(s 100,000 y 5.00% ) or nt (% ve

50,000 y In nc w Ne 0 0.00% Vaca 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Forecast Forecast Forecast Forecast Forecast 2018 2019 2020 2021 2022

New Inventory Historical Vacancy (%) Forecasted Vacancy (%) Click here to view Table ONE vacancy details Q3 2018 VACANCY SUMMARY

BUILDING CLASS TOTAL INVENTORY HEADLEASE SUBLEASE TOTAL (sf) (sf) (%) (sf) (%) (sf) (%) Downtown AA 15,960,873 929,960 5.83% 1,785,525 11.19% 2,715,485 17.01% A 17,451,204 3,151,232 18.06% 1,217,396 6.98% 4,368,628 25.03% AA/A 33,412,077 4,081,192 12.21% 3,002,921 8.99% 7,084,113 21.20% B 7,539,393 2,786,722 36.96% 194,401 2.58% 2,981,123 39.54% C 2,584,781 516,117 19.97% 100,115 3.87% 616,232 23.84% Total Downtown 43,536,251 7,384,031 16.96% 3,297,437 7.57% 10,681,468 24.53%

Beltline and Fringe Area Beltline 6,785,144 1,074,910 15.84% 553,232 8.15% 1,628,142 24.00% Kensington 604,702 58,171 9.62% 0 0.00% 58,171 9.62% Inglewood 461,985 23,776 5.15% 9,427 2.04% 33,203 7.19% Mission 937,532 148,034 15.79% 6,509 0.69% 154,543 16.48% Total Beltline & Fringe Area 8,789,363 1,304,891 14.85% 569,168 6.48% 1,874,059 21.32% Graph TWO Graph THREE SUBLEASE VACANCY INDEXSublease Vacancy Index COMPARATIVE ComparativeVACANCY Vacancy Rate Q3 2014 - Q3 2018

45.00% 80.00%

40.00% 70.00% AA = 65.75 35.00% 60.00% 30.00% 50.00% 25.00%

40.00% 20.00% A = 27.87% 30.00% 15.00%

20.00% C = 16.25% 10.00%

10.00% 5.00%

B = 6.56%

Vacancy % 0.00% 0.00% Vacancy Rate Q3 2014 Q3 2015 Q3 2016 Q3 2017 Q3 2018

Class AA Class A Class B Class C

Class AA Class A Class B Class C Table TWO LARGE BLOCKS OF AVAILABLE CONTIGUOUS SPACE, DOWNTOWN CALGARY

Buildings Type Area (sf) Building Type Area (sf) Sublease 321,077 F1RST TOWER Headlease 177,352 Brookfield Place - East Upcoming Sublease 320,869 Place Headlease 134,111 Telus Sky Upcoming Headlease 286,172 Hanover Place Headlease 126,211 Brookfield Place - East Headlease 265,000 Lavalin Centre Headlease 119,366 707 Fifth Headlease 261,056 The Edison Headlease 118,826 Penn West Plaza - East Sublease 196,539 The Bow Sublease 116,165 Gulf Canada Square Sublease 193,604 Approximate Scale: 100 75 50 25 0 100 200 METERS

Prince’s

Island Bridge Condo Estates Cresa Alberta Rest. Suite 1400, 606 - 4 Street SW Condo Calgary, Alberta T2P 1T1 Condo tel: 403.571.8080 Princeton l & II Eau The Waterfront New DEVELOPMENTS Claire Future Y.M.C.A. P cresa.com Development Condo Rest. DOWNTOWN Condo Condo Site 7 Eau Claire Downtown Rest. Market Helicopter Eau Claire Avenue S.W. Riverfront Avenue Landing Pad Bow River Future Calgary Chinatown Suites

Development Sheraton Condo Seniors Centre Le Caille Fav Claire Apt The P Rest. P on the Bow Bow Claire Apt Site Indian P Friendship Bowside Broadview TELUS Sky Building Condo Millennium Tower P Centre Hong P Joe Phillips P Manor Condo Condo Centre Kong Plaza 1 Chinese Landlord: Telus, Westbank 2 Avenue S.W. Daqing Avenue 2 Avenue S.E. Cultural Riverfront Avenue & Allied REIT Downtown / Beltline Drive LaCaille Centre Office Floors: 26 Rest. Livingston Eau Claire Park Eau Claire Manor P NG Office Area: 430,000 sf The Point Centennial Place Waikwan Lookout Place Centennial Future Tower Memorial on the Bow Shaw Eau Claire Place East Calgary West Manor China Town Ave. Floor Plate: 16,500 sf Place West Development Court Tower City Est. Completion: 2019 Devon Site Five Harvest Apt. Apt.Apt. Centre Livingston Place Liberte Tower Plaza Percentage Leased: 36% P Prince’s Crossing P South P P Eau Claire Barclay Mall Rest. Anchor Tenants: Telus ExecSuite 3 Avenue S.W. 3 Avenue S.E. The Riverfront Gov’t Harry of Hays Sonoma Eau Churchill North Livingston Pavillion 615 Eau Claire Place P Canada Place Claire City Opulence P Bldg. House P Estates 3rd Ave. P I II Westin P Retirement Shell 4 Plaza Centre Brookfield Place Calgary - West Hotel BP Centre Jamieson Future 2 Hotel Pacific P Regency Centre Riverfront P Asia United Altius Place Centre Development Columbia Summit Retail International First Pointe Landlord: Brookfield Properties Neff Apts McFarlane Bldg Apts Place Optima P Bldg Site Dragon City Street Tower Plaza P Floors: 41 Place West East Building Area: 1,000,000 sf 4 Avenue S.W. 4 Avenue S.E. Ave. Floor Plate: 27,500 sf 3 Street S.E. 1 Street S.E. Est. Completion: n/a Canadian Phillips 555 Canada Delta Anchor Tenants: n/a Electric Centre Prince’s Island McDougall Bldg London Fourth & Northland Calgary Metropolitan Fifth Ave. Fifth Ave. P Substation Place P 4th Place Place II Place Place Place TransCanada Hotel Ave. House Fourth Centre P Centre Centre West East PipeLines James Short F1RST P P Tower Tower Baker Catholic 5 West Apt. Parkade Ubridge Fire 926 800 Chevron Calgary Hall House School West East The Heritage 640 5th Hawthorn Hotel Aquitaine 520 Roslyn Stock College 5th Ffith 622 5th 5th Ave. Plaza P # 1 444 Building Place I P Board Sundance Place Ave. & Suites Bldg Centre Street 5 Street S.W. 8 Street S.W. Ave. Exchange Tower 7 Street S.W. 3 Street S.W.

5th Ave. Ave. S.W. Street 4

Ave. 2 Street S.W.

5 Avenue S.W. 5 Avenue S.E. Oxford Tower 1 Street S.W. 3 441 Prospect Northwest Rimbey Lavalin Chateau 6 Street S.W. Five Future 505 Future Development Diversified 639 5th 5 Ave. 333 Petroleum East Tower Travellers Landlord: Oxford Properties House Centre Atrium P 715 - 5th Ave. Apt. Fifth & Fifth Ten 3rd Place III II Site P P Staffing P Oxford Tower 5th Ave. Suncor Bldg. I Ave. Fifth Development Club Calgary Bow Floors: 47 Knox Energy The Bow Site Board of Worker’s Building Area: 1,200,000 sf United Centre Valley Barclay Mcleod 404 - Education Compensation Ave. Floor Plate: 26,000 sf Office Place 736 - Pacific Bantrel Calgary Church Centrium College Condo Condo Edinburgh Atrium Place 6th 634 West Tower 9-6 P P Bradie House P 6th Ave. P IV I Budget Board Est. Completion: n/a Marquis Condo Future Retail Place II 800 Parkade Tower 6th Place Oddfellows Riverwest Bldg P Ave. Petex Bldg Building Anchor Tenants: n/a 6 Avenue S.W. 6 Avenue S.W. 2 6 Avenue S.E. Carber Tarjan Britannia Alpine 606 Bow Parkade Lougheed Block Court The Calgary Future Ford West East Hanover Place Rocky Prov. Discovery Point Apt. Terrace Bldg Fourth Brookfield Telephone P Police Pointe P P AMEC Dev Bldg Tower Place Mountain Centre P Axxis Place Apartments Gardens Harley P Intact Place Building Remand Place Site Calgary P Place - East Court (Apt.) Hotchkiss

Courts Public 6 1 Library Historic Court Gardens Rocky West Parallel Nexen Sierra Centre First Future Telus City Palliser West and East Plaza Pentland Northland Sandman 840 Life John J. of Appeal Telus TELUS Anglican Point Atrium 444 Bldg Mountain Centre 1000 Place Centre Plaze P Place Bowlen Canadian Development P Bldg P Cathedral Police P4 P Place Hotel 7th Ave. Seventh Sky Bldg Barclay Mall

Plaza Dominion Plaza Apts. Centre Site Bow Parkade H.Q. Landlord: Aspen Properties Floors: 29 each 7 Avenue S.W. LRT LRT LRT LRT LRT LRT LRT LRT LRT LRT 5 Building Area: 620,000 sf each Central O’Neil Garden Iveagh TD Canada Kerby Office 1035 7th Encor Stephen Ave. Floor Plate: 23,500 sf Towers Towers House City Trust Dome Devonian United P Avenue Nexen Guinness Elveden House 707 Fifth Hyatt Hotel Est. Completion: n/a Memorial Bldg. Apts. TV Tower Tower Gardens Avenue Church P Telus Convention Apts. Tower House Place Century Watermark Holt Place The Centre Anchor Tenants: n/a Gardens Olympic Tower Renfrew North White Westmount Western Bay Plaza City Lord 8th1010 1000 Strategic The Core Home Lancaster Bank of Winner Hudson Dominion Oak Place Condo Ramada Union Barron The Core Hall Nelson 8th Petrofina Shopping Shopping Bldg. Montreal Dept. Block Bank Plaza P Downtown Campus P Bldg. Centre P Tower Genesis Manor Ave Retail office Building Inn Ave 9 Street S.W. Hotel 10 Street S.W. Bldg. Hist Bldg Store Bldg.

8 Avenue S.W. Stephen Avenue Mall 8 Avenue S.E. Municipal Future Development Future Hollingsworth Kerris Eight Century North Plains Eighth Shaw HSBC Alberta Bldg. Centre Site P Mixed Use Century Panarctic The Taylor First 635 Calfrac Building National Retail Hotel Telus Convention Burns - East Retail P P West Park Place Midstream Plaza Avenue Bldg. Bldg. Royal Retail Retail Calgary Arts Americana Building Western 8th Ave. Bank Building Marriott Centre 6 Development Garden Plaza Alberta Place Bank Public Commons Bldg. Canadian Place Hotel Stampede Place Bldg South Building Landlord: GWL Realty West Eighth Pontiac Advisors Avenue Grain Edward’s Stampede Pontiac Continental APS Centennial Bankers Glenbow City of Calgary Place West East Exchange The Edison Le Germain P Place P Floors: 27 Car Lot Metro Ford Apt. Bldg. P Parkade P P Court P Office Electric Sub- South East Museum Building Area: 698,000 sf station # 1 Ave. Floor Plate: 27,400 sf 9 Avenue S.W. 9 Avenue S.E . Est. Completion: n/a 4 5 Tech Anchor Tenants: n/a Place P Palliser Future Calgary Future Palliser 303 - Car Lot Penn West Plaza P P P Gulf Canada Square Dev. Tower Dev. One 9th Ave Metro Ford P P P Hotel West East Site Site Tower C.P.R. Centre C.P.R.

Fire City Centre Parkade Car Mount Palliser Eau Claire Market Redevelopment Emerald P P P Mountain Place 10 Place 10 P Hall Future Retail South 7 Retail Wash Mgmt. 999 Equipment P Retail P Alberta Boot Co. West East P Royal P Development 8th St. P P

Coop Sprint Canada House P P Landlord: Harvard Site Developments 10 Avenue S.W. 10 Avenue S.E. Floors: 40 Macleod Trail 3 Street S.E. Retail/ Tenth 1 Street S.E. Building Area: 555,000 sf Sprung Kipling Apt. Lancore Rest. Avenue P 707 Bottle Rest. & P P MacCosham Carbon MEG Future The Alberta Ave. Floor Plate: 13,800 sf Astoria Mark on Tenth The Condo Centre 10 Butcher Block P Self Depot Annex Square Bromley Square Vantage P Bldg. 10th Ave Kipling Retail Block Copy Place Brownstone Trade Atco House P P Hudson Dev. Site Storage Cooperblok P Office Demcor Centre Est. Completion: n/a Pointe Calgary Co-op P Anchor Tenants: n/a Condos Sunrise Lewis Paramount Retail 902 Corner Joffre 11th Mustard Square 1015 Genco The Retail Clennan Mustard 134 - 11th Louis Ribtor I Ribtor II Atco 11 Ave. Block P Glenbow Retail Place 5/5 The Lofts Avenue Building Square Seed Braemar

P P P 5 Street S.W. 4th St. Place P Seed 4 Street S.W. Street 4 Retail 6 Street S.W. Ave. S.E.

11 Street S.W. Vintage I P 10 Street S.W.

7 Street S.W. Vintage II Bldg. Blk. 1 Street S.W. 8 Street S.W. 9 Street S.W. Building

2 Street S.W. Place Centre Street Ave.

1006 11th The Paserium 11 Avenue S.W. 11 Avenue S.E.

Century Sport The Atco Fairmore Roberts P Future Stephenson Flooring 1111-11th P Atco Retail P Swap Atrium on 525 P 333 IBM Office Carrington Centre I Bldg. Block 11th Ave. Development 301 - Bldg. Centre II Bike Shop 11th P -11th B Future Anticipated Completion Trico Retail Site 11th Ave Alta P IBM s Development P Safeway Bldg. Tran Bldg Keynote P Future Dev. Site Lorraine Stella Nova Future Barnhart Foundation Site Future 2019 Pending Dhalsen P Dominion Block Parkside Citadel Sam 1122 4th Lacey Can-am Manhattan Condos Condos Dev. Genesis Xenex Livingston Bldg. IBM Development Apt. Place P Bldg Place West Castello St. S.W. Court Masonic P Lofts P Condo Apt. Condos C Office Bldg. Temple Site 12 Avenue S.W. 12 Avenue S.E. LEGEND Plus 15 Connections Prince’s Island Proposed Plus 15 Connections

Centre Street Bridge Estates Condo One way Directions Memorial Drive Rest. Transit Condo Railway Condo Building / Future Development Princeton l & II Eau The Waterfront 14 Number of Floors Claire Future Y.M.C.A. P Cresa Alberta Development Condo Rest. Condo Condo Site Eau Suite 1400, 606 - 4 Street SW Claire Downtown Rest. 4 Street N.E. Market Calgary, Alberta T2P 1T1 Helicopter Eau Claire Avenue S.W. Riverfront Avenue Bow River Landing Pad tel: 403.571.8080 Future Bow River Calgary Chinatown Memorial Drive Development Condo Seniors Centre Le Caille Fav Claire Apt The P Rest. P cresa.com on the Bow Bow Claire Apt Site Hotel Indian Sheraton

P Tower Friendship Bowside Broadview Building P Millennium Condo P Joe Phillips P Manor Centre Hong Condo Condo Centre Kong Plaza Chinese 2 Avenue S.W. Daqing Avenue 2 Avenue S.E. Cultural Riverfront Avenue Drive LaCaille Centre Rest. Livingston Eau Claire Park Eau Claire Manor P NG The Point Place Centennial Place Waikwan Lookout Centennial Future Tower Memorial on the Bow Shaw Eau Claire Place East Calgary West Manor China Town Place West Development Court Tower City Devon Site Five Harvest Apt. Apt.Apt. Louise Bridge Centre Livingston Place Liberte Tower Plaza Flyover ridge P Prince’s Crossing P South P P B Eau Claire Barclay Mall Rest. ExecSuite evin

3 Avenue S.W. 3 Avenue S.E. NewThe Riverfront DEVELOPMENTS4 Avenue ng Gov’t Harry Condo La of Hays Sonoma Eau Churchill Eau Claire Place North Livingston Pavillion 615 P Canada Bldg. BELTLINE Place Claire City Opulence P Old House P Estates 3rd Ave. P I II Westin P Retirement Shell Plaza Centre Hotel BP Bridge Centre Jamieson Future Sun Life Plaza P P Regency Hotel Riverfront United Altius Place Centre Development Columbia Summit International First Pointe Bookers Neff Apts McFarlane Retail Place P Bldg Centre Site Asia Dragon City Street

Apts Pacific Bldg Centre Langevin 744- Tower Plaza P West East 4th Ave. 4 Avenue S.W. 4 Avenue S.E. 3 Street S.E. Macleod Trail 1 Street S.E. Canadian Phillips Calgary Electric Prince’s Island Bldg 555 Northland Canada Fifth Avenue Fifth Ave. Delta Cecil Calgary Drop Centre London Fourth & Place II Metropolitan Hotel P Substation Place P 4th Place Place Place Place Hotel in Centre House Fourth Centre TransCanada Ave. P F1RST West East PipeLines James Short P McDougall P Tower Baker Catholic 5 West Apt. Tower Parkade Fire Place 10 - East Centre Chevron Hall House School Place West East The Heritage 808 622 Hawthorn Hotel Aquitaine 520 Roslyn Calgary Ubridge 1 640 5th 444 # 1 Landlord: Centron 926 5th Ave. Plaza Building Place I Stock P College P Board Sundance Place 5th Ave. 5th Ave. & Suites Bldg Centre Street 8 Street S.W. Ave. 5 Street S.W. Exchange Tower 7 Street S.W.

3 Street S.W.

5th Ave. 4 Street S.W. Street 4 2 Street S.W. P Developments Floors: 14 5 Avenue S.W. 5 Avenue S.E. 1 Street S.W. Building Area: 316,500 sf Simmons 441 Northwest Bldg Rimbey Chateau 6 Street S.W. Five Prospect Future Development Lavalin Diversified 639 5th 5 Ave. 505 333 Petroleum East Tower Travellers Ave. Floor Plate: 24,850 sf House Centre Atrium P Apt. Ave. Fifth & Fifth Ten 3rd Place III II Site P P Staffing 715 - 5th Ave. P Oxford Tower 5th Ave. Suncor Bldg. 5 Avenue S.E. I Fifth Club The Bow Calgary Bow Future Est. Completion: 2017 Development Site Knox Bow Valley Square Energy P Board of Worker’s United Centre Valley DevelopmentAnchor Tenants: n/a Barclay Mcleod Place 404 - Education Compensation Alberta Locker Office 736 - Pacific Bantrel 634 Calgary Church Centrium College Site Police Condo Condo Edinburgh Atrium Place 6th West Tower Service 9-6 P P 6th Bradie House P 6th Ave. P IV I Budget Board Marquis Condo Future Retail Place II 800 Parkade Tower P Place Oddfellows Association Bow River Riverwest Ave. Bldg Petex Building Building Site

Mewata Bridge 6 Avenue S.W. 6 Avenue S.W. 6 Avenue S.E. 6 Avenue S.E.

Britannia Carber Calgary Police Tarjan Future Alpine 606 Lougheed Block Rocky Court Discovery Pointe The Calgary Ford West East Telephone Hanover Place Prov. Police 4 Street S.E. Bow Parkade Service 5 Street S.E. Apt. AMEC Terrace Bldg Bldg Court Fourth Brookfield P Police Centre P P Pointe Axxis P Place Apartments P Dev Tower P Intact Place Place Mountain Remand P Place 10 - West Gardens of Appeal Place - East Building (Apt.) Parking Place Site Calgary Harley P Court 2 Landlord: Centron Hotchkiss Structur Courts Public Historic Court Rocky Library West Parallel Pentland Nexen Sierra Centre Gardens First Future Telus Telus City Developments Assoc. Plaza Northland Sandman 840 Life John J. of Appeal TELUS Anglican P Rick’s Calgary Firefighters BJ’s Point Atrium 444 Bldg Mountain Gym Centre 1000 Place Place Centre Plaza Place Bowlen Canadian Development P Bldg Sky Cathedral Police Floors: 14 P Hotel 7th Ave. P Seventh P P Auction P Hostel Barclay Mall

Plaza Apts. Dominion Bldg Plaza Centre Site Bow Parkade H.Q. Building Area: 300,000 sf P LRT LRT LRT LRT LRT LRT LRT LRT LRT LRT Ave. FloorLRT Plate: 23,3507 Avenuesf S.E. Central O’Neil Garden Iveagh TD Canada Est. Completion: n/a Kerby Office 1035 7th Encor Dome Stephen Tower Tower Guinness House 707 Fifth City Trust Devonian United P P Ave Nexen ElvedenHouse Avenue Hyatt Hotel Anchor Tenants: n/a Memorial Bldg. Apts. Apts. TV Tower Tower Gardens Church P Telus Convention Tower House Place Holt Century Watermark Place The Centre Olympic Renfrew Gardens Tower Bay North City White Westmount Western Strategic Plaza Lord 8th1010 1000 The Core The Core Home Lancaster Bank of Winner Dominion Oak Place condo University of Calgary Ramada Union Barron Dept. Hudson Hall P East Village Nelson 8th Petrofina Centre Shopping Shopping Bldg. Montreal Bank Plaza P P Bldg. P Tower Genesis Manor Ave Downtown Campus Retail Block office Building Store Inn Ave 9 Street S.W. Hotel Place 10 Street S.W. Bldg. HIst Bldg Bldg. St. Louis

P Calgary Eagle Bldg Shaw Mewata 8 Avenue S.W. Stephen Avenue Mall 8 Avenue S.E. Municipal 8 Avenue S.E. Millenium Armory Stampede Station, Phase II Gas Park Kerris Future Development Future HSBC Hollingsworth Alberta Eight West Century The North Shaw Calfrac Bldg.3 Orange Centre Site P Mixed Use Century First 635 Plains Building National Hotel Retail Burns Landlord:Hillier Artis REIT Retail P P Park Place Panarctic Taylor Eighth Bldg. . Bldg. Royal Retail Retail Telus Convention Calgary Epcor Lofts Americana 8th Ave. Midstream Plaza Bank Building Marriott P Development Garden Plaza Alberta Place Western Avenue Bank CIBC Centre Public Bldg. Floors: 19 Building Hotel Center for Canadian Place Bldg Tower South Building Murdoch Stampede Place Eighth Building Area: 315,400 sf Pontiac West Manor Avenue BankersHall Grain the Performing Edward’s P Stampede Pontiac Continental APS Centennial Bankers Glenbow Ave. CentreFloor Plate: 22,600 sf City of Calgary Place East Exchange The Edison Le Germain P Place P King Car Lot Metro Ford Apt. Bldg. P Parkade P P West Court P Arts of Hope Office Electric Sub- South East Museum Est. Completion:Edward n/aCommisionaires station # 1 Anchor Tenants:Hotel n/a 9 Avenue S.W. 9 Avenue S.W. 9 Avenue S.E. 9 Avenue S.E. Teck Penn West Plaza Place P 6 Palliser Future Calgary Future Palliser 303 - P Carstar Sundog Place Intergulf Car Lot Canada Staples P P P Gulf Square West East Dev. Tower Dev. One 9th Ave Future Development Site Cidex Metro Ford P P P Hotel Site Site Tower C.P.R. 2 1 Centre C.P.R.

Future Koryo Community United Car Fire City Centre Parkade Mount Keynote 4 Bank of Emerald P P P Mountain Development Plaza Natural Technologies P Hall Future Retail Place 10 Place 10 Palliser P Montreal Retail Wash Mgmt. 999 Equipment P Retail P Alberta Boot Co. P Royal P South 4 Landlord: Triovest Realty Foods Bldg Development 8th St. West East P P

Coop Sprint Site Canada House P Data Centre Site P Floors: 18

10 Avenue S.W. 10 Avenue S.W. 10 Avenue S.E. Building Area: 340,000 sf Future Development Site Macleod Trail 3 Street S.E. 1 Street S.E. Ave. Floor Plate: 20,900 sf Smith- Vistek Retail/ Tenth Kipling 4 et S.W. 14 GE Bldg Sprung 707 Bottle Apt. Carbon MEG Alberta 409 10th Royal Bank bilt Lancor Mark on Rest. Avenue P Centre 10 Rest. & P P MacCosham Future The

Printing Condo Astoria Annex Self Est. Completion: n/a Lighting P Hats P P P Bldg. The 10th Ave Depot Kipling Square Butcher Block Retail Block Bromley Square P Trade Ave. Stre Vantage Copy Place Brownstone Data Centre Atco Tenth House P P Hudson Dev. Sit Storage Centre Cooperblok P Office Demcor Centre Pointe Anchor Tenants: n/a Calgary Co-op P Condos Sunrise Lewis Paramount Future Retail 902 Joffre 11th Avenue Mustard Corner Square 1015 Genco The Buildin Retail Clennan Mustard 134 - 11th Louis Ribtor I Ribtor II Pilkington Abugov The Development Crabtree Retail Atco 11 Ave. P Glenbow Retail Place 5/5 The Lofts Place g Square Seed Braemar

P P P P 5 Street S.W. 4th St. Place P Seed Biscuit Block S.W. Street 4 Kaspar Retail 6 Street S.W. Ave. S.E. P P 13 Street S.W. 12 Street S.W. 11 Street S.W. Vintage I P 10 Street S.W. Building 7 Street S.W. Vintage II Bldg. Blk. Coyotes 1 Street S.W. 8 Street S.W. Site House 9 Street S.W. Building 2 Street S.W. Centre Street Ave.

1006 11th The Paserium Block 11 Avenue S.W. 11 Avenue S.W. 5 11 Avenue S.E. 11 Avenue S.E.

Century Fairmore Sport Future Olympic Way S.E. Contempa Taymor Kai Connaught Stephenson The Atco Roberts P Future Office Sandstone Super Hamburg Flooring 1111-11th P Atco Retail P Swap Atrium on 525 P IBM P Carrington Centre I Bldg. 333 - 11th 301 - Development Grandel Drug Building Tower Centre Bldg. Centre II 11th Block 11th Ave. Dev. Site P Future 1108School - 4th Street SW Trico Bike Shop Retail Retail 11th Ave B 4 Arriva Bldg Mart P Alta Site IBM Development 5 Landlord: Genco P Safeway A TransBldg Keynote P Future Dev. Site Lorraine Future Stella Nova Future Barnhart Site Future P Royal P Dominion Parkside Citadel Sam 1122 4th Lacey Can-am Development The 1320 - Condos Condos Dev. Dhalsen Genesis Xenex Block Manhattan Future Park Plaza Grosvenor Place P West Castello Livingston Court Bldg. P IBM Development P Development Ravenwood 12th Ave Apt. Condo Apt. Foundation Place St. SW Masonic Lofts Floors: 13 House Condos Bldg Bldg. Temple C Office Dev. Site Site Site Building Area: 186,600 sf 12 Avenue S.W. 12 Avenue S.W. 12 Avenue S.E. Ave. Floor Plate: 15,40012 Avenue sf S.E. Retail Centre Husky Beltline Fountain Petrowest Sutton Place Marlhurst Exud 1201-5 St The Rest Retail Monaco P Connaught Public Stanford Renoir Stonehaven Memorial Park Twelve Retail Est. Completion: n/a Davenport Apt. P 5 Street S.E. Auto Apt. Plac S.W. Seville Beltline Gas Edinburgh House Court Court Plaza Came Suites Condo Library Hotel P P Condos School Apt. Helene Pool Esso Future P Anchor Tenants: n/a Sunalta House Retail Apt. Apts. Condo Calgary Apt. Central Arts P Sheldon Future Gas Development Calgary Exhibition Calgary Exhibition Calgary Exhibition Chumir Memorial Station Board of Future Dev. Development Brompton Cambridge Health Centre & Stampede Grounds & Stampede Grounds & Stampede Grounds The Adair Hull Park Apt. Site Huntsman Connaught Apt. Education Future Site Victoria 1228 - 1220 - The Apt. Apt. The Estate Gate Apt. Retail Retail P Prestige Apt. Estates Apt. Apt. Lancaster 13th 13th The Grapevine Gardens Apt. Club Colonel Park Development P Square Riomilan Apt. Condo Block 1328 Condo Radio Ave Ave Willmax Belcher Estates Site

1310 Ranchman’s 13 Avenue S.W. 13 Avenue S.W. 13 Avenue S.E. 13 Avenue S.E . Prada 999, Phase II City Congress 3 Future Camelot Executive Apt. Royal Horizo Van Canadian Centra Wexford Place Apt. Bernard Gas Manor The Cavaler Rivera Aldrin St. Elizabeth Apt. P Park 300 Park Apt. Apt. Colours Callebaut 6 Jardin Dev. Helden Stratto Lougheed Towers P Apt. Landlord: Triovest Realty Church Centre Point West House Arms Estates Montage Apt. Oak Condos Apt. Apt. House Church Blood Moxam Birkenshaw Apt Place P P Condo Condo Bldg. P Oak Apt. House Church Stampede Barclay Square Services Apt. Future P CalgaryFloors: Exhibition 13 Calgary Exhibition Calgary Exhibition Station Retai Development Nuera Kingston Sherman White-Wain- Yellowstone Paris Retail Retail Condo Retai No & StampedeBuilding Grounds Area: 224,000& Stampede sf Grounds & Stampede Grounds Union Landing Wesley Pallisades Site Square Manor St James Dorchester Square Best Western Oaks Apt. Beulieu Hill Apt. Rosewood Apt. Exeter Square Apt. Apt. 1224 - 1208 - Park Barclay Estates Apt. Bristol Apt. Chelesa Apt. Park & Ave. Floor Plate: 16,800 sf Chelsea Estates Place Place Apt. Office Hotel Condos United Apt. P P Scenic Polo Terrace Condo

A & W Estate Harcourt 14th Ave 1212 14th Ave View Condo Manor Gardens Apt. rendering Estates Condo Tower Church Apt. Place Playground Balmoral Est. Completion: n/a Plaza The Manor Findlay Anchor Tenants: n/a 14 Avenue S.W. 14 Avenue S.W. Trump 14 Avenue S.E. available 14 Avenue S.E. Retail Casablanca Lincoln St. Moritz Gardens Haultain Haworth Estates Mount Colonial Monticello 1209 Retail Apt. Whickam Full Evergreen Cypriana Apt. Apt. House Apt. Terra Weatherford St. Stephens Apt. Apt. Cozart Apt. Granada House Centro Towers Apt. Beltline Tower Apt. Apt. Church Richmond P Sasso Estates del Gospel Royal Apt. The Towers Apt. P Commissary P Apt.

Estates Office Park Apt. P Condo Arms Condo Apt. Condo Coronation Apt. P

Church The Condo Avenue Diplomat Apt. Sony

Sol Ashwood

Church Retail Place Darlington

JWC Block P M-tech Future P Office Hath Away P Place Stampede Calgary Exhibition Grandville Place Apts Development Westbury House Madison Roundup Retail Hardwood The Alberta Manor Court Laurekka Site & Stampede Grounds House Centennial House Apt. Dunhill Kingston Carlyle Ashbury Alex Wellington Apt. Brigden Premier Apt. Emerald Stone Kildare Apt. Apt. Apt. Condo Apt. Retail The MacKenzie Condo Vetro Centre Apt. Hamstead Grace Apt. Gas Apt. Apt. Apt. Estates Apt. Towers Apt. Apt. Condos Walker Retail Estates Apt. Westbow Apt. Norwood Block Place P Condo Apt. Church Condo Estates Gardens Retail Condos Apt. Apt. Chocolate Hargrave House LRT 15 Avenue S.W. 15 Avenue S.W. 15 Avenue S.E. Saddledome RS Parking Retail

Park Apt. Apt. Office Apt. Panorama Rose & Randel House Executive Apt. Alpha Trail S.E. 14 Street S.W. West Grace Apt. The Pillars Chateau Condo Sonesta Dorset Hallmark Royal White City Grace The Montana Apt. P P P Apt. Doral Retail White The Residences of House Coronation The Biltmor Pole View Manor Manor Apt. Court Apt. Falls The House Crown Manor P Square Estates Manor Plaza Arms Mansion Wild Rose Savoy Condo Centre Apt. Haven The Shylui Presbyterian Mount Royal Future Condo Conservatory Manor Apt. Manor Iona 15 Apt. Dev. Queenswood Condo P Superior Paint Office Car P P Church Funeral Building Rest. Scotiabank The Apt. Retail Rental Madiso Office / Home Park P Thompson Family National 1520 4th St. P Church Saddledome Retail Calgary Connaught Lucy Anne Retail Mt. Royal Retail The Courtyard Royal View Park Skygate Apt. P Office/Retail Block Retail 17 Avenue S.E. P Lawn Bowling Manor Apt. P Apt. Village Mt. Royal Apt. Apt. Aurora Phil’s Apt. Tower P Centre Apt. Apt. P Club Apt. Retail Bldg Office Stampede Calgary P Retail Agriculture Trail S.E. Blockbuster Stamp Corral 16 Avenue S.W. 16 Avenue S.W. Retail Retail Office Retail Economy Lane College Retail Glass Centre of Hillier Thomkins Park Main La Chaumiere Casino Anticipated Completion Rockwood Devenish Bldg. il Funeral Vet Retail P Positive Retail Royal Square Retail Opus Reta Notre Dame Rouleauville Condon First etail Square Shell Street Apt. Home Living Wendy’s P Liquor R ATB Place Square Building McDonald’s Seventeen KFC Station ers CIBC 17 Avenue S.W. Retail Stratford Tow

Place Retail P Retail Pending P Calmar Retail Corral Trail S.E. Retail Future Shoppers Western Canada High Apts. Retail Drug Mart Bank Street Dev. Retail Retail of vereign hool 17 Avenue S.W. 1109 So Retail House Montreal High Sc Fire Hall Retail Apt Heights Huntington Toole 17 Ave P Apt Peete Tim Apt. Scotia Retail Centre Apt Bldg Retail Royal 1429 - Retail Manor Hortons Approximate Scale : Downtown / Beltline Condo Telus Bank 17 Calgary 17th Jewelers 100 75 50 25 0 100 200 METERS Ave Graph FOUR HISTORICAL DOWNTOWN OFFICE ABSORPTION 1,600

1,400

1,200

1,000

800

600

400

200

0

sf) (200) 00's (0

(400) on ti

rp (600) so

Ab (800) Q3 2016 Q4 2016Q1 2017 Q2 2017 Q3 2017Q4 2017Q1 2018Q2 2018 Q3 2018 Class A/AA 150,619 (386,460) 1,208,88453,141 (353,265) 397,059 72,310 (167,350) 224,141 Class B (298,043) (172,839) 92,659 (338,892)(11,534)(25,370)(31,381)(147,531) (40,016) Class C 26,658 (18,156) 21,133 (26,730) (52,035) 45,431 21,461 (52,905) 20,843 Quarterly Absorption All Classes (120,766) (577,455) 1,322,676 (312,481)(416,834) 417,120 62,390 (367,786) 204,968

Average Net Rental Rates, All Classes Graph FIVE 2012 - 2018 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

$10.00

$5.00

$- Net Rate per sf 2013 2014 2015 2016 2017 2018 YTD

Class AA Net Rent Class A Net Rent Class B Net Rent Class C Net Rent

Graph SIX Average Operating Cost per sf AVERAGE OPERATING COSTS PER SF $25

$20

$15

$10

$5

Cost per sf $0 2012 2013 2014 2015 2016 2017 2018 Class AA $19.21 $21.23 $22.60 $23.58 $23.67 $22.79 $22.86 Class A $17.60 $18.76 $20.25 $21.54 $21.51 $20.77 $20.27 Class B $15.43 $16.22 $18.44 $19.38 $18.96 $17.79 $16.82 Class C $14.60 $14.50 $16.07 $16.74 $16.94 $16.89 $16.46 CONTACT INFORMATION

OFFICE ADVISORY TEAM Donna Lea Banks Josh Hamill Gary Jones Willem Thoma 403.571.6018 403.539.0889 403.571.8081 403.539.0894 [email protected] [email protected] [email protected] [email protected]

Nicole Bennett Damon Harmon, CPA, CGA Josh Manerikar Michael Yue 403.258.1872 403.571.8221 403.571.8227 403.571.8083 [email protected] [email protected] [email protected] [email protected]

Jessica Downie Adam Hayes Kendra Pinder 403.537.2393 403.571.8222 403.571.8085 [email protected] [email protected] [email protected]

John Engbloom Dan Houston Adam Stewart 403.571.6016 403.539.0893 403.590.5704 [email protected] [email protected] [email protected]

INDUSTRIAL ADVISORY TEAM Greg Albright David Miles Donna Lea Banks 403.571.8223 403.571.8088 403.571.6018 [email protected] [email protected] [email protected]

PROJECT MANAGEMENT ADVISORY TEAM Janet Hewitt Syeda Ahmad 403.571.6019 403.571.8082 [email protected] [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 real estate services, including: Transaction Management, Project Management, Strategic Services, Corporate Solutions, Site Selection, Lease Calgary, AB T2P 1T1 Administration, Capital Markets, Mission Critical Solutions, Relocation Management, and Facilities Management. For more information, visit 403.571.8080 www.cresa.com

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