Ottawa Office Second Quarter 2012

CBRE Limited

Global Research and Consulting Ottawa Office www.cbre.ca/research Second Quarter 2012

The Ottawa office market reacted well Following the trends set in the first quarter despite lackluster economic growth in the of 2012, the West market’s vacancy rate second quarter of 2012. Leasing activity decreased by 40 bps to 5.6% as a result remained constant even though Ottawa’s of stable leasing velocity. Notable to this vacancy rate decreased by 90 basis submarket is the Canadian Institute for Quick Stats points (bps) quarter-over-quarter to 7.2%. Health Information’s renewal of 90,000 Ottawa’s vacancy rate remains below the SF at 495 Richmond Road where they national average of 8.2%. Change from last also executed an expansion of 15,000 SF. Current Yr. Qtr. The vacancy rate in the Central Business The second quarter of 2012 saw the District (CBD) decreased by 60 bps in the South market’s vacancy rate decrease by Vacancy 7.2 % second quarter of 2012 to 5.8%. 150 bps quarter-over-quarter to 9.5%. Lease Rates $15.92 psf Morguard’s Performance Court at 150 The primary source of this decrease can Net Absorption 323,614 SF Elgin Street continues pre-leasing and be attributed to a drop in Class A sublet Construction 2,351,546 SF has secured the Canada Council for the space. The Class C marketplace did

*The arrows are trend indicators over the Arts who will occupy 80,880 SF and most experienced 16,433 SF of negative net specified time period and do not represent a positive or negative value. (e.g., absorption recently KPMG who will occupy 70,000 absorption, with the majority of this could be negative, but still represent a positive trend over a specified period.) SF upon the building’s completion in negative absorption occurring in the 2014. Ernst & Young will relocate to Colonnade/Rideau Heights sub node. reside in 27,720 SF at the Sun Life The East market’s vacancy rate was Hot Topics Financial Centre as they vacate the World unchanged quarter-over-quarter at 5.2% Exchange Plaza in order to consolidate • New buildings are creating as a result of stagnant leasing activity. their space on a single floor. Borden competition amongst landlords as There was 2,187 SF of negative net Ladner Gervais LLP renewed 70,000 SF tenants look to revitalize their space. absorption in a submarket that at 100 Queen Street and Norton Rose experienced relatively modest variations. Canada LLP renewed 42,000 SF at 45 • The suburban market performed well O’Connor Street. Investment sales in the Ottawa this quarter as leasing velocity marketplace were modest in the second exceeded expectations. Ottawa’s suburban market logged a 100 quarter of 2012 with two notable bps decrease in the vacancy rate and transactions taking place. Bridgeport • Rental rates decreased again this currently sits at 8.7%. Realty Management sold an asset at quarter but are expected to stabilize Kanata performed well throughout the 1130 Morrison Drive for $10.9 million to as the market remains active. second quarter of 2012 with multiple JDC Apex Inc. The building remains fully large transactions being completed. leased and houses eight tenants spread Genband’s search for space has come to over three floors. League Financial an end as they have landed themselves Partners traded 80 Aberdeen Street for a at 500 Palladium Drive, occupying consideration of $14.1 million to BTB 73,000 SF, Skyworks Solutions will move REIT. The building is situated on the to 1145 Innovation Drive, occupying fringe of the core and includes a multi- 25,000 SF, and finally PrairieFyre residential component. Software has renewed for 20,000 SF at 10 Brewer Hunt Way.

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Vacancy

Rate (%) Rate

2Q12

Ottawa Ontario Canada

OttawaRate Vacancy 899 130 304 220 366 858 Avg. Rental RateRentalAvg. (psf) 1,029 1,748 2,777 1Q12 SF (000s) SF 1Q12 Total Vacant Total

4Q11 2,538 3,207 4,205 6,527 6,262 4Q11 15,605 18,142 20,201 38,344 SF (000s) SF Inventory

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MarketView Ottawa Office

Top Lease Transactions Average Asking Lease Rate Size (SF) Tenant Address Rate determined by multiplying the asking net lease rate for each building by its available 90,000 Canadian Institute for Health Information* 495 Richmond Road space, summing the products, then dividing by the sum of the available space with net leases 80,880 Canada Council for the Arts 150 Elgin Street for all buildings in the summary. Net Leases 73,000 GENBAND 500 Palladium Drive Includes all lease types whereby the tenant pays an agreed rent plus most, or all, of the 70,000 KPMG LLP 150 Elgin Street operating expenses and taxes for the property, including utilities, insurance and/or 70,000 Borden Ladner Gervais LLP* 100 Queen Street maintenance expenses. Market Coverage 42,000 Norton Rose Canada LLP* 45 O’Connor Street Includes all competitive office buildings 20,000 square feet and greater in size. 30,000 Royal Canadian Mint 100 Murray Street Net Absorption The change in occupied square feet from one 25,000 Skyworks Solutions Inc. 1145 Innovation Drive period to the next.

20,000 PrairieFyre Software, Inc.* 10 Brewer Hunt Way Net Rentable Area The gross building square footage minus the *Renewal elevator core, flues, pipe shafts, vertical ducts, balconies, and stairwell areas. Occupied Square Feet Submarket Map Building area not considered vacant. Under Construction Buildings which have begun construction as evidenced by site excavation or foundation work. Available Square Feet Available Building Area which is either physically vacant or occupied. Availability Rate Available Square Feet divided by the Net Rentable Area. Vacant Square Feet Existing Building Area which is physically vacant or immediately available. Vacancy Rate Vacant Building Feet divided by the Net Rentable Area. Normalization Due to a reclassification of the market, the base, number and square footage of buildings of previous quarters have been adjusted to match the current base. Availability and Vacancy figures for those buildings have been adjusted in previous quarters.

For more information regarding this MarketView, please contact: Brandon Yuck, Sales Trainee CBRE Limited 333 Preston Street, 7th Floor

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