Fall 2018 Avison Young Commercial Real Estate Investment Review

North America and Europe

Partnership. Performance. Contents

Overview

05 Canada Investment Market Overview 43 Memphis 71 London 11 U.S. Investment Market Overview 44 Miami 72 Manchester 45 Minneapolis Canada 46 Nashville Germany 17 Calgary 47 New Jersey 74 Berlin 18 Edmonton 48 New York 75 Duesseldorf Montreal 19 49 Oakland 76 Frankfurt 20 Ottawa 50 Orange County 77 Hamburg 21 Toronto Orlando 51 78 Munich Vancouver 22 52 Philadelphia Phoenix Romania United States 53 Pittsburgh 54 80 Bucharest 24 Atlanta 55 Raleigh-Durham 25 Austin 56 Sacramento More from Avison Young 26 Boston San Antonio 57 Company Overview 27 Charlotte 84 58 San Diego County 28 Chicago 86 Publications and Social Media 59 San Francisco 29 Cleveland 87 Contact Us 60 San Jose/Silicon Valley 30 Columbus, OH 61 San Mateo 31 Dallas 62 St. Louis 32 Denver 63 Tampa 33 Detroit Washington, DC 34 Fairfield County 64 West Palm Beach 35 Fort Lauderdale 65 Westchester County 36 Hartford 66 37 Houston Mexico 38 Indianapolis 39 Jacksonville 68 Mexico City

Disclaimer 40 Las Vegas United Kingdom The statistics contained in this report were obtained from sources deemed reliable, including Altus InSite, Avison Young, Collette, Plante & Associés, Commercial Edge, CoStar Group 41 Long Island Inc., Desjarlais Prévost Inc., Gettel Network, Property Data Ltd., Real Capital Analytics, Inc., RealNet Canada, RealTrack, Reis Services, LLC, and Thomas Daily GmbH. However, Avison Young (Canada) Inc. does not guarantee the accuracy or completeness of the information presented, nor does it assume any responsibility or liability for any errors or omissions. All opinions 42 Los Angeles 70 Coventry expressed and data provided herein are subject to change without notice. This report cannot be reproduced in part or in full in any format without the prior written consent of Avison Young (Canada) Inc.

2 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 3 Contents

Overview

05 Canada Investment Market Overview 43 Memphis 71 London 11 U.S. Investment Market Overview 44 Miami 72 Manchester 45 Minneapolis Canada 46 Nashville Germany 17 Calgary 47 New Jersey 74 Berlin 18 Edmonton 48 New York 75 Duesseldorf Montreal 19 49 Oakland 76 Frankfurt 20 Ottawa 50 Orange County 77 Hamburg 21 Toronto Orlando 51 78 Munich Vancouver 22 52 Philadelphia Phoenix Romania United States 53 Pittsburgh 54 80 Bucharest 24 Atlanta 55 Raleigh-Durham 25 Austin 56 Sacramento More from Avison Young 26 Boston San Antonio 57 Company Overview 27 Charlotte 84 58 San Diego County 28 Chicago 86 Publications and Social Media 59 San Francisco 29 Cleveland 87 Contact Us 60 San Jose/Silicon Valley 30 Columbus, OH 61 San Mateo 31 Dallas 62 St. Louis 32 Denver 63 Tampa 33 Detroit Washington, DC 34 Fairfield County 64 West Palm Beach 35 Fort Lauderdale 65 Westchester County 36 Hartford 66 37 Houston Mexico 38 Indianapolis 39 Jacksonville 68 Mexico City

Disclaimer 40 Las Vegas United Kingdom The statistics contained in this report were obtained from sources deemed reliable, including Altus InSite, Avison Young, Collette, Plante & Associés, Commercial Edge, CoStar Group 41 Long Island Inc., Desjarlais Prévost Inc., Gettel Network, Property Data Ltd., Real Capital Analytics, Inc., RealNet Canada, RealTrack, Reis Services, LLC, and Thomas Daily GmbH. However, Avison Young (Canada) Inc. does not guarantee the accuracy or completeness of the information presented, nor does it assume any responsibility or liability for any errors or omissions. All opinions 42 Los Angeles 70 Coventry expressed and data provided herein are subject to change without notice. This report cannot be reproduced in part or in full in any format without the prior written consent of Avison Young (Canada) Inc.

2 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 3 Canada Investment Market Overview

Investor enthusiasm fuelled by sound economic and property fundamentals

Investors remain enthusiastic about Canada’s commercial property market, despite uncertainty surrounding rising interest rates, the lateness of the investment cycle and – in particular – scarcity of available product to meet insatiable demand. Against a backdrop of geopolitical tensions and financial volatility, Canada is still viewed globally as a safe haven given the country’s stable economic and political climate and sound property market fundamentals.

Toronto and Vancouver remain the primary destinations for investor capital, but investment was relatively evenly distributed among the asset classes nationwide in first-half 2018. Office product is attracting its share of capital as the influx of technology and co-working firms adds to demand from traditional sectors. Ongoing urban intensification is not only impacting the office sector, but rising population density and the strong links between the industrial and retail sectors – resulting from the growth of e-commerce and last-mile logistics – mean that both asset types are garnering investors’ attention. Meanwhile, tight housing supply is driving multi-family investment, yielding the lowest cap rates. With development robust in all sectors, the scarcity of developable land has put land sales on pace for a record year.

The first half of 2018 was notable not only for direct investment in commercial real estate assets, but also multi-billion-dollar M&A activity in the industry with headline transactions, including Choice Properties REIT’s purchase of CREIT and Blackstone’s acquisition of PIRET. At the same time, Canadian capital continued to flow into the U.S. as trade-agreement negotiations and political uncertainty did not dampen investors’ interest in assets south of the border.

In a world of moderating returns, investors are looking to capitalize on landlord- favouring markets and sectors offering significant rental-rate growth – pushing beyond pure-play acquisitions to redevelopment and upgrade opportunities – while debt reduction and geographic diversification continue. For the near term, asset values will remain elevated and cap rates low.

4 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 5 Canada Investment Market Overview

Investor enthusiasm fuelled by sound economic and property fundamentals

Investors remain enthusiastic about Canada’s commercial property market, despite uncertainty surrounding rising interest rates, the lateness of the investment cycle and – in particular – scarcity of available product to meet insatiable demand. Against a backdrop of geopolitical tensions and financial volatility, Canada is still viewed globally as a safe haven given the country’s stable economic and political climate and sound property market fundamentals.

Toronto and Vancouver remain the primary destinations for investor capital, but investment was relatively evenly distributed among the asset classes nationwide in first-half 2018. Office product is attracting its share of capital as the influx of technology and co-working firms adds to demand from traditional sectors. Ongoing urban intensification is not only impacting the office sector, but rising population density and the strong links between the industrial and retail sectors – resulting from the growth of e-commerce and last-mile logistics – mean that both asset types are garnering investors’ attention. Meanwhile, tight housing supply is driving multi-family investment, yielding the lowest cap rates. With development robust in all sectors, the scarcity of developable land has put land sales on pace for a record year.

The first half of 2018 was notable not only for direct investment in commercial real estate assets, but also multi-billion-dollar M&A activity in the industry with headline transactions, including Choice Properties REIT’s purchase of CREIT and Blackstone’s acquisition of PIRET. At the same time, Canadian capital continued to flow into the U.S. as trade-agreement negotiations and political uncertainty did not dampen investors’ interest in assets south of the border.

In a world of moderating returns, investors are looking to capitalize on landlord- favouring markets and sectors offering significant rental-rate growth – pushing beyond pure-play acquisitions to redevelopment and upgrade opportunities – while debt reduction and geographic diversification continue. For the near term, asset values will remain elevated and cap rates low.

4 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 5 Notable First-Half 2018 Canadian Investment Market Highlights Canadian Investment Market Snapshot

„„ After pouring a record $36.2 billion into commercial real „„ Given robust construction activity across the country, ICI estate assets across Canada’s six major markets in 2017, land was in high demand. In all, $3.8 billion worth of land investors placed another $17.7 billion in first-half 2018 – parcels changed hands in the first half of the year – the down a modest $1.3 billion, or 7%, from the first half of only sector to post notable year-over-year growth in sales 2017. Though office was the most sought-after asset type (+82%). The land sector was exceptionally hot in Toronto $17.7 BILLION among investors, retail, ICI land and industrial were not far and Vancouver as annual sales in each market nearly 4.3% CAP RATE Total investment volume in behind. doubled to $1.8 billion and $1 billion, respectively. Average for Vancouver Canada during first-half 2018 vs. $19 billion in first-half 2017 and „„ Toronto, the top investment location, ($8.2 billion/46% „„ The value of industrial acquisitions inched up 1% year- vs. Canada average of 5.1% share) outstripped Vancouver ($5.1 billion/29% share) from over-year to $3.3 billion at the midway point of 2018, $36.2 billion in all of 2017 one year earlier as the two markets combined for three- while cap rates compressed in nearly every market. Buyers quarters of total first-half 2018 dollar volume. Toronto continued to seek product in one of North America’s attracted the most capital in four of the five sectors, biggest and tightest industrial markets, Toronto – which placing second to Vancouver only in retail asset sales. accounted for almost half of overall investment in the Apart from in Toronto and Ottawa, property sales in all sector. Meanwhile, more capital flowed into Ottawa, markets declined by varying degrees year-over-year. Montreal and Edmonton compared with one year earlier. FIRST-HALF 2018 INVESTMENT ACTIVITY Investment Volume by Market and Property Type „„ Office was the most desired asset class, securing one „„ Accounting for only 13% of the total first-half 2018 quarter, or $4.5 billion, of investor capital, but sales investment tally, multi-family property sales dropped declined 16% year-over-year. Toronto was the only 28% to $2.3 billion from $3.2 billion one year earlier. market to register year-over-year sales growth (+35%) Blackstone’s foray into the Canadian multi-family sector EDMONTON as it garnered $2.7 billion (60% of first-half 2018 office (a joint-venture with Starlight Investments) propelled $1B dollar volume) in sales – more than the other five markets Toronto ($848 million/+46%) ahead of Vancouver ($698 combined and almost triple Vancouver’s $1.1-billion million/-55%) from one year earlier. CALGARY performance. „„ Multi-family assets commanded the lowest capitalization $1.3B „„ Coming off a record $9.1-billion performance in 2017, retail (cap) rates – closely followed by retail. On a market-by- VANCOUVER TORONTO posted $3.9 billion (22% share) in first-half 2018 sales – a market basis, overall average rates showed the greatest MONTREAL decrease of 25% year-over-year. As in first-half 2017, investors compression year-over-year in Montreal and Ottawa, while $5.1B $8.2B favoured retail properties mostly in Vancouver ($1.7 billion) the lowest yields were found in Vancouver and Toronto. $1.4B and Toronto ($1.3 billion) as these two markets combined for The overall average cap rate across the six markets and 78% of total retail investment in the first half of 2018. five asset types was 5.1% at mid-year 2018, down 20 bps OTTAWA year-over-year. TOTAL INVESTMENT VOLUME (FIRST-HALF 2018) = $17.7 BILLION (CAD) $610M OFFICE $4.5B INDUSTRIAL $3.3B RETAIL $3.9B MULTI-FAMILY $2.3B ICI LAND $3.8B

$4.5 BILLION 75% First-half 2018 total Toronto’s (46%) and investment in office Vancouver’s (29%) share product across Canada – of total investment the most of any asset class volume in Canada – led by Toronto with $2.7 in first-half 2018 billion in trades

6 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 7 Notable First-Half 2018 Canadian Investment Market Highlights Canadian Investment Market Snapshot

„„ After pouring a record $36.2 billion into commercial real „„ Given robust construction activity across the country, ICI estate assets across Canada’s six major markets in 2017, land was in high demand. In all, $3.8 billion worth of land investors placed another $17.7 billion in first-half 2018 – parcels changed hands in the first half of the year – the down a modest $1.3 billion, or 7%, from the first half of only sector to post notable year-over-year growth in sales 2017. Though office was the most sought-after asset type (+82%). The land sector was exceptionally hot in Toronto $17.7 BILLION among investors, retail, ICI land and industrial were not far and Vancouver as annual sales in each market nearly 4.3% CAP RATE Total investment volume in behind. doubled to $1.8 billion and $1 billion, respectively. Average for Vancouver Canada during first-half 2018 vs. $19 billion in first-half 2017 and „„ Toronto, the top investment location, ($8.2 billion/46% „„ The value of industrial acquisitions inched up 1% year- vs. Canada average of 5.1% share) outstripped Vancouver ($5.1 billion/29% share) from over-year to $3.3 billion at the midway point of 2018, $36.2 billion in all of 2017 one year earlier as the two markets combined for three- while cap rates compressed in nearly every market. Buyers quarters of total first-half 2018 dollar volume. Toronto continued to seek product in one of North America’s attracted the most capital in four of the five sectors, biggest and tightest industrial markets, Toronto – which placing second to Vancouver only in retail asset sales. accounted for almost half of overall investment in the Apart from in Toronto and Ottawa, property sales in all sector. Meanwhile, more capital flowed into Ottawa, markets declined by varying degrees year-over-year. Montreal and Edmonton compared with one year earlier. FIRST-HALF 2018 INVESTMENT ACTIVITY Investment Volume by Market and Property Type „„ Office was the most desired asset class, securing one „„ Accounting for only 13% of the total first-half 2018 quarter, or $4.5 billion, of investor capital, but sales investment tally, multi-family property sales dropped declined 16% year-over-year. Toronto was the only 28% to $2.3 billion from $3.2 billion one year earlier. market to register year-over-year sales growth (+35%) Blackstone’s foray into the Canadian multi-family sector EDMONTON as it garnered $2.7 billion (60% of first-half 2018 office (a joint-venture with Starlight Investments) propelled $1B dollar volume) in sales – more than the other five markets Toronto ($848 million/+46%) ahead of Vancouver ($698 combined and almost triple Vancouver’s $1.1-billion million/-55%) from one year earlier. CALGARY performance. „„ Multi-family assets commanded the lowest capitalization $1.3B „„ Coming off a record $9.1-billion performance in 2017, retail (cap) rates – closely followed by retail. On a market-by- VANCOUVER TORONTO posted $3.9 billion (22% share) in first-half 2018 sales – a market basis, overall average rates showed the greatest MONTREAL decrease of 25% year-over-year. As in first-half 2017, investors compression year-over-year in Montreal and Ottawa, while $5.1B $8.2B favoured retail properties mostly in Vancouver ($1.7 billion) the lowest yields were found in Vancouver and Toronto. $1.4B and Toronto ($1.3 billion) as these two markets combined for The overall average cap rate across the six markets and 78% of total retail investment in the first half of 2018. five asset types was 5.1% at mid-year 2018, down 20 bps OTTAWA year-over-year. TOTAL INVESTMENT VOLUME (FIRST-HALF 2018) = $17.7 BILLION (CAD) $610M OFFICE $4.5B INDUSTRIAL $3.3B RETAIL $3.9B MULTI-FAMILY $2.3B ICI LAND $3.8B

$4.5 BILLION 75% First-half 2018 total Toronto’s (46%) and investment in office Vancouver’s (29%) share product across Canada – of total investment the most of any asset class volume in Canada – led by Toronto with $2.7 in first-half 2018 billion in trades

6 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 7 Canada Commercial Real Estate Investment Volume By Property Type Canada Average Capitalization Rates By Market (All Property Types)

2013 6%

2014 5%

2015 4%

2016 3%

2017 2%

1H 2018 1%

$0 $5 $10 $15 $20 $25 $30 $35 $40 0% BILLIONS (CAD) Calgary Edmonton Montreal Ottawa Toronto Vancouver

OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND 1H 2017 1H 2018

Canada Commercial Real Estate Investment Volume By Market Canada Average Capitalization Rates By Property Type (All Markets)

$8 Downtown Class AA Office $7 $6 Suburban Class A Office $ BILLIONS (CAD) $5 Single-Tenant Industrial $4 Multi-Tenant Industrial $3

$2 Tier I Regional Mall $1 Multi-Residential $0 Calgary Edmonton Montreal Ottawa Toronto Vancouver 0% 1% 2% 3% 4% 5% 6% 7%

1H 2017 1H 2018 1H 2017 1H 2018

Canada Commercial Real Estate Investment Volume By Property Type

Office

Industrial

Retail

Multi-Family

ICI Land

$0 $1 $2 $3 $4 $5 $6 BILLIONS (CAD) 1H 2017 1H 2018

8 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 9 Canada Commercial Real Estate Investment Volume By Property Type Canada Average Capitalization Rates By Market (All Property Types)

2013 6%

2014 5%

2015 4%

2016 3%

2017 2%

1H 2018 1%

$0 $5 $10 $15 $20 $25 $30 $35 $40 0% BILLIONS (CAD) Calgary Edmonton Montreal Ottawa Toronto Vancouver

OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND 1H 2017 1H 2018

Canada Commercial Real Estate Investment Volume By Market Canada Average Capitalization Rates By Property Type (All Markets)

$8 Downtown Class AA Office $7 $6 Suburban Class A Office $ BILLIONS (CAD) $5 Single-Tenant Industrial $4 Multi-Tenant Industrial $3

$2 Tier I Regional Mall $1 Multi-Residential $0 Calgary Edmonton Montreal Ottawa Toronto Vancouver 0% 1% 2% 3% 4% 5% 6% 7%

1H 2017 1H 2018 1H 2017 1H 2018

Canada Commercial Real Estate Investment Volume By Property Type

Office

Industrial

Retail

Multi-Family

ICI Land

$0 $1 $2 $3 $4 $5 $6 BILLIONS (CAD) 1H 2017 1H 2018

8 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 9 United States Investment Market Overview

U.S. investment sales volume increases, multi-family dominates

Despite investor concerns over interest-rate hikes, the economy and the country's political landscape heading into 2018, overall U.S. investment sales volume in the first half of the year increased 4% year-over-year to approximately $137 billion in markets in which Avison Young has an office. Industrial, retail and multi-family investment sales volume increases contributed to this growth, while office investment decreased slightly. Multi-family investment sales volume represented the largest portion of overall investment sales volume at $48 billion and was followed closely by office investment sales at $46 billion.

Foreign investors continued to demonstrate interest in the U.S. in first-half 2018, even in the face of rising U.S. protectionism and global trade uncertainty. Foreign capital flow focused on high-profile and high-priced assets and was concentrated in the New York, Los Angeles and Washington, DC metro markets. Canada led foreign investment in the U.S. once again although the composition of cross- border investors changed. Investment from Chinese investors, who had been particularly active in the U.S. in 2015 ($16 billion) and 2016 ($17 billion), fell off. Chinese investment in U.S. assets had reached approximately $4.9 billion by mid- year 2018.

Private investors, REITs and institutional investors were all active in first-half 2018, fueled by the availability of debt and commercial-loan increases. Private and institutional investors have persistently been more active than foreign investors and REITs in recent years. The abundance of accessible debt has created a competitive lending market, specifically for higher-quality assets.

The U.S. economy posted an unemployment rate of 4% and GDP growth of 4.2% in June 2018, and these figures support the continued bullish outlook of many investors. Looking ahead to the rest of 2018, investment will likely be on par with the $300 billion of overall investment achieved in 2017.

10 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 11 United States Investment Market Overview

U.S. investment sales volume increases, multi-family dominates

Despite investor concerns over interest-rate hikes, the economy and the country's political landscape heading into 2018, overall U.S. investment sales volume in the first half of the year increased 4% year-over-year to approximately $137 billion in markets in which Avison Young has an office. Industrial, retail and multi-family investment sales volume increases contributed to this growth, while office investment decreased slightly. Multi-family investment sales volume represented the largest portion of overall investment sales volume at $48 billion and was followed closely by office investment sales at $46 billion.

Foreign investors continued to demonstrate interest in the U.S. in first-half 2018, even in the face of rising U.S. protectionism and global trade uncertainty. Foreign capital flow focused on high-profile and high-priced assets and was concentrated in the New York, Los Angeles and Washington, DC metro markets. Canada led foreign investment in the U.S. once again although the composition of cross- border investors changed. Investment from Chinese investors, who had been particularly active in the U.S. in 2015 ($16 billion) and 2016 ($17 billion), fell off. Chinese investment in U.S. assets had reached approximately $4.9 billion by mid- year 2018.

Private investors, REITs and institutional investors were all active in first-half 2018, fueled by the availability of debt and commercial-loan increases. Private and institutional investors have persistently been more active than foreign investors and REITs in recent years. The abundance of accessible debt has created a competitive lending market, specifically for higher-quality assets.

The U.S. economy posted an unemployment rate of 4% and GDP growth of 4.2% in June 2018, and these figures support the continued bullish outlook of many investors. Looking ahead to the rest of 2018, investment will likely be on par with the $300 billion of overall investment achieved in 2017.

10 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 11 Notable First-Half 2018 U.S. Investment Market Highlights U.S. Investment Market Snapshot

„„ Multi-family investment sales volume in the U.S. multi-family markets of Manhattan and San Mateo, accounted for a whopping 35% of total investment both at 3.6%. Overall, the U.S. office market had the volume and totaled $48 billion – a 12% increase highest cap rate at 7% and the multi-family sector compared with the same period in 2017. This had the lowest at 5.6%. prominent increase was supported by an abundance BILLION of recent development across the U.S. „„ Los Angeles was the top market performer overall BILLION $48.2 $136.6 Multi-family sales for the second year in a row with total investment U.S. investment sales volume „„ U.S. office investment in the first half of 2018 ($11.2 billion) constituting 8% of all U.S. investment accounted for a whopping demonstrated a slight decline compared with the same sales. Although office and industrial volume in the through June 30, 2018 35% of all U.S. investment period in 2017, falling 9% to $45.6 billion. The decline first six months of 2018 lagged what was achieved volume in first-half 2018 in individual asset values year-over-year likely accounts in first-half 2017 due to limited inventory and a for this decrease. Additionally, investors in the office decrease in Chinese investment, the retail and multi- market have displayed a preference toward newer and family sectors increased by 200 bps and 460 bps, higher-quality office buildings. These trends in the office respectively. market are expected to continue through the rest of 2018. „„ Washington, DC continued to be a favored FIRST-HALF 2018 INVESTMENT ACTIVITY investment target as its volume increased 22% to $9.8 Investment Volume by Market and Property Type *U.S. MARKETS WITH TOTAL VOLUME EXCEEDING $3 BILLION „„ U.S. industrial investment volume increased by 19% billion year-over-year. Although office sales decreased year-over-year to $23.6 billion in the first half of 2018. slightly, significant growth in the multi-family and

The majority of this performance increase was due industrial sectors drove the overall volume higher. BOSTON $5.6B to megadeals, largely because of high demand for CHICAGO NEW YORK $8.7B $8.2B industrial assets in light of the growth in online retail „„ Manhattan also remained one of the top performers, NEW JERSEY $3.7B DENVER and need for distribution centers. Industrial investors achieving $8.7 billion in investment volume in the $4.4B PHILADELPHIA $3.1B have displayed increased interest in smaller markets first half of 2018 and a 5% increase in investment SAN FRANCISCO $3.1B WASHINGTON, DC $9.8B where they predict greater yields. volume year-over-year, partly due to increases in cross- SAN JOSE/SILICON VALLEY $4B DALLAS border investment. The retail and multi-family sectors LOS ANGELES $11.2B $8.5B

PHOENIX ATLANTA „„ Cap rates have remained stable year-over-year even exhibited increases in sales volume – 50% and 19%, ORANGE COUNTY $3.2B $5.8B $6.2B as interest rates have risen. The average cap rate respectively – while Manhattan’s office sales market SAN DIEGO $3.3B

across all sectors dipped slightly to 6.4% at mid- remains the strongest in the U.S. at $6.7 billion. HOUSTON year 2018 from 6.5% at mid-year 2017. The most $5.5B compressed cap rates in the U.S. were recorded in the

TOTAL INVESTMENT VOLUME (FIRST-HALF 2018) = $136.6 BILLION (USD) OFFICE $45.6B INDUSTRIAL $23.6B RETAIL $19.2B MULTI-FAMILY $48.2B

8% 6.4% CAP RATE TOTAL U.S. VOLUME Average cap rate at mid-year Los Angeles again takes U.S. 2018 dips after averaging top investment location with 6.5% at mid-year for prior $11.2 billion in sales two years

12 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 13 Notable First-Half 2018 U.S. Investment Market Highlights U.S. Investment Market Snapshot

„„ Multi-family investment sales volume in the U.S. multi-family markets of Manhattan and San Mateo, accounted for a whopping 35% of total investment both at 3.6%. Overall, the U.S. office market had the volume and totaled $48 billion – a 12% increase highest cap rate at 7% and the multi-family sector compared with the same period in 2017. This had the lowest at 5.6%. prominent increase was supported by an abundance BILLION of recent development across the U.S. „„ Los Angeles was the top market performer overall BILLION $48.2 $136.6 Multi-family sales for the second year in a row with total investment U.S. investment sales volume „„ U.S. office investment in the first half of 2018 ($11.2 billion) constituting 8% of all U.S. investment accounted for a whopping demonstrated a slight decline compared with the same sales. Although office and industrial volume in the through June 30, 2018 35% of all U.S. investment period in 2017, falling 9% to $45.6 billion. The decline first six months of 2018 lagged what was achieved volume in first-half 2018 in individual asset values year-over-year likely accounts in first-half 2017 due to limited inventory and a for this decrease. Additionally, investors in the office decrease in Chinese investment, the retail and multi- market have displayed a preference toward newer and family sectors increased by 200 bps and 460 bps, higher-quality office buildings. These trends in the office respectively. market are expected to continue through the rest of 2018. „„ Washington, DC continued to be a favored FIRST-HALF 2018 INVESTMENT ACTIVITY investment target as its volume increased 22% to $9.8 Investment Volume by Market and Property Type *U.S. MARKETS WITH TOTAL VOLUME EXCEEDING $3 BILLION „„ U.S. industrial investment volume increased by 19% billion year-over-year. Although office sales decreased year-over-year to $23.6 billion in the first half of 2018. slightly, significant growth in the multi-family and

The majority of this performance increase was due industrial sectors drove the overall volume higher. BOSTON $5.6B to megadeals, largely because of high demand for CHICAGO NEW YORK $8.7B $8.2B industrial assets in light of the growth in online retail „„ Manhattan also remained one of the top performers, NEW JERSEY $3.7B DENVER and need for distribution centers. Industrial investors achieving $8.7 billion in investment volume in the $4.4B PHILADELPHIA $3.1B have displayed increased interest in smaller markets first half of 2018 and a 5% increase in investment SAN FRANCISCO $3.1B WASHINGTON, DC $9.8B where they predict greater yields. volume year-over-year, partly due to increases in cross- SAN JOSE/SILICON VALLEY $4B DALLAS border investment. The retail and multi-family sectors LOS ANGELES $11.2B $8.5B

PHOENIX ATLANTA „„ Cap rates have remained stable year-over-year even exhibited increases in sales volume – 50% and 19%, ORANGE COUNTY $3.2B $5.8B $6.2B as interest rates have risen. The average cap rate respectively – while Manhattan’s office sales market SAN DIEGO $3.3B

across all sectors dipped slightly to 6.4% at mid- remains the strongest in the U.S. at $6.7 billion. HOUSTON year 2018 from 6.5% at mid-year 2017. The most $5.5B compressed cap rates in the U.S. were recorded in the

TOTAL INVESTMENT VOLUME (FIRST-HALF 2018) = $136.6 BILLION (USD) OFFICE $45.6B INDUSTRIAL $23.6B RETAIL $19.2B MULTI-FAMILY $48.2B

8% 6.4% CAP RATE TOTAL U.S. VOLUME Average cap rate at mid-year Los Angeles again takes U.S. 2018 dips after averaging top investment location with 6.5% at mid-year for prior $11.2 billion in sales two years

12 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 13 U.S. Commercial Real Estate Investment Volume By Property Type U.S. Average Capitalization Rates By Market (All Property Types)

10%

2013 8%

2014 6%

2015 4% 2016 2% 2017 0% 1H 2018

$0 $50 $100 $150 $200 $250 $300 $350 BILLIONS (USD) Billions OFFICE INDUSTRIAL RETAIL MULTI-FAMILY 1H 2017 1H 2018

U.S. Commercial Real Estate Investment Volume By Market U.S. Average Capitalization Rates By Property Type (All Markets)

$15

Office

$ BILLIONS (USD) $10

Industrial $5

Retail

$0 Multi-Family

0% 1% 2% 3% 4% 5% 6% 7% 1H 2017 1H 2018 1H 2017 1H 2018

U.S. Commercial Real Estate Investment Volume By Property Type

Office

Industrial

Retail

Multi-Family

$0 $10 $20 $30 $40 $50

BILLIONS (USD) 1H 2017 1H 2018

14 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 15 U.S. Commercial Real Estate Investment Volume By Property Type U.S. Average Capitalization Rates By Market (All Property Types)

10%

2013 8%

2014 6%

2015 4% 2016 2% 2017 0% 1H 2018

$0 $50 $100 $150 $200 $250 $300 $350 BILLIONS (USD) Billions OFFICE INDUSTRIAL RETAIL MULTI-FAMILY 1H 2017 1H 2018

U.S. Commercial Real Estate Investment Volume By Market U.S. Average Capitalization Rates By Property Type (All Markets)

$15

Office

$ BILLIONS (USD) $10

Industrial $5

Retail

$0 Multi-Family

0% 1% 2% 3% 4% 5% 6% 7% 1H 2017 1H 2018 1H 2017 1H 2018

U.S. Commercial Real Estate Investment Volume By Property Type

Office

Industrial

Retail

Multi-Family

$0 $10 $20 $30 $40 $50

BILLIONS (USD) 1H 2017 1H 2018

14 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 15 Calgary Investment Market

Select Avg. Cap Rates 1H 1H Industrial and retail markets growing, office remains challenged Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Overall first-half 2018 investment and pushing vacancy rates lower. Downtown Class AA Office 5.8% 5.9% Canada dollar volume in Calgary’s commercial Suburban Class A Office 6.9% 6.4% real estate market ($1.3 billion) nearly Calgary’s office market appears to have Single-Tenant Industrial 5.8% 5.7% matched first-half 2017 ($1.4 billion). found bottom. Vacancy has moved within a narrow 40-bps range over the Calgary However, a divergence in the market’s Multi-Tenant Industrial 5.9% 5.8% 17 last five quarters. The overall vacancy perception of the office asset class and Tier I Regional Mall 4.6% 4.7% rate increased marginally to 23.5% during Edmonton other investment sectors is occurring. 18 the second quarter of 2018 from 23.2% in Multi-Family 4.8% 4.9% Calgary’s industrial market is posting first-quarter 2018, and remains even with Montreal 19 strong signs of recovery. After five the vacancy rate at mid-year 2017. Investment Activity consecutive quarters of positive Investment Activity 1H 1H Ottawa 2017 2018 20 absorption (2.1 msf in the last 12 months), A large proportion of recent investment 41% 29% there is currently more than 2.7 msf in Calgary has been completed by 21 Toronto purchasers who did not previously 25% 23% 1H 2018 under construction with 73% of that 1H 2018 forthcoming space being developed on have a presence in the local market. $1.3 9% 21% 22 Vancouver These groups underwrote Calgary as a BILLION a speculative basis. New supply totalled 11% 7% less than 700,000 sf in the previous 24 market with opportunity and purchased 13% 21% months. Industrial assets continue to be assets at prices not seen in more than a decade. A steady number of transactions OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND sought-after, particularly by Vancouver- OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND and Toronto-based investors, as yields on throughout the remainder of 2018 is Alberta properties are noticeably higher expected to keep investment dollar Investment Volume than in their home markets. volume consistent with 2017. Investment Volume

$4 Calgary’s retail real estate sector remains steady – with the exception of the central business district, which is directly $3 $ BILLIONS (CAD) influenced by lagging vacancy in the $ BILLIONS (CAD)

office market. Resiliency and evolution $2 continue to push retailers to reinvest in their businesses as they try to understand $1 and keep up with changing consumer behaviours. Alberta’s full embrace of $0 2013 2014 2015 2016 2017 1H 2018 private recreational-cannabis sales is 2013 2014 2015 2016 2017 1H 2018 adding to the demand for retail locations OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 First Tower Office $107,000,000 H&R REIT / Dream Office REIT Hines / Oaktree Capital Management $147 psf

2 Scotia Centre Office $95,121,000 Cominar REIT Slate Asset Management $152 psf

3 Cominar Industrial Portfolio Industrial $47,460,000 Cominar REIT Slate Asset Management $143 psf

4 Green Line LRT Lands Land $39,000,000 Canadian National Railway The City of Calgary $977,199 per acre

5 Mountain View Business Office & Land $32,005,000 Cominar REIT Slate Asset Management Campus $253 psf

16 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 17 Calgary Investment Market

Select Avg. Cap Rates 1H 1H Industrial and retail markets growing, office remains challenged Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Overall first-half 2018 investment and pushing vacancy rates lower. Downtown Class AA Office 5.8% 5.9% Canada dollar volume in Calgary’s commercial Suburban Class A Office 6.9% 6.4% real estate market ($1.3 billion) nearly Calgary’s office market appears to have Single-Tenant Industrial 5.8% 5.7% matched first-half 2017 ($1.4 billion). found bottom. Vacancy has moved within a narrow 40-bps range over the Calgary However, a divergence in the market’s Multi-Tenant Industrial 5.9% 5.8% 17 last five quarters. The overall vacancy perception of the office asset class and Tier I Regional Mall 4.6% 4.7% rate increased marginally to 23.5% during Edmonton other investment sectors is occurring. 18 the second quarter of 2018 from 23.2% in Multi-Family 4.8% 4.9% Calgary’s industrial market is posting first-quarter 2018, and remains even with Montreal 19 strong signs of recovery. After five the vacancy rate at mid-year 2017. Investment Activity consecutive quarters of positive Investment Activity 1H 1H Ottawa 2017 2018 20 absorption (2.1 msf in the last 12 months), A large proportion of recent investment 41% 29% there is currently more than 2.7 msf in Calgary has been completed by 21 Toronto purchasers who did not previously 25% 23% 1H 2018 under construction with 73% of that 1H 2018 forthcoming space being developed on have a presence in the local market. $1.3 9% 21% 22 Vancouver These groups underwrote Calgary as a BILLION a speculative basis. New supply totalled 11% 7% less than 700,000 sf in the previous 24 market with opportunity and purchased 13% 21% months. Industrial assets continue to be assets at prices not seen in more than a decade. A steady number of transactions OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND sought-after, particularly by Vancouver- OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND and Toronto-based investors, as yields on throughout the remainder of 2018 is Alberta properties are noticeably higher expected to keep investment dollar Investment Volume than in their home markets. volume consistent with 2017. Investment Volume

$4 Calgary’s retail real estate sector remains steady – with the exception of the central business district, which is directly $3 $ BILLIONS (CAD) influenced by lagging vacancy in the $ BILLIONS (CAD)

office market. Resiliency and evolution $2 continue to push retailers to reinvest in their businesses as they try to understand $1 and keep up with changing consumer behaviours. Alberta’s full embrace of $0 2013 2014 2015 2016 2017 1H 2018 private recreational-cannabis sales is 2013 2014 2015 2016 2017 1H 2018 adding to the demand for retail locations OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 First Tower Office $107,000,000 H&R REIT / Dream Office REIT Hines / Oaktree Capital Management $147 psf

2 Scotia Centre Office $95,121,000 Cominar REIT Slate Asset Management $152 psf

3 Cominar Industrial Portfolio Industrial $47,460,000 Cominar REIT Slate Asset Management $143 psf

4 Green Line LRT Lands Land $39,000,000 Canadian National Railway The City of Calgary $977,199 per acre

5 Mountain View Business Office & Land $32,005,000 Cominar REIT Slate Asset Management Campus $253 psf

16 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 17 Edmonton Investment Market Montreal Investment Market

Investment volume continues its rebound Select Avg. Cap Rates 1H 1H Industrial and land sectors post significant improvement Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Edmonton’s first-half 2018 commercial The ICI land sector recorded the largest Downtown Class AA Office 6.0% 6.1% Montreal commercial real estate during the first half of 2018. Total dollar Downtown Class AA Office 5.2% 5.1% investment sales totalled $1.4 billion in volume was up by 26% compared with real estate market investment volume dollar volume declines during the past Suburban Class A Office 6.7% 6.6% Suburban Class A Office 6.5% 6.0% remained on pace for a full-year result three years relative to the early part the first half of 2018, down 18% year- the first half of 2017 with an additional Single-Tenant Industrial 5.9% 6.0% Single-Tenant Industrial 6.2% 6.0% consistent with 2017 totals as $1 billion of the decade. However, investment over-year. The decline was mainly due to $72 million invested. The top transaction was transacted in the first six months of dollar volume is on pace to surpass the Multi-Tenant Industrial 6.0% 5.9% weak activity in the office and multi- was the sale of the ABB Montreal Campus Multi-Tenant Industrial 6.5% 6.1% 2018 (relative to nearly $2 billion during 2017 total and, as large parcels become Tier I Regional Mall 4.7% 4.8% family segments. Despite an overall drop to Crestpoint Real Estate Investments. Tier I Regional Mall 4.9% 4.7% the 2017 calendar year). increasingly scarce inside Anthony in investment dollar volume, investors The 300,814-sf, LEED-Silver facility was Multi-Family 5.0% 4.9% Multi-Family 4.8% 4.7% Henday Drive, investment volume remain very active and interested in all built in 2018 and is fully leased by ABB. Retail investment profoundly reversed is being driven by industrial land in asset classes in the Greater Montreal The developer, Broccolini Construction, course in 2017 – increasing fivefold surrounding markets. Area. The market is more aggressive in sold the property for $250 psf. Investment Activity 1H 1H Investment Activity 1H 1H compared with 2016 – as investor 2017 2018 terms of pricing in the industrial and 2016 2017 confidence was supported by an 8.7% While cap rates are generally expected to The land market registered the most 12% 4% land sectors as a result of the scarcity of 26% 14% increase in consumer spending in the remain stable until the cost of borrowing investment opportunities. significant increase (73%) in dollar 16% 28% 16% 25% region during the year. The first half substantially increases, each asset class 1H 2018 volume year-over-year, bringing the 1H 2018 of 2018 followed a similar trend with will be affected differently as interest $1 27% 27% The office sector recorded the largest investment total to $346 million in $1.4 16% 8% BILLION BILLION several shopping centres transacting in rates rise. Older office investment 28% 16% deterioration in first-half sales volume, first-half 2018. The most notable land 30% 28% Edmonton and surrounding markets. properties will see the greatest increase down 57% year-over-year. The downtown transaction was a 3.1-acre mixed-use 17% 24% 12% 25% in cap rates versus interest rates due to market has historically been favoured by development site in downtown Montreal, After several downtown office buildings a 15% office vacancy rate and lenders’ OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND investors; however, the most significant acquired by Broccolini Construction in a OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND were purchased with the intention reduced willingness to accept office transaction of the first half of 2018 partnership with National Bank for $32.3 of redevelopment in 2017, the trend properties as collateral relative to other occurred in the midtown submarket. million per acre. continued in first-half 2018 with the asset classes. Retail properties are Investment Volume Bentall Kennedy, acting on behalf of Investment Volume sale of Enbridge Tower at 10201 Jasper anticipated to see the smallest increase $4 Sun Life Financial, acquired 7250 and $6 Avenue for $22 million. The buyer plans in cap rates, as there is a deep pool 7450 Rue du Mile End for $155 million. to convert the property to a hotel. The of local investors for this asset class, The office buildings will add 400,000 sf $5 $3 second half is already off to a great start providing higher liquidity to vendors. to Sun Life Financial’s Quebec portfolio. $ BILLIONS (CAD) $ BILLIONS (CAD) $4 as Alberta Investment Management Office investment dollar volume could Corporation (AIMCo) purchased $2 climb back up by year-end, considering $3 Edmonton Tower from the Katz Group that 600 and 700 de la Gauchetiere – $2 and One Properties for $400 million, $1 two linked class A buildings – are on the marking the largest office transaction in market. $1 the city’s history. $0 $0 2013 2014 2015 2016 2017 1H 2018 The industrial investment market posted 2013 2014 2015 2016 2017 1H 2018 a significant year-over-year improvement OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Westland Market Mall Retail $35,493,730 SRF2 Westland Market Mall Inc. CCP Westland GP Ltd. 1 7250 & 7450 Du Mile End Street Office $155,500,000 Mile-End Investments Inc. Sun Life Assurance Company of $273 psf $374 psf Canada

2 Westgate Shopping Centre Retail $26,000,000 Rexall (C&H Properties Inc.) Crestpoint Real Estate Investments 2 Robert-Bourassa Boulevard Land $100,000,000 Magil Laurentian Realty Investments Broccolini Construction / Banque $507 psf $32,266,667 per acre Inc. / Laurentian Weloga LP / Desjardins Nationale

3 Parsons Business Centre Industrial $25,000,000 Jaylor Realty Management Inc. York Realty Inc. 3 3460 Peel Street Multi-Family $79,650,000 Placements des appartements de la Akelius Montreal Ltd. $144 psf $298,315 per unit Place Peel Ltée

4 Enbridge Tower Office $22,000,000 Bentall Kennedy LP Lighthouse Hospitality Management 4 800 Hymus Street Industrial $82,300,000 Broccolini Limited Partnership Crestpoint Real Estate Investments $121 psf Inc. $250 psf

5 Windsor Arms Multi-Family $21,350,000 S.M.C. Holdings LLC Timbercreek Communities 5 1975 de Maisonneuve Boulevard Multi-Family $48,000,000 9275-2146 Québec Inc. Akelius Montreal Ltd. $234,615 per unit West $200,000 per unit

18 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 19 Edmonton Investment Market Montreal Investment Market

Investment volume continues its rebound Select Avg. Cap Rates 1H 1H Industrial and land sectors post significant improvement Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Edmonton’s first-half 2018 commercial The ICI land sector recorded the largest Downtown Class AA Office 6.0% 6.1% Montreal commercial real estate during the first half of 2018. Total dollar Downtown Class AA Office 5.2% 5.1% investment sales totalled $1.4 billion in volume was up by 26% compared with real estate market investment volume dollar volume declines during the past Suburban Class A Office 6.7% 6.6% Suburban Class A Office 6.5% 6.0% remained on pace for a full-year result three years relative to the early part the first half of 2018, down 18% year- the first half of 2017 with an additional Single-Tenant Industrial 5.9% 6.0% Single-Tenant Industrial 6.2% 6.0% consistent with 2017 totals as $1 billion of the decade. However, investment over-year. The decline was mainly due to $72 million invested. The top transaction was transacted in the first six months of dollar volume is on pace to surpass the Multi-Tenant Industrial 6.0% 5.9% weak activity in the office and multi- was the sale of the ABB Montreal Campus Multi-Tenant Industrial 6.5% 6.1% 2018 (relative to nearly $2 billion during 2017 total and, as large parcels become Tier I Regional Mall 4.7% 4.8% family segments. Despite an overall drop to Crestpoint Real Estate Investments. Tier I Regional Mall 4.9% 4.7% the 2017 calendar year). increasingly scarce inside Anthony in investment dollar volume, investors The 300,814-sf, LEED-Silver facility was Multi-Family 5.0% 4.9% Multi-Family 4.8% 4.7% Henday Drive, investment volume remain very active and interested in all built in 2018 and is fully leased by ABB. Retail investment profoundly reversed is being driven by industrial land in asset classes in the Greater Montreal The developer, Broccolini Construction, course in 2017 – increasing fivefold surrounding markets. Area. The market is more aggressive in sold the property for $250 psf. Investment Activity 1H 1H Investment Activity 1H 1H compared with 2016 – as investor 2017 2018 terms of pricing in the industrial and 2016 2017 confidence was supported by an 8.7% While cap rates are generally expected to The land market registered the most 12% 4% land sectors as a result of the scarcity of 26% 14% increase in consumer spending in the remain stable until the cost of borrowing investment opportunities. significant increase (73%) in dollar 16% 28% 16% 25% region during the year. The first half substantially increases, each asset class 1H 2018 volume year-over-year, bringing the 1H 2018 of 2018 followed a similar trend with will be affected differently as interest $1 27% 27% The office sector recorded the largest investment total to $346 million in $1.4 16% 8% BILLION BILLION several shopping centres transacting in rates rise. Older office investment 28% 16% deterioration in first-half sales volume, first-half 2018. The most notable land 30% 28% Edmonton and surrounding markets. properties will see the greatest increase down 57% year-over-year. The downtown transaction was a 3.1-acre mixed-use 17% 24% 12% 25% in cap rates versus interest rates due to market has historically been favoured by development site in downtown Montreal, After several downtown office buildings a 15% office vacancy rate and lenders’ OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND investors; however, the most significant acquired by Broccolini Construction in a OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND were purchased with the intention reduced willingness to accept office transaction of the first half of 2018 partnership with National Bank for $32.3 of redevelopment in 2017, the trend properties as collateral relative to other occurred in the midtown submarket. million per acre. continued in first-half 2018 with the asset classes. Retail properties are Investment Volume Bentall Kennedy, acting on behalf of Investment Volume sale of Enbridge Tower at 10201 Jasper anticipated to see the smallest increase $4 Sun Life Financial, acquired 7250 and $6 Avenue for $22 million. The buyer plans in cap rates, as there is a deep pool 7450 Rue du Mile End for $155 million. to convert the property to a hotel. The of local investors for this asset class, The office buildings will add 400,000 sf $5 $3 second half is already off to a great start providing higher liquidity to vendors. to Sun Life Financial’s Quebec portfolio. $ BILLIONS (CAD) $ BILLIONS (CAD) $4 as Alberta Investment Management Office investment dollar volume could Corporation (AIMCo) purchased $2 climb back up by year-end, considering $3 Edmonton Tower from the Katz Group that 600 and 700 de la Gauchetiere – $2 and One Properties for $400 million, $1 two linked class A buildings – are on the marking the largest office transaction in market. $1 the city’s history. $0 $0 2013 2014 2015 2016 2017 1H 2018 The industrial investment market posted 2013 2014 2015 2016 2017 1H 2018 a significant year-over-year improvement OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Westland Market Mall Retail $35,493,730 SRF2 Westland Market Mall Inc. CCP Westland GP Ltd. 1 7250 & 7450 Du Mile End Street Office $155,500,000 Mile-End Investments Inc. Sun Life Assurance Company of $273 psf $374 psf Canada

2 Westgate Shopping Centre Retail $26,000,000 Rexall (C&H Properties Inc.) Crestpoint Real Estate Investments 2 Robert-Bourassa Boulevard Land $100,000,000 Magil Laurentian Realty Investments Broccolini Construction / Banque $507 psf $32,266,667 per acre Inc. / Laurentian Weloga LP / Desjardins Nationale

3 Parsons Business Centre Industrial $25,000,000 Jaylor Realty Management Inc. York Realty Inc. 3 3460 Peel Street Multi-Family $79,650,000 Placements des appartements de la Akelius Montreal Ltd. $144 psf $298,315 per unit Place Peel Ltée

4 Enbridge Tower Office $22,000,000 Bentall Kennedy LP Lighthouse Hospitality Management 4 800 Hymus Street Industrial $82,300,000 Broccolini Limited Partnership Crestpoint Real Estate Investments $121 psf Inc. $250 psf

5 Windsor Arms Multi-Family $21,350,000 S.M.C. Holdings LLC Timbercreek Communities 5 1975 de Maisonneuve Boulevard Multi-Family $48,000,000 9275-2146 Québec Inc. Akelius Montreal Ltd. $234,615 per unit West $200,000 per unit

18 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 19 Ottawa Investment Market Toronto Investment Market

Opportunities attract outside investors Select Avg. Cap Rates 1H 1H Sound property fundamentals position market for another record year Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Ottawa’s investment market continued Towers in the downtown core by Downtown Class AA Office 5.3% 5.0% Buoyed by solid property fundamentals, Following a record $3.5 billion in sales Downtown Class AA Office 4.3% 4.2% sellers capitalized on record-high asset in 2017, industrial was the only sector to to attract outside investors in the first Brookfield Properties is expected to Suburban Class A Office 6.4% 6.3% Suburban Class A Office 5.6% 5.8% half of 2018 as they sought better value close before year-end, and would likely values and buyers’ abundant capital in the decline year-over-year, falling a modest 9% Single-Tenant Industrial 5.9% 5.6% Single-Tenant Industrial 5.0% 4.7% than is typically found in other major be the largest single-asset sale in Ottawa first half of 2018, trading $8.2 billion worth to $1.6 billion at mid-year 2018 – due to Canadian centres. The trend started in in 2018, boosting the full-year result. Multi-Tenant Industrial 6.0% 5.7% of Greater Toronto Area (GTA) commercial product scarcity rather than lack of investor Multi-Tenant Industrial 5.1% 4.9% March 2017 when the sale of Minto Place Tier I Regional Mall 4.7% 4.8% real estate. That total represented a 26% demand. Historically low vacancy, new Tier I Regional Mall 4.1% 4.1% set a benchmark price for trophy assets Development opportunities, particularly year-over-year increase, and the market is on supply struggling to meet demand and a Multi-Family 4.5% 4.3% Multi-Family 3.9% 3.8% in the downtown core and continued those with proximity to Ottawa’s pace to break the record $14.5 billion sold very active owner-user market defined the in the latter half of 2017 when Oxford soon-to-be-opened (early 2019) light- in all of 2017, as four of the five asset types sector, while Mississauga and Peel Region and its partner, the Canada Pension Plan rail-transit line, have certainly moved recorded year-over-year sales growth. have attracted strong investor interest. Investment Activity 1H 1H Investment Activity 1H 1H Investment Board, sold their interest in the investment bar upward in terms of 2017 2018 2016 2017 asset values. Prices have topped $40 per The GTA office leasing market is one Ongoing retail landscape changes have Constitution Square for $480 million. 70% 20% 30% 32% buildable foot for in-place development of North America’s hottest, prompting not dampened investors’ enthusiasm These trophy office assets garnered a 15% 24% 26% 19% 1H 2018 for the sector. Coming off a near-record 1H 2018 great deal of attention. density with current asking prices for key investors to pour $2.7 billion into the locations far exceeding that threshold. $610 6% 27% sector during first-half 2018 – more $2.9 billion result in 2017, retail posted $8.2 20% 16% MILLION BILLION While investment dollar volume in 8% 15% than any other asset class and up 35% $1.3 billion in first-half 2018 sales, inching 9% 10% 2017 was skewed by the sales noted year-over-year. Office trades ranked above 2017’s first-half tally. 1% 14% 15% 22% above, the pace of investment activity among the region’s largest first-half Meanwhile, Blackstone’s foray into in first-half 2018 was greater year-over- OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND sales – including a 50% non-managing OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND Canadian multi-family property year across almost all asset classes. interest in Brookfield Properties’ 2.2-msf ownership, through a joint-venture with The retail, office and industrial markets Bay Adelaide Centre complex in Toronto’s Starlight Investments, lifted the sector’s had significant assets change hands in Investment Volume Financial Core to foreign buyer Dadco Investment Volume first-half 2018 sales to $848 million – the first half of 2018 with the sale of a Investments for $850 million. $16 $2 within striking distance of the $1.6 billion portfolio of automobile dealerships by sold in all of 2017. $14 Ogilvie Realty to Toronto-based Alpha Boosted by a record $1.3-billion second quarter, ICI land sales volume almost $12 Auto Group topping the list at $76.6 $ BILLIONS (CAD) A supply-demand imbalance will keep cap $ BILLIONS (CAD) doubled year-over-year to $1.8 billion in $10 million. This transaction was one of rates for most asset types historically low three portfolio sales to rank in the top $1 first-half 2018 – on pace to surpass 2017’s $8 record $2.2-billion result. Bombardier’s as eager investors seek new ways to direct five deals of first-half 2018, and is further $6 $825-million sale of its Downsview capital into hard assets – despite the evidence of Ottawa’s attractiveness to $4 Airport site to the Public Sector Pension lateness of the investment cycle, higher outside investors. $2 Investment Board was the GTA’s second- interest rates and, potentially, declining $0 returns. $0 Looking to the second half of the year, 2013 2014 2015 2016 2017 1H 2018 largest transaction in first-half 2018 – and 2013 2014 2015 2016 2017 1H 2018 the pending sale of Jean Edmonds Canada’s largest-ever ICI land sale. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Ogilvie Realty - Alpha Auto Group Retail $76,640,000 Ogilvie Realty Ltd. Alpha Auto Group 1 Bay Adelaide Centre Office $850,000,000 Brookfield Properties Dadco Investments Portfolio $358 psf (50% interest) $767 psf

2 3000 & 3001 Solandt Road / 450 Office $74,173,000 Morguard Investments Ltd. / HOOPP Fiera Properties 2 Downsview Airport Land $825,000,000 Parc Downsview Park Inc. / Bombardier Public Sector Pension Investment March Road / 1001 Farrar Road $216 psf Realty Inc. $2,261,823 per acre Inc. Board

3 Investors Group - Desjardins Industrial $68,150,000 Investors Group Trust Desjardins 3 Parkway Place Office $256,250,000 Agellan Commercial REIT Tigra Vista Inc. Portfolio $125 psf $296 psf

4 1100 & 1101 Polytek Street Industrial $42,500,000 HOOPP Realty Inc. Morguard Investments Ltd. 4 483 Bay Street (50% interest) Office $226,250,000 Northam Realty Advisors German investment fund $175 psf $480 psf

5 236 Richmond Road Multi-Family $36,250,000 Main and Main InterRent REIT 5 55 University Avenue Office $195,100,000 Cominar REIT Investors Group $510,563 per unit $742 psf

20 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 21 Ottawa Investment Market Toronto Investment Market

Opportunities attract outside investors Select Avg. Cap Rates 1H 1H Sound property fundamentals position market for another record year Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Ottawa’s investment market continued Towers in the downtown core by Downtown Class AA Office 5.3% 5.0% Buoyed by solid property fundamentals, Following a record $3.5 billion in sales Downtown Class AA Office 4.3% 4.2% sellers capitalized on record-high asset in 2017, industrial was the only sector to to attract outside investors in the first Brookfield Properties is expected to Suburban Class A Office 6.4% 6.3% Suburban Class A Office 5.6% 5.8% half of 2018 as they sought better value close before year-end, and would likely values and buyers’ abundant capital in the decline year-over-year, falling a modest 9% Single-Tenant Industrial 5.9% 5.6% Single-Tenant Industrial 5.0% 4.7% than is typically found in other major be the largest single-asset sale in Ottawa first half of 2018, trading $8.2 billion worth to $1.6 billion at mid-year 2018 – due to Canadian centres. The trend started in in 2018, boosting the full-year result. Multi-Tenant Industrial 6.0% 5.7% of Greater Toronto Area (GTA) commercial product scarcity rather than lack of investor Multi-Tenant Industrial 5.1% 4.9% March 2017 when the sale of Minto Place Tier I Regional Mall 4.7% 4.8% real estate. That total represented a 26% demand. Historically low vacancy, new Tier I Regional Mall 4.1% 4.1% set a benchmark price for trophy assets Development opportunities, particularly year-over-year increase, and the market is on supply struggling to meet demand and a Multi-Family 4.5% 4.3% Multi-Family 3.9% 3.8% in the downtown core and continued those with proximity to Ottawa’s pace to break the record $14.5 billion sold very active owner-user market defined the in the latter half of 2017 when Oxford soon-to-be-opened (early 2019) light- in all of 2017, as four of the five asset types sector, while Mississauga and Peel Region and its partner, the Canada Pension Plan rail-transit line, have certainly moved recorded year-over-year sales growth. have attracted strong investor interest. Investment Activity 1H 1H Investment Activity 1H 1H Investment Board, sold their interest in the investment bar upward in terms of 2017 2018 2016 2017 asset values. Prices have topped $40 per The GTA office leasing market is one Ongoing retail landscape changes have Constitution Square for $480 million. 70% 20% 30% 32% buildable foot for in-place development of North America’s hottest, prompting not dampened investors’ enthusiasm These trophy office assets garnered a 15% 24% 26% 19% 1H 2018 for the sector. Coming off a near-record 1H 2018 great deal of attention. density with current asking prices for key investors to pour $2.7 billion into the locations far exceeding that threshold. $610 6% 27% sector during first-half 2018 – more $2.9 billion result in 2017, retail posted $8.2 20% 16% MILLION BILLION While investment dollar volume in 8% 15% than any other asset class and up 35% $1.3 billion in first-half 2018 sales, inching 9% 10% 2017 was skewed by the sales noted year-over-year. Office trades ranked above 2017’s first-half tally. 1% 14% 15% 22% above, the pace of investment activity among the region’s largest first-half Meanwhile, Blackstone’s foray into in first-half 2018 was greater year-over- OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND sales – including a 50% non-managing OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND Canadian multi-family property year across almost all asset classes. interest in Brookfield Properties’ 2.2-msf ownership, through a joint-venture with The retail, office and industrial markets Bay Adelaide Centre complex in Toronto’s Starlight Investments, lifted the sector’s had significant assets change hands in Investment Volume Financial Core to foreign buyer Dadco Investment Volume first-half 2018 sales to $848 million – the first half of 2018 with the sale of a Investments for $850 million. $16 $2 within striking distance of the $1.6 billion portfolio of automobile dealerships by sold in all of 2017. $14 Ogilvie Realty to Toronto-based Alpha Boosted by a record $1.3-billion second quarter, ICI land sales volume almost $12 Auto Group topping the list at $76.6 $ BILLIONS (CAD) A supply-demand imbalance will keep cap $ BILLIONS (CAD) doubled year-over-year to $1.8 billion in $10 million. This transaction was one of rates for most asset types historically low three portfolio sales to rank in the top $1 first-half 2018 – on pace to surpass 2017’s $8 record $2.2-billion result. Bombardier’s as eager investors seek new ways to direct five deals of first-half 2018, and is further $6 $825-million sale of its Downsview capital into hard assets – despite the evidence of Ottawa’s attractiveness to $4 Airport site to the Public Sector Pension lateness of the investment cycle, higher outside investors. $2 Investment Board was the GTA’s second- interest rates and, potentially, declining $0 returns. $0 Looking to the second half of the year, 2013 2014 2015 2016 2017 1H 2018 largest transaction in first-half 2018 – and 2013 2014 2015 2016 2017 1H 2018 the pending sale of Jean Edmonds Canada’s largest-ever ICI land sale. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Ogilvie Realty - Alpha Auto Group Retail $76,640,000 Ogilvie Realty Ltd. Alpha Auto Group 1 Bay Adelaide Centre Office $850,000,000 Brookfield Properties Dadco Investments Portfolio $358 psf (50% interest) $767 psf

2 3000 & 3001 Solandt Road / 450 Office $74,173,000 Morguard Investments Ltd. / HOOPP Fiera Properties 2 Downsview Airport Land $825,000,000 Parc Downsview Park Inc. / Bombardier Public Sector Pension Investment March Road / 1001 Farrar Road $216 psf Realty Inc. $2,261,823 per acre Inc. Board

3 Investors Group - Desjardins Industrial $68,150,000 Investors Group Trust Desjardins 3 Parkway Place Office $256,250,000 Agellan Commercial REIT Tigra Vista Inc. Portfolio $125 psf $296 psf

4 1100 & 1101 Polytek Street Industrial $42,500,000 HOOPP Realty Inc. Morguard Investments Ltd. 4 483 Bay Street (50% interest) Office $226,250,000 Northam Realty Advisors German investment fund $175 psf $480 psf

5 236 Richmond Road Multi-Family $36,250,000 Main and Main InterRent REIT 5 55 University Avenue Office $195,100,000 Cominar REIT Investors Group $510,563 per unit $742 psf

20 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 21 Vancouver Investment Market

Private investors spur near-record investment Select Avg. Cap Rates 1H 1H Select Avg. Cap Rates 1H 1H 2017 2018 2017 2016

Demand for BC investment properties the same period in 2017. The value of ICI Downtown Class AA Office 4.1% 4.1% remained robust in the face of land acquisitions surged year-over-year, United States Suburban Class A Office 5.3% 5.5% heightened global trade uncertainty and jumping 94% to more than $1 billion in Single-Tenant Industrial 4.8% 4.3% increased government regulation with the first half of 2018 from $527 million 12 24 Atlanta Multi-Tenant Industrial 4.7% 4.5% $5.1 billion in proceeds in the first half of months earlier. 25 Austin 2018 – a 34% decrease when compared Tier I Regional Mall 4.0% 4.1% 26 Boston with the record-setting first half of 2017. Private investors resumed their Multi-Family 3.3% 3.3% 27 Charlotte The absence of billion-dollar transactions leadership position in terms of Chicago in the first half of 2018 was the primary disposition values in the first half of 2018 28 reason for the decline. (Two noteworthy after institutions had surged to the top 29 Cleveland Investment Activity 1H 1H Investment Activity transactions totalling approximately in 2017 by selling off several trophy retail 2017 2018 30 Columbus, OH and office assets. Land values continue $2.9 billion closed in the first half of 25% 21% 31 Dallas to exert downward pressure on already 2017.) Transactions in the first half of 9% 13% 32 Denver highly compressed cap rates, but land 1H 2018 1H 2018 2018 generated the second-most dollar 33 Detroit 40% 33% volume on record (after 2017) and, in a pricing appears to be stabilizing after $5.1 BILLION 34 Fairfield County years of rapid increases. A rising interest- 20% 14% historical context, eclipsed the full-year Fort Lauderdale rate environment and heightened 35 investment totals of both 2013 and 2014. 7% 20% 36 Hartford The number of deals recorded in the first political uncertainty have resulted in slowing sales activity due to a return to 37 Houston six months of 2018 moderated compared OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND OFFICEOFFICE INDUSTRIALINDUSTRIAL RETAILRETAIL MULTI-FAMILYMULTI-RES ICIICI LAND LAND Indianapolis with the first half of 2017, but, as with more typical periods of due diligence 38 and more cautious underwriting. 39 Jacksonville dollar volume, remained elevated in Investment Volume Investment Volume comparison with years prior to 2017. 40 Las Vegas $12 41 Long Island By asset class, office investment dropped 42 Los Angeles to $1.1 billion by the midway point of $10 43 Memphis

2018 compared with nearly $2 billion $ BILLIONS (CAD) $ BILLIONS (CAD) $8 44 Miami during the same period in 2017. Retail Minneapolis investment declined by 45% to $1.7 $6 45 46 Nashville billion from $3.1 billion in the first half of $4 2017. Multi-family investment dropped 47 New Jersey 55% to $698 million from more than $1.5 $2 48 New York billion in the first half of 2017. Industrial Oakland $0 49 investment dipped 3% to $645 million in 2013 2014 2015 2016 2017 1H 2018 50 Orange County 20122013 20132014 20142015 20152016 20162017 1H1H 2017 2018 the first half of 2018 from $668 million in OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND 51 Orlando OFFICEOFFICE INDUSTRIALINDUSTRIAL RETAILRETAIL MULTI-FAMILYMULTI-RES ICIICI LAND LAND 52 Philadelphia Top 5 Investment Sales by Price - First Half 2018 53 Phoenix 54 Pittsburgh

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser 55 Raleigh-Durham 56 Sacramento 1 Gateway Casinos portfolio, Burnaby/ Retail $501,000,000 Gateway Casinos & Entertainment Meisrow Financial San Antonio New Westminster/Langley n/a 57 58 San Diego County 2 CF Richmond Centre Retail $392,000,000 Ivanhoé Cambridge AIMCo San Francisco (50% interest), Richmond $992 psf* 59 60 San Jose/Silicon Valley 3 Ottmann Properties portfolio, Multi-Family $248,000,000 Ottmann Properties Starlight Investments 61 San Mateo Vancouver/North Vancouver $543,859 per unit 62 St. Louis 4 Willingdon Park (buildings Office $179,000,000 HOOPP Realty Inc. Spear Street Capital Tampa 1,2,5,6 and 7), Burnaby $366 psf 63 64 Washington, DC 5 443 Seymour Street, Vancouver Land $131,460,000 VMB Inc. Reliance Properties West Palm Beach $305,770,930 per acre 65 66 Westchester County *based on 100% value

22 Avison Young Fall 2018 Commercial Real Estate Investment Review Vancouver Investment Market

Private investors spur near-record investment Select Avg. Cap Rates 1H 1H Select Avg. Cap Rates 1H 1H 2017 2018 2017 2016

Demand for BC investment properties the same period in 2017. The value of ICI Downtown Class AA Office 4.1% 4.1% remained robust in the face of land acquisitions surged year-over-year, United States Suburban Class A Office 5.3% 5.5% heightened global trade uncertainty and jumping 94% to more than $1 billion in Single-Tenant Industrial 4.8% 4.3% increased government regulation with the first half of 2018 from $527 million 12 24 Atlanta Multi-Tenant Industrial 4.7% 4.5% $5.1 billion in proceeds in the first half of months earlier. 25 Austin 2018 – a 34% decrease when compared Tier I Regional Mall 4.0% 4.1% 26 Boston with the record-setting first half of 2017. Private investors resumed their Multi-Family 3.3% 3.3% 27 Charlotte The absence of billion-dollar transactions leadership position in terms of Chicago in the first half of 2018 was the primary disposition values in the first half of 2018 28 reason for the decline. (Two noteworthy after institutions had surged to the top 29 Cleveland Investment Activity 1H 1H Investment Activity transactions totalling approximately in 2017 by selling off several trophy retail 2017 2018 30 Columbus, OH and office assets. Land values continue $2.9 billion closed in the first half of 25% 21% 31 Dallas to exert downward pressure on already 2017.) Transactions in the first half of 9% 13% 32 Denver highly compressed cap rates, but land 1H 2018 1H 2018 2018 generated the second-most dollar 33 Detroit 40% 33% volume on record (after 2017) and, in a pricing appears to be stabilizing after $5.1 BILLION 34 Fairfield County years of rapid increases. A rising interest- 20% 14% historical context, eclipsed the full-year Fort Lauderdale rate environment and heightened 35 investment totals of both 2013 and 2014. 7% 20% 36 Hartford The number of deals recorded in the first political uncertainty have resulted in slowing sales activity due to a return to 37 Houston six months of 2018 moderated compared OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND OFFICEOFFICE INDUSTRIALINDUSTRIAL RETAILRETAIL MULTI-FAMILYMULTI-RES ICIICI LAND LAND Indianapolis with the first half of 2017, but, as with more typical periods of due diligence 38 and more cautious underwriting. 39 Jacksonville dollar volume, remained elevated in Investment Volume Investment Volume comparison with years prior to 2017. 40 Las Vegas $12 41 Long Island By asset class, office investment dropped 42 Los Angeles to $1.1 billion by the midway point of $10 43 Memphis

2018 compared with nearly $2 billion $ BILLIONS (CAD) $ BILLIONS (CAD) $8 44 Miami during the same period in 2017. Retail Minneapolis investment declined by 45% to $1.7 $6 45 46 Nashville billion from $3.1 billion in the first half of $4 2017. Multi-family investment dropped 47 New Jersey 55% to $698 million from more than $1.5 $2 48 New York billion in the first half of 2017. Industrial Oakland $0 49 investment dipped 3% to $645 million in 2013 2014 2015 2016 2017 1H 2018 50 Orange County 20122013 20132014 20142015 20152016 20162017 1H1H 2017 2018 the first half of 2018 from $668 million in OFFICE INDUSTRIAL RETAIL MULTI-FAMILY ICI LAND 51 Orlando OFFICEOFFICE INDUSTRIALINDUSTRIAL RETAILRETAIL MULTI-FAMILYMULTI-RES ICIICI LAND LAND 52 Philadelphia Top 5 Investment Sales by Price - First Half 2018 53 Phoenix 54 Pittsburgh

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser 55 Raleigh-Durham 56 Sacramento 1 Gateway Casinos portfolio, Burnaby/ Retail $501,000,000 Gateway Casinos & Entertainment Meisrow Financial San Antonio New Westminster/Langley n/a 57 58 San Diego County 2 CF Richmond Centre Retail $392,000,000 Ivanhoé Cambridge AIMCo San Francisco (50% interest), Richmond $992 psf* 59 60 San Jose/Silicon Valley 3 Ottmann Properties portfolio, Multi-Family $248,000,000 Ottmann Properties Starlight Investments 61 San Mateo Vancouver/North Vancouver $543,859 per unit 62 St. Louis 4 Willingdon Park (buildings Office $179,000,000 HOOPP Realty Inc. Spear Street Capital Tampa 1,2,5,6 and 7), Burnaby $366 psf 63 64 Washington, DC 5 443 Seymour Street, Vancouver Land $131,460,000 VMB Inc. Reliance Properties West Palm Beach $305,770,930 per acre 65 66 Westchester County *based on 100% value

22 Avison Young Fall 2018 Commercial Real Estate Investment Review Atlanta Investment Market Austin Investment Market

Multi-family property sales lead market Select Avg. Cap Rates 1H 1H Office prices maintain upward trajectory Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Atlanta office, industrial, retail and multi- a lack of industrial properties on the Office 6.9% 6.5% Low unemployment, rising property Despite rising cap rates, industrial Office 6.8% 6.8% family property sales totaled $6.2 billion market. However, demand is still present valuations and persistent population sales volume at mid-year 2018 had during the first half of 2018, slightly for core properties as well as value- Industrial 7.4% 6.7% growth are just some of the many factors already surpassed the full-year total for Industrial 6.6% 7.4% trailing the 2017 pace of activity. Multi- add opportunities, so investment sales that have driven investors to the Austin 2017 by nearly $151 million. Upticks in Retail 7.2% 7.0% Retail 6.6% 6.5% family sales were the largest, totaling activity should increase in the second market in recent cycles. The metro’s manufacturing jobs, and the inclusion $3.1 billion, followed by office sales half of 2018. The largest industrial Multi-Family 6.0% 5.9% continued economic success powered of Austin’s product in larger national Multi-Family 5.6% 5.4% at $1.5 billion. Office sales registered transaction was the $58-million sale of competition for commercial assets during and international portfolio sales, a slight decrease in activity, primarily the 1-msf Metropolitan industrial park, the first half of 2018, meaning that willing have helped stimulate local industrial due to fewer CBD properties trading. which Carter USA purchased in May buyers were often unable to find willing investment activity. Retail investment The largest office transaction was the from Candler Warehouses. Investment Activity 1H 1H sellers. Accordingly, overall transaction activity abounds in Austin’s suburban Investment Activity 1H 1H 2017 2018 2017 2018 $267.5-million sale of Three Alliance volume for Austin’s commercial assets submarkets, where much of the Center in the Buckhead submarket. Retail sales totaled $687 million during 24% 23% through the first half of 2018 was roughly proposed office product is set to break 26% 20% the first half of 2018, down from the The 506,000-sf office building was 93% 1H 2018 70% of the first-half 2017 total. ground. As new projects are delivered, 1H 2018 same period in 2017. This drop was 18% 15% 5% 18% leased when purchased by the State of $6.2 investment in surrounding retail assets $2.8 due in large part to investors waiting The multi-family sector once again Florida Retirement Fund in January and BILLION 12% 11% is expected to increase, keeping the BILLION 13% 10% recorded a 6.35% cap rate. for cap rates to compress, as retail cap outperformed other commercial asset volume in 2018 on pace with recent 46% 50% 55% rates are currently the highest in Metro classes – in terms of both sales totals years. 52% Multi-family sales continue to make the Atlanta, averaging 7%. The largest retail and prices – during the first half of metro Atlanta investment market one transaction was the sale of Kennesaw OFFICE INDUSTRIAL RETAIL MULTI-FAMILY 2018. Austin’s population growth and Market-wide low vacancy, rising rents, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY of the best performing markets in the Marketplace for $64.3 million. The demographic makeup continued to job growth and a robust construction U.S. Southeast. Multi-family sales activity 114,000-sf shopping center is anchored fuel investors’ affinity for multi-family pipeline signal that new investment was up 8% from the same time in 2017 by Whole Foods and was purchased by Investment Volume assets, resulting in multi-family making opportunities are soon to come, keeping Investment Volume

and comprised 50% of activity during InvenTrust Properties. $18 up nearly 50% of the total first-half 2018 the outlook for Austin’s commercial real $9

the first half of 2018. In the largest multi- $16 sales volume. Though first-half 2018 estate investment market positive. $8

family sale during the first six months of $14 office transaction volume appeared to $7

2018, Carter-Haston Real Estate Services $ BILLIONS (US) $12 lag the first-half 2017 level, office prices $ BILLIONS (US) $6 remained on an upward trajectory and purchased the Juncture, a 560-unit class $10 $5 A property, for $141.7 million. cap rates registered no year-over-year $8 $4 change. Growth in trophy-class inventory $6 $3 Industrial sales totaled $941 million and high occupancy rates from credit $4 $2 during the first six months of the year, tenants suggest promising returns for $2 $1 down 14% year-over-year. This result investors, thus furthering their desire $0 $0 followed a trend that is being seen 2013 2014 2015 2016 2017 1H 2018 to participate in this, now, secondary 2013 2014 2015 2016 2017 1H 2018 across the country as there is currently OFFICE INDUSTRIAL RETAIL MULTI-FAMILY market. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Three Alliance Office $267,500,000 Tishman Speyer State of Florida Retirement Fund 1 The Block Multi-Family $294,478,520 American Campus Communities Allianz of America $534 psf $440,177 per unit

2 The Juncture Multi-Family $141,700,000 JLB Partners Carter-Haston Real Estate Services 2 2400 Neuces Multi-Family $185,827,278 EdR Greystar $253,036 per unit $611,274 per unit

3 Royal Centre II, III, IV Office $107,000,000 Dilweg Companies / New York Life Bridge Investment Group 3 The Castilian Multi-Family $163,305,727 American Campus Communities Allianz of America $172 psf $440,177 per unit

4 Modera Morningside Multi-Family $106,750,000 Mill Creek Residential Trust GID Investment Advisors 4 26 West Multi-Family $161,545,018 American Campus Communities Allianz of America $328,461 per unit $440,177 per unit

5 Jefferson at Perimeter Multi-Family $102,800,000 The Blackstone Group Steadfast Apartment REIT 5 Domain 8 Office $137,700,000 Shorenstein / Endeavor RE Group TIER REIT $203,968 per unit $473 psf

24 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 25 Atlanta Investment Market Austin Investment Market

Multi-family property sales lead market Select Avg. Cap Rates 1H 1H Office prices maintain upward trajectory Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Atlanta office, industrial, retail and multi- a lack of industrial properties on the Office 6.9% 6.5% Low unemployment, rising property Despite rising cap rates, industrial Office 6.8% 6.8% family property sales totaled $6.2 billion market. However, demand is still present valuations and persistent population sales volume at mid-year 2018 had during the first half of 2018, slightly for core properties as well as value- Industrial 7.4% 6.7% growth are just some of the many factors already surpassed the full-year total for Industrial 6.6% 7.4% trailing the 2017 pace of activity. Multi- add opportunities, so investment sales that have driven investors to the Austin 2017 by nearly $151 million. Upticks in Retail 7.2% 7.0% Retail 6.6% 6.5% family sales were the largest, totaling activity should increase in the second market in recent cycles. The metro’s manufacturing jobs, and the inclusion $3.1 billion, followed by office sales half of 2018. The largest industrial Multi-Family 6.0% 5.9% continued economic success powered of Austin’s product in larger national Multi-Family 5.6% 5.4% at $1.5 billion. Office sales registered transaction was the $58-million sale of competition for commercial assets during and international portfolio sales, a slight decrease in activity, primarily the 1-msf Metropolitan industrial park, the first half of 2018, meaning that willing have helped stimulate local industrial due to fewer CBD properties trading. which Carter USA purchased in May buyers were often unable to find willing investment activity. Retail investment The largest office transaction was the from Candler Warehouses. Investment Activity 1H 1H sellers. Accordingly, overall transaction activity abounds in Austin’s suburban Investment Activity 1H 1H 2017 2018 2017 2018 $267.5-million sale of Three Alliance volume for Austin’s commercial assets submarkets, where much of the Center in the Buckhead submarket. Retail sales totaled $687 million during 24% 23% through the first half of 2018 was roughly proposed office product is set to break 26% 20% the first half of 2018, down from the The 506,000-sf office building was 93% 1H 2018 70% of the first-half 2017 total. ground. As new projects are delivered, 1H 2018 same period in 2017. This drop was 18% 15% 5% 18% leased when purchased by the State of $6.2 investment in surrounding retail assets $2.8 due in large part to investors waiting The multi-family sector once again Florida Retirement Fund in January and BILLION 12% 11% is expected to increase, keeping the BILLION 13% 10% recorded a 6.35% cap rate. for cap rates to compress, as retail cap outperformed other commercial asset volume in 2018 on pace with recent 46% 50% 55% rates are currently the highest in Metro classes – in terms of both sales totals years. 52% Multi-family sales continue to make the Atlanta, averaging 7%. The largest retail and prices – during the first half of metro Atlanta investment market one transaction was the sale of Kennesaw OFFICE INDUSTRIAL RETAIL MULTI-FAMILY 2018. Austin’s population growth and Market-wide low vacancy, rising rents, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY of the best performing markets in the Marketplace for $64.3 million. The demographic makeup continued to job growth and a robust construction U.S. Southeast. Multi-family sales activity 114,000-sf shopping center is anchored fuel investors’ affinity for multi-family pipeline signal that new investment was up 8% from the same time in 2017 by Whole Foods and was purchased by Investment Volume assets, resulting in multi-family making opportunities are soon to come, keeping Investment Volume

and comprised 50% of activity during InvenTrust Properties. $18 up nearly 50% of the total first-half 2018 the outlook for Austin’s commercial real $9

the first half of 2018. In the largest multi- $16 sales volume. Though first-half 2018 estate investment market positive. $8

family sale during the first six months of $14 office transaction volume appeared to $7

2018, Carter-Haston Real Estate Services $ BILLIONS (US) $12 lag the first-half 2017 level, office prices $ BILLIONS (US) $6 remained on an upward trajectory and purchased the Juncture, a 560-unit class $10 $5 A property, for $141.7 million. cap rates registered no year-over-year $8 $4 change. Growth in trophy-class inventory $6 $3 Industrial sales totaled $941 million and high occupancy rates from credit $4 $2 during the first six months of the year, tenants suggest promising returns for $2 $1 down 14% year-over-year. This result investors, thus furthering their desire $0 $0 followed a trend that is being seen 2013 2014 2015 2016 2017 1H 2018 to participate in this, now, secondary 2013 2014 2015 2016 2017 1H 2018 across the country as there is currently OFFICE INDUSTRIAL RETAIL MULTI-FAMILY market. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Three Alliance Office $267,500,000 Tishman Speyer State of Florida Retirement Fund 1 The Block Multi-Family $294,478,520 American Campus Communities Allianz of America $534 psf $440,177 per unit

2 The Juncture Multi-Family $141,700,000 JLB Partners Carter-Haston Real Estate Services 2 2400 Neuces Multi-Family $185,827,278 EdR Greystar $253,036 per unit $611,274 per unit

3 Royal Centre II, III, IV Office $107,000,000 Dilweg Companies / New York Life Bridge Investment Group 3 The Castilian Multi-Family $163,305,727 American Campus Communities Allianz of America $172 psf $440,177 per unit

4 Modera Morningside Multi-Family $106,750,000 Mill Creek Residential Trust GID Investment Advisors 4 26 West Multi-Family $161,545,018 American Campus Communities Allianz of America $328,461 per unit $440,177 per unit

5 Jefferson at Perimeter Multi-Family $102,800,000 The Blackstone Group Steadfast Apartment REIT 5 Domain 8 Office $137,700,000 Shorenstein / Endeavor RE Group TIER REIT $203,968 per unit $473 psf

24 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 25 Boston Investment Market Charlotte Investment Market

Industrial investment volume surges Select Avg. Cap Rates 1H 1H Investor demand remains strong despite volume decline Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Greater Boston investment sales dollar end consumer in densely populated Office 5.6% 5.6% Charlotte investment sales totaled $2.2 Sales of industrial and retail properties Office 6.5% 6.9% volume was down $1.6 billion year- areas of Boston and Cambridge as billion in the first half of 2018, down 26% declined in the first half of 2018 over-year in first-half 2018 at $5.6 billion. strategic supply-chain operations seek to Industrial 6.8% 6.8% compared with the first half of 2017. The following an extraordinarily active year Industrial 7.0% 7.3% Downward pressure on cap rates remains reach these bustling population cohorts. decline in volume is not indicative of for both asset classes in 2017. Industrial Retail 6.3% 6.4% Retail 6.8% 7.1% a theme with the overall market average waning investor demand, but instead sales totaled $338 million, down 33% As Greater Boston’s labor pool increases, sinking to 6% at mid-year thanks to a Multi-Family 5.5% 5.1% represents a return to more typical year-over-year, and retail sales totaled Multi-Family 6.1% 6.1% continuing robust economy and growing so does the need for housing, especially activity levels following the blockbuster $110 million, down 67% year-over-year. residential base. near Boston and Cambridge, where sale of Ballantyne Corporate Center – Industrial sales are likely to pick up demand for office, lab and industrial the largest transaction in Charlotte’s in the second half of 2018 as vacancy Office trades have achieved record-high space is highest. Despite an increase Investment Activity 1H 1H history – in early 2017. remains tight and more than 5.7 msf in Investment Activity 1H 1H 2017 2018 2017 2018 prices during the last couple of years – in multi-family supply year-over-year construction delivered in the past year particularly in downtown Boston and since 2014, demand for apartment space 71% 46% Multi-family sales surged to $1.1 billion offers investors new opportunities to 48% 31% Cambridge, where some class A building has not slowed. Thanks to a variety of in the first half of 2018, rising 45% 1H 2018 acquire modern, well-leased facilities. 1H 2018 prices exceed $1,200 psf. However, companies migrating to, and starting 8% 23% from the same period in 2017 and 17% 15% $5.6 In the face of an ongoing wave of store $2.2 up in, the Greater Boston market, the representing 49% of overall dollar office investment dollar volume was BILLION 8% 5% closures, investors are cautious with BILLION 11% 5% down compared with first-half 2017. This region’s rising population is pushing cap volume. Demand for multi-family assets regard to retail properties, but grocery- 13% 25% 25% reduction was mainly due to a significant rates down and boosting trade volume. remains resilient despite a flood of new anchored centers and single-tenant net- 49% amount of long-term institutional capital supply as occupancy and rental rates leased assets remain in demand. having entered the market during the Looking ahead, overall investment sales OFFICE INDUSTRIAL RETAIL MULTI-FAMILY are supported by Charlotte’s robust OFFICE INDUSTRIAL RETAIL MULTI-FAMILY past several years. This situation has the volume is expected to rise in the second job growth and rapidly expanding Charlotte continues to offer a significant effect of driving down sales frequency half of 2018, as several trophy office population. Demand also remains strong value proposition versus tier-one and keeping cap rates low for deals that towers with a combined value exceeding Investment Volume for office properties with investors markets. While 2018 volume is likely to Investment Volume $2 billion are either on the market or come to the market. $16 seeking both trophy assets and value- fall short of the more than $5 billion $6 have a sale pending in downtown add opportunities as rental rates rise recorded in 2017, sales activity through $14 Industrial sales volume posted the largest Boston. to record highs. Office sales totaled the remainder of the year is expected to $5 year-over-year increase among all four $12

$ BILLIONS (US) $687 million in the first half of 2018, be steady. $ BILLIONS (US) $4 primary asset types. In first-half 2018, $10 representing 31% of total investment. industrial sales in Greater Boston totaled $8 The sale of 615 South College for $222 $3 nearly $1.3 billion – up more than 100% $6 million ($598 psf) set a record for per- $2 compared with the first six months of $4 square-foot pricing for a Charlotte office 2017. Mainly driven by warehousing $1 $2 building. and distribution assets, the market has $0 $0 benefited from strong demand from 2013 2014 2015 2016 2017 1H 2018 2013 2014 2015 2016 2017 1H 2018 companies looking to get closer to the OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 28 State Street Office $417,600,000 The Rockefeller Group Heitman 1 615 South College Office $222,000,000 Portman Holdings CBRE Global Investors $730 psf $598 psf

2 451 D Street Office $276,000,000 GE Asset Management Related Beal 2 400 South Tryon Office $133,500,000 DRA Advisors / Trinity Capital Oaktree Capital Group $578 psf $229 psf

3 4 Blackfan Circle Office (Lab) $273,030,940 Harvard Real Estate Intercontinental Real Estate 3 2901 Lakemont Blvd. & 3725 Industrial $70,500,000 GLP The Keith Corporation $1,421 psf Corporation Westinghouse Blvd. $92 psf

4 85 Seaport Boulevard Multi-Family $238,750,000 Skanska Development Clarion Partners 4 Centric Gateway Multi-Family $69,000,000 Dominion Realty Partners TH Real Estate $690,000 per unit $232,323 per unit

5 177 Huntington Avenue Office $137,500,000 Beacon Capital Partners AFL-CIO Building Investment Trust 5 Avant at Steele Creek Multi-Family $67,825,000 LivCor American Landmark $665 psf $148,739 per unit

26 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 27 Boston Investment Market Charlotte Investment Market

Industrial investment volume surges Select Avg. Cap Rates 1H 1H Investor demand remains strong despite volume decline Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Greater Boston investment sales dollar end consumer in densely populated Office 5.6% 5.6% Charlotte investment sales totaled $2.2 Sales of industrial and retail properties Office 6.5% 6.9% volume was down $1.6 billion year- areas of Boston and Cambridge as billion in the first half of 2018, down 26% declined in the first half of 2018 over-year in first-half 2018 at $5.6 billion. strategic supply-chain operations seek to Industrial 6.8% 6.8% compared with the first half of 2017. The following an extraordinarily active year Industrial 7.0% 7.3% Downward pressure on cap rates remains reach these bustling population cohorts. decline in volume is not indicative of for both asset classes in 2017. Industrial Retail 6.3% 6.4% Retail 6.8% 7.1% a theme with the overall market average waning investor demand, but instead sales totaled $338 million, down 33% As Greater Boston’s labor pool increases, sinking to 6% at mid-year thanks to a Multi-Family 5.5% 5.1% represents a return to more typical year-over-year, and retail sales totaled Multi-Family 6.1% 6.1% continuing robust economy and growing so does the need for housing, especially activity levels following the blockbuster $110 million, down 67% year-over-year. residential base. near Boston and Cambridge, where sale of Ballantyne Corporate Center – Industrial sales are likely to pick up demand for office, lab and industrial the largest transaction in Charlotte’s in the second half of 2018 as vacancy Office trades have achieved record-high space is highest. Despite an increase Investment Activity 1H 1H history – in early 2017. remains tight and more than 5.7 msf in Investment Activity 1H 1H 2017 2018 2017 2018 prices during the last couple of years – in multi-family supply year-over-year construction delivered in the past year particularly in downtown Boston and since 2014, demand for apartment space 71% 46% Multi-family sales surged to $1.1 billion offers investors new opportunities to 48% 31% Cambridge, where some class A building has not slowed. Thanks to a variety of in the first half of 2018, rising 45% 1H 2018 acquire modern, well-leased facilities. 1H 2018 prices exceed $1,200 psf. However, companies migrating to, and starting 8% 23% from the same period in 2017 and 17% 15% $5.6 In the face of an ongoing wave of store $2.2 up in, the Greater Boston market, the representing 49% of overall dollar office investment dollar volume was BILLION 8% 5% closures, investors are cautious with BILLION 11% 5% down compared with first-half 2017. This region’s rising population is pushing cap volume. Demand for multi-family assets regard to retail properties, but grocery- 13% 25% 25% reduction was mainly due to a significant rates down and boosting trade volume. remains resilient despite a flood of new anchored centers and single-tenant net- 49% amount of long-term institutional capital supply as occupancy and rental rates leased assets remain in demand. having entered the market during the Looking ahead, overall investment sales OFFICE INDUSTRIAL RETAIL MULTI-FAMILY are supported by Charlotte’s robust OFFICE INDUSTRIAL RETAIL MULTI-FAMILY past several years. This situation has the volume is expected to rise in the second job growth and rapidly expanding Charlotte continues to offer a significant effect of driving down sales frequency half of 2018, as several trophy office population. Demand also remains strong value proposition versus tier-one and keeping cap rates low for deals that towers with a combined value exceeding Investment Volume for office properties with investors markets. While 2018 volume is likely to Investment Volume $2 billion are either on the market or come to the market. $16 seeking both trophy assets and value- fall short of the more than $5 billion $6 have a sale pending in downtown add opportunities as rental rates rise recorded in 2017, sales activity through $14 Industrial sales volume posted the largest Boston. to record highs. Office sales totaled the remainder of the year is expected to $5 year-over-year increase among all four $12

$ BILLIONS (US) $687 million in the first half of 2018, be steady. $ BILLIONS (US) $4 primary asset types. In first-half 2018, $10 representing 31% of total investment. industrial sales in Greater Boston totaled $8 The sale of 615 South College for $222 $3 nearly $1.3 billion – up more than 100% $6 million ($598 psf) set a record for per- $2 compared with the first six months of $4 square-foot pricing for a Charlotte office 2017. Mainly driven by warehousing $1 $2 building. and distribution assets, the market has $0 $0 benefited from strong demand from 2013 2014 2015 2016 2017 1H 2018 2013 2014 2015 2016 2017 1H 2018 companies looking to get closer to the OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 28 State Street Office $417,600,000 The Rockefeller Group Heitman 1 615 South College Office $222,000,000 Portman Holdings CBRE Global Investors $730 psf $598 psf

2 451 D Street Office $276,000,000 GE Asset Management Related Beal 2 400 South Tryon Office $133,500,000 DRA Advisors / Trinity Capital Oaktree Capital Group $578 psf $229 psf

3 4 Blackfan Circle Office (Lab) $273,030,940 Harvard Real Estate Intercontinental Real Estate 3 2901 Lakemont Blvd. & 3725 Industrial $70,500,000 GLP The Keith Corporation $1,421 psf Corporation Westinghouse Blvd. $92 psf

4 85 Seaport Boulevard Multi-Family $238,750,000 Skanska Development Clarion Partners 4 Centric Gateway Multi-Family $69,000,000 Dominion Realty Partners TH Real Estate $690,000 per unit $232,323 per unit

5 177 Huntington Avenue Office $137,500,000 Beacon Capital Partners AFL-CIO Building Investment Trust 5 Avant at Steele Creek Multi-Family $67,825,000 LivCor American Landmark $665 psf $148,739 per unit

26 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 27 Chicago Investment Market Cleveland Investment Market

Industrial investors keen about portfolios Select Avg. Cap Rates 1H 1H Investors target stabilized multi-family assets Select Avg. Cap Rates 1H 1H 2017 2018 2016 2017

Chicago’s first-half 2018 commercial new owner plans to invest $9 million in Office 8.0% 6.4% Overall first-half 2018 investment in from a modest $59 million in first-half Office 9.6% 9.4% real estate investment volume rose 44% upgrades. While assets within Chicago’s Cleveland’s commercial real estate 2017. In conjunction with this 240% across all asset classes year-over-year, city limits continued to attract high Industrial 6.6% 6.5% market registered a 23% increase increase in total volume, cap rates Industrial 8.3% 8.6% totaling $8.2 billion. This increase can prices, investors have increased their compared with the same period in compressed to an average 7.2% at mid- Retail 6.6% 6.4% Retail 8.2% 7.2% largely be attributed to the rise in sales appetite for quality suburban assets. 2017, while individual property sectors year 2018 from 8.2% at mid-year 2017. volume in the office sector, up 225% Retail investment lagged year-over- Multi-Family 6.5% 5.1% displayed volatility year-over-year. Office Meanwhile, industrial investment dollar Multi-Family 7.2% 6.7% to $3.5 billion in first-half 2018 from year, accounting for only 12% of overall and industrial markets had the greatest volume dropped 47% year-over-year, $1.1 billion at mid-2017. Foreign capital investment sales dollar volume. As amount of investment activity in 2017. primarily due to the lack of modern, represented 15% of total sales dollar the retail landscape restructures itself, However, due to diminished availability single-tenant net-leased properties volume with the majority allocated investors will continue to focus on well- Investment Activity 1H 1H of quality assets, both asset classes available on the market. Investment Activity 1H 1H 2017 2018 2016 2017 towards office product. leased properties with more amenities in recorded significant decreases in total densely populated urban areas. 19% 43% investment dollar volume and, ultimately, Office sales dropped to $126 million in 64% 20% The office sector accounted for 43% of the first two quarters of 2018 from $328 1H 2018 fell behind the retail and multi-family 1H 2018 total sales dollar volume. Institutional Following the national trend of strong 25% 24% million in first-half 2017, a 62% decrease 17% 10% $8.2 performances in first-half 2018. $628 industrial investment, local industrial in total dollar volume. The scrapped and private investors were major BILLION 27% 12% MILLION 12% 32% purchasers of CBD office product, transaction dollar volume increased Investors saw the greatest opportunity sale of one of Cleveland’s core assets, primarily of highly occupied class A 41% year-over-year to almost $2 billion. 29% 21% in the multi-family sector during the first 55 Public Square, contributed to the 7% 38% buildings. Four of the top five sale With an increased volume of capital half of 2018, resulting in a staggering decline. Prospective purchaser K&D had transactions were located in the CBD. focused on securing industrial product, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY $239 million in transfers compared with planned to convert some of the office OFFICE INDUSTRIAL RETAIL MULTI-FAMILY The largest transaction in the first investors have been more inclined to $35.5 million in first-half 2017 – a 574% space to apartments but ultimately half was the sale of Prudential Plaza, acquire portfolios. Notable examples increase year-over-year. Due to high found the economics of the proposed which traded from the 601W Company include Blackstone’s acquisition of a Investment Volume demand and the perceived stability deal unworkable. The most notable office Investment Volume

to a joint-venture between Wanxiang 120-building, last-mile distribution $22 in the sector, the average cap rate transfer involved 925 Euclid Avenue, $1,400 America Real Estate and Sterling Bay portfolio from Cabot Properties for $1.8 $20 dropped from 7.2% to 6.7%. Several a largely vacant 1.4-msf downtown $1,200 for $680 million, or $309 psf. The two- billion with 19% – an allocation of $303.7 $18 prominent CBD assets traded, including building, which traded at $29 psf to local $16 $1,000

building, 2.2-msf East Loop property was million on 23 properties – located in the $ BILLIONS (US) the 407-unit Sphere building and 295- landlord Millennia Companies. $14 $ MILLIONS (US) 85% leased at the time of sale. Chicago market. unit Statler Arms complex, which sold $12 $800 $10 for $114,251 per unit and $142,938 per Multi-family investments recorded little $600 $8 unit, respectively. Both sellers were change in transaction volume when $6 institutional owners looking to liquidate $400 compared with first-half 2017. North $4 at the top of the market cycle. $200 Harbor Tower traded between Crescent $2 $0 $0 Heights and Waterton Residential for 2013 2014 2015 2016 2017 1H 2018 The retail sector followed suit with $202 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 $240 million, or $402,684 per unit. The million in first-half sales, up considerably OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2017

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Prudential Plaza Office $680,000,000 601W Companies Wanxiang America Real Estate Corp. / 1 Marketplace at Four Corners Retail $55,700,000 McGill Property Group Mark Rubin $309 psf Sterling Bay $106 psf

2 600 W. Chicago Avenue Office $510,000,000 Equity Commonwealth Sterling Bay 2 Sphere Multi-Family $46,500,000 Metropolitan Properties of America Marlin Spring $310 psf $114,251 per unit

3 One South Dearborn Office $360,250,000 Olen Commercial Starwood Capital Group 3 Statler Arms Apartments Multi-Family $42,200,000 LCOR Millennia Companies $435 psf $142,938 per unit

4 175 W. Jackson Boulevard Office $305,000,000 Extell Development Company Brookfield Asset Management 4 Richmond Park Multi-Family $41,400,000 BEK Developers 444 Richmond Park Apartments LLC $210 psf $56,201 per unit

5 North Harbor Tower Multi-Family $240,000,000 Crescent Heights Waterton Residential 5 925 Euclid Avenue Office $40,000,000 Hudson Holdings Millennia Companies $402,684 per unit $29 psf

28 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 29 Chicago Investment Market Cleveland Investment Market

Industrial investors keen about portfolios Select Avg. Cap Rates 1H 1H Investors target stabilized multi-family assets Select Avg. Cap Rates 1H 1H 2017 2018 2016 2017

Chicago’s first-half 2018 commercial new owner plans to invest $9 million in Office 8.0% 6.4% Overall first-half 2018 investment in from a modest $59 million in first-half Office 9.6% 9.4% real estate investment volume rose 44% upgrades. While assets within Chicago’s Cleveland’s commercial real estate 2017. In conjunction with this 240% across all asset classes year-over-year, city limits continued to attract high Industrial 6.6% 6.5% market registered a 23% increase increase in total volume, cap rates Industrial 8.3% 8.6% totaling $8.2 billion. This increase can prices, investors have increased their compared with the same period in compressed to an average 7.2% at mid- Retail 6.6% 6.4% Retail 8.2% 7.2% largely be attributed to the rise in sales appetite for quality suburban assets. 2017, while individual property sectors year 2018 from 8.2% at mid-year 2017. volume in the office sector, up 225% Retail investment lagged year-over- Multi-Family 6.5% 5.1% displayed volatility year-over-year. Office Meanwhile, industrial investment dollar Multi-Family 7.2% 6.7% to $3.5 billion in first-half 2018 from year, accounting for only 12% of overall and industrial markets had the greatest volume dropped 47% year-over-year, $1.1 billion at mid-2017. Foreign capital investment sales dollar volume. As amount of investment activity in 2017. primarily due to the lack of modern, represented 15% of total sales dollar the retail landscape restructures itself, However, due to diminished availability single-tenant net-leased properties volume with the majority allocated investors will continue to focus on well- Investment Activity 1H 1H of quality assets, both asset classes available on the market. Investment Activity 1H 1H 2017 2018 2016 2017 towards office product. leased properties with more amenities in recorded significant decreases in total densely populated urban areas. 19% 43% investment dollar volume and, ultimately, Office sales dropped to $126 million in 64% 20% The office sector accounted for 43% of the first two quarters of 2018 from $328 1H 2018 fell behind the retail and multi-family 1H 2018 total sales dollar volume. Institutional Following the national trend of strong 25% 24% million in first-half 2017, a 62% decrease 17% 10% $8.2 performances in first-half 2018. $628 industrial investment, local industrial in total dollar volume. The scrapped and private investors were major BILLION 27% 12% MILLION 12% 32% purchasers of CBD office product, transaction dollar volume increased Investors saw the greatest opportunity sale of one of Cleveland’s core assets, primarily of highly occupied class A 41% year-over-year to almost $2 billion. 29% 21% in the multi-family sector during the first 55 Public Square, contributed to the 7% 38% buildings. Four of the top five sale With an increased volume of capital half of 2018, resulting in a staggering decline. Prospective purchaser K&D had transactions were located in the CBD. focused on securing industrial product, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY $239 million in transfers compared with planned to convert some of the office OFFICE INDUSTRIAL RETAIL MULTI-FAMILY The largest transaction in the first investors have been more inclined to $35.5 million in first-half 2017 – a 574% space to apartments but ultimately half was the sale of Prudential Plaza, acquire portfolios. Notable examples increase year-over-year. Due to high found the economics of the proposed which traded from the 601W Company include Blackstone’s acquisition of a Investment Volume demand and the perceived stability deal unworkable. The most notable office Investment Volume

to a joint-venture between Wanxiang 120-building, last-mile distribution $22 in the sector, the average cap rate transfer involved 925 Euclid Avenue, $1,400 America Real Estate and Sterling Bay portfolio from Cabot Properties for $1.8 $20 dropped from 7.2% to 6.7%. Several a largely vacant 1.4-msf downtown $1,200 for $680 million, or $309 psf. The two- billion with 19% – an allocation of $303.7 $18 prominent CBD assets traded, including building, which traded at $29 psf to local $16 $1,000

building, 2.2-msf East Loop property was million on 23 properties – located in the $ BILLIONS (US) the 407-unit Sphere building and 295- landlord Millennia Companies. $14 $ MILLIONS (US) 85% leased at the time of sale. Chicago market. unit Statler Arms complex, which sold $12 $800 $10 for $114,251 per unit and $142,938 per Multi-family investments recorded little $600 $8 unit, respectively. Both sellers were change in transaction volume when $6 institutional owners looking to liquidate $400 compared with first-half 2017. North $4 at the top of the market cycle. $200 Harbor Tower traded between Crescent $2 $0 $0 Heights and Waterton Residential for 2013 2014 2015 2016 2017 1H 2018 The retail sector followed suit with $202 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 $240 million, or $402,684 per unit. The million in first-half sales, up considerably OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2017

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Prudential Plaza Office $680,000,000 601W Companies Wanxiang America Real Estate Corp. / 1 Marketplace at Four Corners Retail $55,700,000 McGill Property Group Mark Rubin $309 psf Sterling Bay $106 psf

2 600 W. Chicago Avenue Office $510,000,000 Equity Commonwealth Sterling Bay 2 Sphere Multi-Family $46,500,000 Metropolitan Properties of America Marlin Spring $310 psf $114,251 per unit

3 One South Dearborn Office $360,250,000 Olen Commercial Starwood Capital Group 3 Statler Arms Apartments Multi-Family $42,200,000 LCOR Millennia Companies $435 psf $142,938 per unit

4 175 W. Jackson Boulevard Office $305,000,000 Extell Development Company Brookfield Asset Management 4 Richmond Park Multi-Family $41,400,000 BEK Developers 444 Richmond Park Apartments LLC $210 psf $56,201 per unit

5 North Harbor Tower Multi-Family $240,000,000 Crescent Heights Waterton Residential 5 925 Euclid Avenue Office $40,000,000 Hudson Holdings Millennia Companies $402,684 per unit $29 psf

28 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 29 Columbus Investment Market Dallas Investment Market

Investment up in all sectors Select Avg. Cap Rates 1H 1H Strong cyclical growth to continue through 2018 Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Central Ohio’s business opportunities, for the first time in four quarters. Rental Office 7.2% 10.0% The Dallas-Fort Worth (DFW) the office sector, the Infomart building’s Office 6.8% 7.5% well-educated workforce and strategic rates continue to rise and class A space, commercial real estate investment record $800-million sale accounted for location continue to attract investment. in particular, is registering historic lows Industrial 7.4% 6.7% market produced a record total of almost half of the total sales volume, Industrial 7.5% 6.8% According to the U.S. Census Bureau, in vacancy and historic highs in rents. nearly $20 billion in transactions in while the multi-family sector recorded Retail 7.1% 7.1% Retail 6.7% 6.7% the state capital is the fourth-fastest- Further rental-rate growth is expected 2017. Solid absorption rates, strong two transactions worth more than $100 growing big city in the nation with a during the second half of 2018. After Multi-Family 7.3% 7.5% construction pipelines, steady vacancy million apiece. Multi-Family 6.0% 5.3% 1.79% year-over-year population increase. office investment in 2017 started slowly, and a booming economy have helped Industrial has increasingly become a At 3.5%, local unemployment is well $113 million worth of trades were DFW gain international recognition as preferred asset class for investors due to below the national and state averages recorded in first-half 2018 – exceeding one of the strongest and most stable the continued growth of online retail. – and Columbus continues to add new 2017’s full-year result and putting the Investment Activity 1H 1H markets available. Positive market Investment Activity 1H 1H 2017 2018 Multi-family properties will remain 2017 2018 jobs. As the economy continues to sector on pace for an annual result in fundamentals and international buzz attractive as single-family housing boom, consumer spending is expected 2018 more in line with the five-year 15% 8% have investors competing to own every 24% 22% remains scarce across the metro, leaving to increase by more than 3% in 2018. average. 1H 2018 type of commercial property in Dallas, 1H 2018 45% 43% more than 60% of the population to 18% 20% In the first half of the year, investment $1.5 increasing the amount of capital flowing $8.5 Average sale pricing and asking rental rent. Rental-rate growth for all assets has dollar volume was up year-over-year in BILLION 16% 15% into the market and pushing prices to BILLION 10% 12% slowed, but rates are still climbing – a all sectors as investors looked to make rates per square foot continue to rise, record highs. With $8.5 billion in sales 25% 34% situation that translates to continued 48% 47% acquisitions in advance of anticipated and vacancy dipped to 3.5% in first-half during first-half 2018 (nearly identical to demand for product. Investment activity further interest-rate increases. 2018. Retail investment dollar volume in first-half 2017), the market is on pace to OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY first-half 2018 doubled the first-half 2017 match the full-year 2016 and 2017 sales in DFW shows no signs of slowing and is The industrial sector remains strong total – and was already higher than the numbers. projected to remain strong through the with more than 5.5 msf of space full-year results for both 2016 and 2017. rest of 2018. under construction and nearly 27 Investment Volume Industrial and retail investment dollar Investment Volume

msf completed in 2018 to date. The $3 volumes surpassed their first-half 2017 $25 completions include new class A levels, posting 12% and 18% increases,

buildings for Sofidel America, Amazon respectively. The office and multi-family $20

and Goodyear. Industrial vacancy $ BILLIONS (US) $2 sectors were slightly behind their first- $ BILLIONS (US) declined to 3.9% at mid-year 2018 half 2017 results with respective totals $15 from 4.6% at year-end 2017. As a result, of $1.8 billion and almost $4 billion in first-half 2018 – but remained among $10 the sector attracted $648 million in $1 investment during first-half 2018 – up the strongest-performing markets in $5 103% year-over-year. the country. Despite the slight declines, the office and multi-family sectors $0 $0 In second-quarter 2018, the office leasing 2013 2014 2015 2016 2017 1H 2018 accounted for the largest transactions in 2013 2014 2015 2016 2017 1H 2018 market recorded positive net absorption OFFICE INDUSTRIAL RETAIL MULTI-FAMILY the metro during the first half of 2018. In OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 The Quarry Multi-Family $118,700,000 The Connor Group The Solomon Organization 1 Infomart Office $800,000,000 ASB Capital Management LLC Equinix $166 psf $500 psf

2 The Commons at Olentangy Multi-Family $111,645,000 Crawford Hoying GoldOller Real Estate Investments 2 Centrum Tower Office $134,564,815 Quadrant Investment Properties / Cawley Partners / Oaktree $106 psf $342 psf Angelo, Gordon & Co.

3 The Chelsea Multi-Family $36,800,000 The Wolff Company Independence Realty Trust, Inc. 3 Armstrong at Knox Multi-Family $108,913,643 Sarofim Realty Advisors MSD Capital / Retail Connection $122 psf $660,083 per unit

4 6606 Pontius Road Industrial $51,723,888 Cabot Properties, Inc. Blackstone Real Estate Income Trust, 4 Gramercy on the Park Multi-Family $99,474,529 CBRE Global Investors Waterton Associates $52 psf Inc. $185,934 per unit

5 Avalon Oaks Multi-Family $23,000,000 Treplus Communities Independence Realty Trust, Inc. 5 Logistics Center II Industrial $85,251,083 Hillwood Development Company Gramercy Property Trust, Inc. $99 psf $85 psf

30 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 31 Columbus Investment Market Dallas Investment Market

Investment up in all sectors Select Avg. Cap Rates 1H 1H Strong cyclical growth to continue through 2018 Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Central Ohio’s business opportunities, for the first time in four quarters. Rental Office 7.2% 10.0% The Dallas-Fort Worth (DFW) the office sector, the Infomart building’s Office 6.8% 7.5% well-educated workforce and strategic rates continue to rise and class A space, commercial real estate investment record $800-million sale accounted for location continue to attract investment. in particular, is registering historic lows Industrial 7.4% 6.7% market produced a record total of almost half of the total sales volume, Industrial 7.5% 6.8% According to the U.S. Census Bureau, in vacancy and historic highs in rents. nearly $20 billion in transactions in while the multi-family sector recorded Retail 7.1% 7.1% Retail 6.7% 6.7% the state capital is the fourth-fastest- Further rental-rate growth is expected 2017. Solid absorption rates, strong two transactions worth more than $100 growing big city in the nation with a during the second half of 2018. After Multi-Family 7.3% 7.5% construction pipelines, steady vacancy million apiece. Multi-Family 6.0% 5.3% 1.79% year-over-year population increase. office investment in 2017 started slowly, and a booming economy have helped Industrial has increasingly become a At 3.5%, local unemployment is well $113 million worth of trades were DFW gain international recognition as preferred asset class for investors due to below the national and state averages recorded in first-half 2018 – exceeding one of the strongest and most stable the continued growth of online retail. – and Columbus continues to add new 2017’s full-year result and putting the Investment Activity 1H 1H markets available. Positive market Investment Activity 1H 1H 2017 2018 Multi-family properties will remain 2017 2018 jobs. As the economy continues to sector on pace for an annual result in fundamentals and international buzz attractive as single-family housing boom, consumer spending is expected 2018 more in line with the five-year 15% 8% have investors competing to own every 24% 22% remains scarce across the metro, leaving to increase by more than 3% in 2018. average. 1H 2018 type of commercial property in Dallas, 1H 2018 45% 43% more than 60% of the population to 18% 20% In the first half of the year, investment $1.5 increasing the amount of capital flowing $8.5 Average sale pricing and asking rental rent. Rental-rate growth for all assets has dollar volume was up year-over-year in BILLION 16% 15% into the market and pushing prices to BILLION 10% 12% slowed, but rates are still climbing – a all sectors as investors looked to make rates per square foot continue to rise, record highs. With $8.5 billion in sales 25% 34% situation that translates to continued 48% 47% acquisitions in advance of anticipated and vacancy dipped to 3.5% in first-half during first-half 2018 (nearly identical to demand for product. Investment activity further interest-rate increases. 2018. Retail investment dollar volume in first-half 2017), the market is on pace to OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY first-half 2018 doubled the first-half 2017 match the full-year 2016 and 2017 sales in DFW shows no signs of slowing and is The industrial sector remains strong total – and was already higher than the numbers. projected to remain strong through the with more than 5.5 msf of space full-year results for both 2016 and 2017. rest of 2018. under construction and nearly 27 Investment Volume Industrial and retail investment dollar Investment Volume

msf completed in 2018 to date. The $3 volumes surpassed their first-half 2017 $25 completions include new class A levels, posting 12% and 18% increases,

buildings for Sofidel America, Amazon respectively. The office and multi-family $20

and Goodyear. Industrial vacancy $ BILLIONS (US) $2 sectors were slightly behind their first- $ BILLIONS (US) declined to 3.9% at mid-year 2018 half 2017 results with respective totals $15 from 4.6% at year-end 2017. As a result, of $1.8 billion and almost $4 billion in first-half 2018 – but remained among $10 the sector attracted $648 million in $1 investment during first-half 2018 – up the strongest-performing markets in $5 103% year-over-year. the country. Despite the slight declines, the office and multi-family sectors $0 $0 In second-quarter 2018, the office leasing 2013 2014 2015 2016 2017 1H 2018 accounted for the largest transactions in 2013 2014 2015 2016 2017 1H 2018 market recorded positive net absorption OFFICE INDUSTRIAL RETAIL MULTI-FAMILY the metro during the first half of 2018. In OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 The Quarry Multi-Family $118,700,000 The Connor Group The Solomon Organization 1 Infomart Office $800,000,000 ASB Capital Management LLC Equinix $166 psf $500 psf

2 The Commons at Olentangy Multi-Family $111,645,000 Crawford Hoying GoldOller Real Estate Investments 2 Centrum Tower Office $134,564,815 Quadrant Investment Properties / Cawley Partners / Oaktree $106 psf $342 psf Angelo, Gordon & Co.

3 The Chelsea Multi-Family $36,800,000 The Wolff Company Independence Realty Trust, Inc. 3 Armstrong at Knox Multi-Family $108,913,643 Sarofim Realty Advisors MSD Capital / Retail Connection $122 psf $660,083 per unit

4 6606 Pontius Road Industrial $51,723,888 Cabot Properties, Inc. Blackstone Real Estate Income Trust, 4 Gramercy on the Park Multi-Family $99,474,529 CBRE Global Investors Waterton Associates $52 psf Inc. $185,934 per unit

5 Avalon Oaks Multi-Family $23,000,000 Treplus Communities Independence Realty Trust, Inc. 5 Logistics Center II Industrial $85,251,083 Hillwood Development Company Gramercy Property Trust, Inc. $99 psf $85 psf

30 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 31 Denver Investment Market Detroit Investment Market

Dollar volume increases with office, retail and industrial prices Select Avg. Cap Rates 1H 1H Office and retail investors focus on downtown market Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Transaction volume in the Denver market large metros nationally. Smaller office Office 6.6% 6.7% Detroit’s commercial real estate decreased to $163 million in the first half Office 6.4% 7.8% totaled $4.4 billion in the first half of transactions are increasingly attractive investment dollar volume decreased of 2018 from $214 million at mid-year 2018, a 12% increase compared with the replacement properties, or uplegs, in Industrial 6.7% 6.2% 36% year-over-year to $900 million in the 2017. Industrial 7.0% 7.4% first half of 2017. A 25% year-over-year 1031 exchanges, as the sector offers more first half of 2018. The downtown market Retail 6.7% 6.5% Industrial volume also decreased, falling Retail 7.8% 7.5% decline in multi-family dollar volume value-add opportunities when compared remains a focal point for office and retail to $320 million in first-half 2018 from was offset by increases in other sectors with multi-family or industrial. Multi-Family 5.4% 5.4% investors as millennials and businesses Multi-Family 7.4% 6.9% $347 million a year earlier. The most – particularly retail, which registered a migrate to the CBD and the resurgence of significant industrial transaction was in 105% boost to $606 million. Denver’s Industrial product saw the largest the city continues. However, most of the Livonia, where 12025 Tech Center Drive multi-family market remains tight, and year-over-year drop in cap rates as the major transactions in the first half of the was purchased by TR Livonia Property II the lack of transactions is due to record average price per square foot increased Investment Activity 1H 1H year occurred in the suburbs. Investment Activity 1H 1H 2017 2018 LLC from Lexington Realty Trust for $21 2017 2018 prices driving apartment investors 23% between second-quarter 2017 million. to seek markets with higher returns. and second-quarter 2018, to $108 psf. 22% 30% Office investment dollar volume 34% 21% Denver’s status as a logistics hub at the decreased 61% year-over-year to $187 Nevertheless, multi-family is still the 1H 2018 1H 2018 intersection of Interstates 70 and 25, 11% 17% million in the first half of 2018. Notable The average cap rate for all asset classes 25% 36% largest sector by dollar volume. Capital $4.4 at mid-year 2018 was 7.4% – an increase $900 and the affluent consumer base in the BILLION 7% activity included the sale of Franklin MILLION 26% is also being diverted to the industrial 14% of 20 bps year-over-year. 26% sector with Denver’s healthy consumer metro area, will ensure that e-commerce Pointe Medical Center in Southfield. 59% 39% 15% 18% base supporting record rents and spending continues to drive demand for Griffin-American Healthcare REIT continued development thanks to high local industrial space into the foreseeable acquired the medical center from OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY demand for warehouse space. future. Universal Properties LLC for $16.2 million. Retail investment decreased 36% from Downtown office buildings accounted mid-year 2017. for the two largest sales in the first half Investment Volume Investment Volume The largest transaction in first-half of 2018. A 51% interest in 1801 California $12 $4 Street was sold to PNC Realty Advisors 2018 was the sale of Northville Woods by Brookfield Property Partners for $408 $10 Apartments in Northville. The multi- family building sold for $35.2 million $3

psf. Ramrock Real Estate purchased One $ BILLIONS (US) $8 $ BILLIONS (US) Belleview Station for $478 psf from Prime in January. It was bought by Andover West Development. First-half 2018 office $6 Real Estate Partners from Innsbrook LLC. $2 transaction dollar volume increased The second-largest transaction of the $4 first half of 2018 also involved a multi- 51% year-over-year, and office cap rates $1 increased 10 bps to 6.7% – the highest $2 family property as The Village Green level in the Denver market by sector. of Waterford was purchased for $29 $0 million by RESSCO from Village Green. $0 Cap rates remain low by historic local 2013 2014 2015 2016 2017 1H 2018 2013 2014 2015 2016 2017 1H 2018 Total multi-family investment volume standards but are more in line with other OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 1801 California Avenue Office $285,000,000 Brookfield Property Partners PNC Realty Advisors Inc. 1 Northville Woods Apartments Multi-Family $35,200,000 Innsbrook LLC Andover Real Estate Partners $408 psf $128,285 per unit

2 One Belleview Station Office $152,000,000 Prime West Development Ramrock Real Estate 2 Village Green of Waterford Multi-Family $29,000,000 Village Green RESSCO $478 psf $71,605 per unit

3 Southlands Town Center Retail $141,995,000 Northwood Investors M&J Wilkow Ltd. 3 Village on the Park Southgate Multi-Family $23,500,000 Village Green RESSCO $155 psf $65,642 per unit

4 Westend Multi-Family $128,700,000 Carmel Partners Investors RE Trust 4 12025 Tech Center Drive Industrial $21,000,000 Lexington Realty Trust TR Livonia Property II LLC $330,000 per unit $117 psf

5 Pearl at DTC Multi-Family $122,750,000 Carmel Partners Goldman Sachs 5 Franklin Pointe Medical Center Office $16,200,000 Universal Properties LLC Griffin-American Healthcare REIT $300,858 per unit $191 psf

32 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 33 Denver Investment Market Detroit Investment Market

Dollar volume increases with office, retail and industrial prices Select Avg. Cap Rates 1H 1H Office and retail investors focus on downtown market Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Transaction volume in the Denver market large metros nationally. Smaller office Office 6.6% 6.7% Detroit’s commercial real estate decreased to $163 million in the first half Office 6.4% 7.8% totaled $4.4 billion in the first half of transactions are increasingly attractive investment dollar volume decreased of 2018 from $214 million at mid-year 2018, a 12% increase compared with the replacement properties, or uplegs, in Industrial 6.7% 6.2% 36% year-over-year to $900 million in the 2017. Industrial 7.0% 7.4% first half of 2017. A 25% year-over-year 1031 exchanges, as the sector offers more first half of 2018. The downtown market Retail 6.7% 6.5% Industrial volume also decreased, falling Retail 7.8% 7.5% decline in multi-family dollar volume value-add opportunities when compared remains a focal point for office and retail to $320 million in first-half 2018 from was offset by increases in other sectors with multi-family or industrial. Multi-Family 5.4% 5.4% investors as millennials and businesses Multi-Family 7.4% 6.9% $347 million a year earlier. The most – particularly retail, which registered a migrate to the CBD and the resurgence of significant industrial transaction was in 105% boost to $606 million. Denver’s Industrial product saw the largest the city continues. However, most of the Livonia, where 12025 Tech Center Drive multi-family market remains tight, and year-over-year drop in cap rates as the major transactions in the first half of the was purchased by TR Livonia Property II the lack of transactions is due to record average price per square foot increased Investment Activity 1H 1H year occurred in the suburbs. Investment Activity 1H 1H 2017 2018 LLC from Lexington Realty Trust for $21 2017 2018 prices driving apartment investors 23% between second-quarter 2017 million. to seek markets with higher returns. and second-quarter 2018, to $108 psf. 22% 30% Office investment dollar volume 34% 21% Denver’s status as a logistics hub at the decreased 61% year-over-year to $187 Nevertheless, multi-family is still the 1H 2018 1H 2018 intersection of Interstates 70 and 25, 11% 17% million in the first half of 2018. Notable The average cap rate for all asset classes 25% 36% largest sector by dollar volume. Capital $4.4 at mid-year 2018 was 7.4% – an increase $900 and the affluent consumer base in the BILLION 7% activity included the sale of Franklin MILLION 26% is also being diverted to the industrial 14% of 20 bps year-over-year. 26% sector with Denver’s healthy consumer metro area, will ensure that e-commerce Pointe Medical Center in Southfield. 59% 39% 15% 18% base supporting record rents and spending continues to drive demand for Griffin-American Healthcare REIT continued development thanks to high local industrial space into the foreseeable acquired the medical center from OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY demand for warehouse space. future. Universal Properties LLC for $16.2 million. Retail investment decreased 36% from Downtown office buildings accounted mid-year 2017. for the two largest sales in the first half Investment Volume Investment Volume The largest transaction in first-half of 2018. A 51% interest in 1801 California $12 $4 Street was sold to PNC Realty Advisors 2018 was the sale of Northville Woods by Brookfield Property Partners for $408 $10 Apartments in Northville. The multi- family building sold for $35.2 million $3

psf. Ramrock Real Estate purchased One $ BILLIONS (US) $8 $ BILLIONS (US) Belleview Station for $478 psf from Prime in January. It was bought by Andover West Development. First-half 2018 office $6 Real Estate Partners from Innsbrook LLC. $2 transaction dollar volume increased The second-largest transaction of the $4 first half of 2018 also involved a multi- 51% year-over-year, and office cap rates $1 increased 10 bps to 6.7% – the highest $2 family property as The Village Green level in the Denver market by sector. of Waterford was purchased for $29 $0 million by RESSCO from Village Green. $0 Cap rates remain low by historic local 2013 2014 2015 2016 2017 1H 2018 2013 2014 2015 2016 2017 1H 2018 Total multi-family investment volume standards but are more in line with other OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 1801 California Avenue Office $285,000,000 Brookfield Property Partners PNC Realty Advisors Inc. 1 Northville Woods Apartments Multi-Family $35,200,000 Innsbrook LLC Andover Real Estate Partners $408 psf $128,285 per unit

2 One Belleview Station Office $152,000,000 Prime West Development Ramrock Real Estate 2 Village Green of Waterford Multi-Family $29,000,000 Village Green RESSCO $478 psf $71,605 per unit

3 Southlands Town Center Retail $141,995,000 Northwood Investors M&J Wilkow Ltd. 3 Village on the Park Southgate Multi-Family $23,500,000 Village Green RESSCO $155 psf $65,642 per unit

4 Westend Multi-Family $128,700,000 Carmel Partners Investors RE Trust 4 12025 Tech Center Drive Industrial $21,000,000 Lexington Realty Trust TR Livonia Property II LLC $330,000 per unit $117 psf

5 Pearl at DTC Multi-Family $122,750,000 Carmel Partners Goldman Sachs 5 Franklin Pointe Medical Center Office $16,200,000 Universal Properties LLC Griffin-American Healthcare REIT $300,858 per unit $191 psf

32 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 33 Fairfield County Investment Market Fort Lauderdale Investment Market

Bucking the trend, institutional investment on the rise Select Avg. Cap Rates 1H 1H Investors seizing opportunity in suburban submarkets Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

First-half 2018 total sales volume in falling 66% year-over-year. The overall Office 9.0% 8.8% Investment sales activity lagged the two largest transactions with the Office 6.7% 6.6% Fairfield County, CT was $420 million, up average cap rate of 7.6% remained fairly during the first half of 2018 with total $88.5-million sale of Promenade at 36% year-over-year. All property sectors flat at mid-year 2018, posting a modest Industrial 7.5% 7.5% transaction volume recorded at $1.4 Wyndham Lakes, a 332-unit multi-family Industrial 6.6% 5.4% performed well relative to first-half 2017 10-bps increase since mid-year 2017. billion, a 26% decrease from the $1.9 community purchased by AEW Capital Retail 7.4% 7.8% Retail 6.6% 6.9% – except the industrial property market, billion recorded during the first half of Management; and The Morris Companies’ Looking ahead, Fairfield County’s with dollar volume down 71%. Multi-Family 6.2% 6.5% 2017. Investors are continuing to take a $72.7-million purchase of Marquis Coral Multi-Family 5.5% 5.4% total sales dollar volume in 2018 may wait-and-see approach in response to the Springs. Both trades signal investor Strong office sales volume ($216 million) very well exceed the full-year 2017 growing concern over rising interest rates confidence in suburban submarkets as was driven by the landmark sale of total. Fairfield residents’ high average and international trade relations. Despite the availability of developable land near Shippan Landing in Stamford. This deal household income and vibrant spending Investment Activity 1H 1H recent uncertainty, deal volume remains the urban core becomes more scarce. Investment Activity 1H 1H 2017 2018 2017 2018 boosted first-half 2018 overall sales dollar patterns will whet buyer appetites for strong as investors look for value-add volume to more than three times the retail properties, particularly those 24% 51% opportunities in high-growth submarkets Industrial sales volume during the first 14% 23% amount recorded at mid-year 2017. Multi- of out-of-state investors looking for half of 2018 increased by a solid 10% 1H 2018 outside of the city’s urban core. 1H 2018 family and retail dollar volumes also grew higher yields. In the office sector, 29% 6% compared with the first half of 2017. The 13% 20% $420 $1.4 institutional investment in well-located Economic fundamentals remained strong rise of e-commerce is fueling robust – by 12% and 86%, respectively. MILLION 3% 11% BILLION 33% 18% properties with extended lease terms, in Broward County as the unemployment demand for industrial assets. Land For many years, private investors have and discounted prices on properties 44% 32% rate declined to 3.7% in June 2018 – a constraints, paired with a lack of available 39% 40% accounted for the majority of total that present excellent redevelopment 30-bps drop year-over-year. In the trailing industrial product, have pushed rental sales dollar volume in Fairfield County. or adaptive-reuse opportunities, will OFFICE INDUSTRIAL RETAIL MULTI-FAMILY 12 months ending with June 2018, non- rates to new highs while vacancy rates OFFICE INDUSTRIAL RETAIL MULTI-FAMILY However, institutional investors increased continue. Similarly, strong rental demand agricultural employment increased by remain low. The largest industrial trade their contributions in first half-2018 will drive buyer interest in multi-family 14,100 jobs. Interest-rate hikes have not in first-half 2018 was the $67-million sale as both the office and retail sectors properties, most notably in the Stamford Investment Volume yet had a significant impact on cap rates; of the SuperValu Distribution Center in Investment Volume recorded rebounds in institutional and Norwalk markets. $1,200 however, it is likely that there will be Pompano. The 721,948-sf distribution $6 investment. This institutional investment another increase later this year, leading to facility was part of a portfolio acquired upswing included the sale of the Shippan $1,000 a slight rise in cap rates. by the Fortress Investment Group. $5 Landing office complex in Stamford to $ BILLIONS (US) $ BILLIONS (US) $ MILLIONS (US) $800 $4 Philadelphia-based Rubenstein Partners The multi-family sector led the way in

for $151 million – the largest transaction $600 investment sales volume, accounting $3 in the first half of 2018. for 40% of overall dollar volume in $400 first-half 2018. Investors continue $2 In terms of average price per square $200 to target suburban markets, where $1 foot, the office and multi-family sectors new development has been largely experienced increases, while industrial $0 $0 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 underserved, for mixed-use and multi- 2013 2014 2015 2016 2017 1H 2018 properties recorded the steepest decline, family projects. Coral Springs produced OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Shippan Landing Office $151,000,000 Angelo, Gordon & Co. / George Rubenstein Partners 1 Promenade at Wyndham Lakes Multi-Family $88,500,000 Starwood Capital AEW Capital $196 psf Comfort & Sons $266,566 per unit

2 1 Kennedy Flats Multi-Family $86,250,000 Greystar Management / Eagle Realty Lowe Enterprises / Global 2 Marquis Coral Springs Multi-Family $72,700,000 Bainbridge Companies The Morris Companies Securitization Services $290,719 per unit

3 1385-1391 Post Road Retail $28,000,000 Forstone Capital / Caprok Capital Asana Partners 3 SuperValu Distribution Center Industrial $67,410,000 SuperValu Inc. Fortress Investment Group $816 psf $86 psf

4 Pine Hill Apartments Multi-Family $25,500,000 Pine Hill Apartments LLC K5 Equities 4 Centro at Davie Multi-Family $63,947,124 Goldman Sachs / Greystar / Ivanhoé Carroll Organization / PGIM Real Estate $157,085 per unit Cambridge

5 One Gorham Island Office $23,250,000 Maplewood Gorham Island LLC Maplewood Healthcare 5 Sawgrass Lake Center Office $57,400,000 Long Wharf Real Estate Partners American Realty Advisors $528 psf $240 psf

34 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 35 Fairfield County Investment Market Fort Lauderdale Investment Market

Bucking the trend, institutional investment on the rise Select Avg. Cap Rates 1H 1H Investors seizing opportunity in suburban submarkets Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

First-half 2018 total sales volume in falling 66% year-over-year. The overall Office 9.0% 8.8% Investment sales activity lagged the two largest transactions with the Office 6.7% 6.6% Fairfield County, CT was $420 million, up average cap rate of 7.6% remained fairly during the first half of 2018 with total $88.5-million sale of Promenade at 36% year-over-year. All property sectors flat at mid-year 2018, posting a modest Industrial 7.5% 7.5% transaction volume recorded at $1.4 Wyndham Lakes, a 332-unit multi-family Industrial 6.6% 5.4% performed well relative to first-half 2017 10-bps increase since mid-year 2017. billion, a 26% decrease from the $1.9 community purchased by AEW Capital Retail 7.4% 7.8% Retail 6.6% 6.9% – except the industrial property market, billion recorded during the first half of Management; and The Morris Companies’ Looking ahead, Fairfield County’s with dollar volume down 71%. Multi-Family 6.2% 6.5% 2017. Investors are continuing to take a $72.7-million purchase of Marquis Coral Multi-Family 5.5% 5.4% total sales dollar volume in 2018 may wait-and-see approach in response to the Springs. Both trades signal investor Strong office sales volume ($216 million) very well exceed the full-year 2017 growing concern over rising interest rates confidence in suburban submarkets as was driven by the landmark sale of total. Fairfield residents’ high average and international trade relations. Despite the availability of developable land near Shippan Landing in Stamford. This deal household income and vibrant spending Investment Activity 1H 1H recent uncertainty, deal volume remains the urban core becomes more scarce. Investment Activity 1H 1H 2017 2018 2017 2018 boosted first-half 2018 overall sales dollar patterns will whet buyer appetites for strong as investors look for value-add volume to more than three times the retail properties, particularly those 24% 51% opportunities in high-growth submarkets Industrial sales volume during the first 14% 23% amount recorded at mid-year 2017. Multi- of out-of-state investors looking for half of 2018 increased by a solid 10% 1H 2018 outside of the city’s urban core. 1H 2018 family and retail dollar volumes also grew higher yields. In the office sector, 29% 6% compared with the first half of 2017. The 13% 20% $420 $1.4 institutional investment in well-located Economic fundamentals remained strong rise of e-commerce is fueling robust – by 12% and 86%, respectively. MILLION 3% 11% BILLION 33% 18% properties with extended lease terms, in Broward County as the unemployment demand for industrial assets. Land For many years, private investors have and discounted prices on properties 44% 32% rate declined to 3.7% in June 2018 – a constraints, paired with a lack of available 39% 40% accounted for the majority of total that present excellent redevelopment 30-bps drop year-over-year. In the trailing industrial product, have pushed rental sales dollar volume in Fairfield County. or adaptive-reuse opportunities, will OFFICE INDUSTRIAL RETAIL MULTI-FAMILY 12 months ending with June 2018, non- rates to new highs while vacancy rates OFFICE INDUSTRIAL RETAIL MULTI-FAMILY However, institutional investors increased continue. Similarly, strong rental demand agricultural employment increased by remain low. The largest industrial trade their contributions in first half-2018 will drive buyer interest in multi-family 14,100 jobs. Interest-rate hikes have not in first-half 2018 was the $67-million sale as both the office and retail sectors properties, most notably in the Stamford Investment Volume yet had a significant impact on cap rates; of the SuperValu Distribution Center in Investment Volume recorded rebounds in institutional and Norwalk markets. $1,200 however, it is likely that there will be Pompano. The 721,948-sf distribution $6 investment. This institutional investment another increase later this year, leading to facility was part of a portfolio acquired upswing included the sale of the Shippan $1,000 a slight rise in cap rates. by the Fortress Investment Group. $5 Landing office complex in Stamford to $ BILLIONS (US) $ BILLIONS (US) $ MILLIONS (US) $800 $4 Philadelphia-based Rubenstein Partners The multi-family sector led the way in

for $151 million – the largest transaction $600 investment sales volume, accounting $3 in the first half of 2018. for 40% of overall dollar volume in $400 first-half 2018. Investors continue $2 In terms of average price per square $200 to target suburban markets, where $1 foot, the office and multi-family sectors new development has been largely experienced increases, while industrial $0 $0 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 underserved, for mixed-use and multi- 2013 2014 2015 2016 2017 1H 2018 properties recorded the steepest decline, family projects. Coral Springs produced OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Shippan Landing Office $151,000,000 Angelo, Gordon & Co. / George Rubenstein Partners 1 Promenade at Wyndham Lakes Multi-Family $88,500,000 Starwood Capital AEW Capital $196 psf Comfort & Sons $266,566 per unit

2 1 Kennedy Flats Multi-Family $86,250,000 Greystar Management / Eagle Realty Lowe Enterprises / Global 2 Marquis Coral Springs Multi-Family $72,700,000 Bainbridge Companies The Morris Companies Securitization Services $290,719 per unit

3 1385-1391 Post Road Retail $28,000,000 Forstone Capital / Caprok Capital Asana Partners 3 SuperValu Distribution Center Industrial $67,410,000 SuperValu Inc. Fortress Investment Group $816 psf $86 psf

4 Pine Hill Apartments Multi-Family $25,500,000 Pine Hill Apartments LLC K5 Equities 4 Centro at Davie Multi-Family $63,947,124 Goldman Sachs / Greystar / Ivanhoé Carroll Organization / PGIM Real Estate $157,085 per unit Cambridge

5 One Gorham Island Office $23,250,000 Maplewood Gorham Island LLC Maplewood Healthcare 5 Sawgrass Lake Center Office $57,400,000 Long Wharf Real Estate Partners American Realty Advisors $528 psf $240 psf

34 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 35 Hartford Investment Market Houston Investment Market

Downtown development wave helps spur investment Select Avg. Cap Rates 1H 1H Multi-family sales keep overall investments on track Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

The Greater Hartford investment sales has always been well-positioned to Office 7.5% 7.5% Houston is experiencing healthy volume in the sector nearly tripled Office 7.5% 8.0% market is on pace for another robust meet the needs of industrial users who commercial real estate investment thanks year-over-year. Among the significant year thanks to strong industrial and have supply-chain-oriented operations. Industrial 8.5% 8.3% to the continued recovery of the energy properties sold were the CBD’s Houston Industrial 7.3% 6.6% multi-family fundamentals. The market Investment in the industrial sector industry. Reported sales during the Center, which comprises a four-building Retail 5.7% 6.0% Retail 7.2% 7.0% was off to a slower start in the first half never surpassed $100 million on an first half of 2018 were strong – only 6% complex totaling 4.2 msf; Energy Center of 2018 in terms of total investment annual basis before 2016. In 2016 and Multi-Family 5.9% 6.0% behind the first half of 2017, which turned IV and Helios Plaza, both class A office Multi-Family 6.2% 5.6% volume when compared with the first 2017, industrial dollar volume was out to be a record year. The investment properties in the Energy Corridor; and half of 2017, although the number of greater than $190 million in each year. market got off to a fast start in 2018 with several large retail properties including trades increased year-over-year. The The sector’s dollar volume is expected 57% of total investments occurring in the LaCenterra at Cinco Ranch, a 413,000-sf market recorded a 10-year high in terms to remain elevated through 2018 with Investment Activity 1H 1H first quarter, including the largest office property in west Houston. Investment Activity 1H 1H 2017 2018 2017 2018 of full-year investment dollar volume in several large sales slated to close in the sale of the first half: Marathon Oil Tower, Consistent sales growth is expected to 2017 with approximately $683 million second half of the year. 14% 6% a 1.1-msf property in the Galleria area. 35% 21% continue even though the overall sales of transactions completed. With $241 1H 2018 1H 2018 A slight year-over-year increase in retail 34% 34% Multi-family was the lone asset type pace has slowed slightly in 2018. Houston 16% 13% million transacting during the first $241 $5.5 investment took place during the first to show higher sales at mid-year 2018 has established itself as a gateway half of 2018, overall investment is not MILLION 3% 6% BILLION 14% 13% city because of its global presence expected to exceed 2017 levels, but the half of 2018 thanks to the area’s growing compared with mid-year 2017 with 49% 54% as the center for the world’s energy 35% 53% market is anticipated to remain active. residential sector. Driven by downtown more than 10,000 additional units sold Hartford, where more than 950 in first-half 2018. Retail also reported an industry. The area’s steady growth in Office investment was minimal in the apartment units have been added since OFFICE INDUSTRIAL RETAIL MULTI-FAMILY increase in the number of property sales both employment and population, in OFFICE INDUSTRIAL RETAIL MULTI-FAMILY first half of 2018 with only $14 million in 2015, the city is beginning to experience closed, although not in investment dollar conjunction with strong trade through sales – down from $43 million in first- a live-work-play lifestyle. In line with volume, while fewer office and industrial the Port of Houston, is keeping the half 2017 – due to the limited number the first half of 2017, multi-family sales Investment Volume properties changed hands in first-half investment market on track. Investment Volume

of assets available in the market. are driving total investment volume for $800 2018 compared with first-half 2017. $16 Given the scarcity of deals, upward Greater Hartford with more than $130 $700 $14 pressure is being placed on sale prices million in deals transacted during first- The full-year 2017 investment total was $600 the highest level recorded during the $12

– particularly in downtown Hartford, half 2018. $ BILLIONS (US) $ BILLIONS (US) $ MILLIONS (US) where urban migration trends and a $500 last five years, surpassing the five-year $10 newly improved public-transit system $400 average by 14.3%. The blockbuster year $8 recorded a 40% jump in sales from are luring more investors and office $300 $6 2016 when investor interest in office users to the region. $200 $4 and industrial product was low and few $100 $2 Centrally located between the major significant deals were completed. Several $0 $0 economic hubs of Boston and New 20132013 20142014 20152015 20162016 20172017 1H 2018 large office transactions closed during 2013 2014 2015 2016 2017 1H 2018 York City, the Greater Hartford market the second half of 2017 as investment OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 1339 Tolland Turnpike Industrial $70,000,000 Winstanley Enterprises LLC JCPenney Company, Inc. 1 Marathon Oil Tower Office $176,500,000 CBRE Global Investors Ltd. M-M Properties / Baupost Group LLC $36 psf $147 psf

2 100 Town Ridge Road Multi-Family $31,500,000 Hamilton Zanze & Company Fairfield Residential 2 Loop Central I, II, III Office $72,982,000 TIER REIT Griffin Partners / Wheelock Street (Part of Multi-Property Sale) $111,250 per unit $127 psf Capital

3 100 Town Brooke (Part of Multi-Family $31,150,000 Hamilton Zanze & Company Fairfield Residential 3 Vue Kingsland Multi-Family $64,400,000 Davis Development Cortland Partners Multi-Property Sale) $132,352 per unit $151,887 per unit

4 627 Brighton Park Way Multi-Family $26,850,000 Paredim Partners Rohdie Group 4 Grand at LaCenterra Multi-Family $58,265,000 Martin Fein Interests Carlyle Group / Roscoe Properties $203,409 per unit $215,000 per unit

5 162-182 Homestead Street Multi-Family $11,520,000 Up Realty LLC Estate of Raymond F Damato 5 Vista on Gessner Multi-Family $51,000,000 John Quinlan Dalcor Companies (Part of Portfolio) $720,000 per unit $63,354 per unit

36 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 37 Hartford Investment Market Houston Investment Market

Downtown development wave helps spur investment Select Avg. Cap Rates 1H 1H Multi-family sales keep overall investments on track Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

The Greater Hartford investment sales has always been well-positioned to Office 7.5% 7.5% Houston is experiencing healthy volume in the sector nearly tripled Office 7.5% 8.0% market is on pace for another robust meet the needs of industrial users who commercial real estate investment thanks year-over-year. Among the significant year thanks to strong industrial and have supply-chain-oriented operations. Industrial 8.5% 8.3% to the continued recovery of the energy properties sold were the CBD’s Houston Industrial 7.3% 6.6% multi-family fundamentals. The market Investment in the industrial sector industry. Reported sales during the Center, which comprises a four-building Retail 5.7% 6.0% Retail 7.2% 7.0% was off to a slower start in the first half never surpassed $100 million on an first half of 2018 were strong – only 6% complex totaling 4.2 msf; Energy Center of 2018 in terms of total investment annual basis before 2016. In 2016 and Multi-Family 5.9% 6.0% behind the first half of 2017, which turned IV and Helios Plaza, both class A office Multi-Family 6.2% 5.6% volume when compared with the first 2017, industrial dollar volume was out to be a record year. The investment properties in the Energy Corridor; and half of 2017, although the number of greater than $190 million in each year. market got off to a fast start in 2018 with several large retail properties including trades increased year-over-year. The The sector’s dollar volume is expected 57% of total investments occurring in the LaCenterra at Cinco Ranch, a 413,000-sf market recorded a 10-year high in terms to remain elevated through 2018 with Investment Activity 1H 1H first quarter, including the largest office property in west Houston. Investment Activity 1H 1H 2017 2018 2017 2018 of full-year investment dollar volume in several large sales slated to close in the sale of the first half: Marathon Oil Tower, Consistent sales growth is expected to 2017 with approximately $683 million second half of the year. 14% 6% a 1.1-msf property in the Galleria area. 35% 21% continue even though the overall sales of transactions completed. With $241 1H 2018 1H 2018 A slight year-over-year increase in retail 34% 34% Multi-family was the lone asset type pace has slowed slightly in 2018. Houston 16% 13% million transacting during the first $241 $5.5 investment took place during the first to show higher sales at mid-year 2018 has established itself as a gateway half of 2018, overall investment is not MILLION 3% 6% BILLION 14% 13% city because of its global presence expected to exceed 2017 levels, but the half of 2018 thanks to the area’s growing compared with mid-year 2017 with 49% 54% as the center for the world’s energy 35% 53% market is anticipated to remain active. residential sector. Driven by downtown more than 10,000 additional units sold Hartford, where more than 950 in first-half 2018. Retail also reported an industry. The area’s steady growth in Office investment was minimal in the apartment units have been added since OFFICE INDUSTRIAL RETAIL MULTI-FAMILY increase in the number of property sales both employment and population, in OFFICE INDUSTRIAL RETAIL MULTI-FAMILY first half of 2018 with only $14 million in 2015, the city is beginning to experience closed, although not in investment dollar conjunction with strong trade through sales – down from $43 million in first- a live-work-play lifestyle. In line with volume, while fewer office and industrial the Port of Houston, is keeping the half 2017 – due to the limited number the first half of 2017, multi-family sales Investment Volume properties changed hands in first-half investment market on track. Investment Volume

of assets available in the market. are driving total investment volume for $800 2018 compared with first-half 2017. $16 Given the scarcity of deals, upward Greater Hartford with more than $130 $700 $14 pressure is being placed on sale prices million in deals transacted during first- The full-year 2017 investment total was $600 the highest level recorded during the $12

– particularly in downtown Hartford, half 2018. $ BILLIONS (US) $ BILLIONS (US) $ MILLIONS (US) where urban migration trends and a $500 last five years, surpassing the five-year $10 newly improved public-transit system $400 average by 14.3%. The blockbuster year $8 recorded a 40% jump in sales from are luring more investors and office $300 $6 2016 when investor interest in office users to the region. $200 $4 and industrial product was low and few $100 $2 Centrally located between the major significant deals were completed. Several $0 $0 economic hubs of Boston and New 20132013 20142014 20152015 20162016 20172017 1H 2018 large office transactions closed during 2013 2014 2015 2016 2017 1H 2018 York City, the Greater Hartford market the second half of 2017 as investment OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 1339 Tolland Turnpike Industrial $70,000,000 Winstanley Enterprises LLC JCPenney Company, Inc. 1 Marathon Oil Tower Office $176,500,000 CBRE Global Investors Ltd. M-M Properties / Baupost Group LLC $36 psf $147 psf

2 100 Town Ridge Road Multi-Family $31,500,000 Hamilton Zanze & Company Fairfield Residential 2 Loop Central I, II, III Office $72,982,000 TIER REIT Griffin Partners / Wheelock Street (Part of Multi-Property Sale) $111,250 per unit $127 psf Capital

3 100 Town Brooke (Part of Multi-Family $31,150,000 Hamilton Zanze & Company Fairfield Residential 3 Vue Kingsland Multi-Family $64,400,000 Davis Development Cortland Partners Multi-Property Sale) $132,352 per unit $151,887 per unit

4 627 Brighton Park Way Multi-Family $26,850,000 Paredim Partners Rohdie Group 4 Grand at LaCenterra Multi-Family $58,265,000 Martin Fein Interests Carlyle Group / Roscoe Properties $203,409 per unit $215,000 per unit

5 162-182 Homestead Street Multi-Family $11,520,000 Up Realty LLC Estate of Raymond F Damato 5 Vista on Gessner Multi-Family $51,000,000 John Quinlan Dalcor Companies (Part of Portfolio) $720,000 per unit $63,354 per unit

36 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 37 Indianapolis Investment Market Jacksonville Investment Market

Investment activity slightly outpacing historical norms Select Avg. Cap Rates 1H 1H Multi-family and industrial sectors earn most transaction volume Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Investment activity in all property market, as demonstrated by its two- Office 7.6% 7.6% Investors largely perceive Jacksonville investors continue to view the metro Office 7.6% 7.6% sectors continued to be steady in the property acquisition from Bluestone as a tertiary market that does not area as a more affordable alternative to first half of 2018 with dollar volume up Properties totaling $70 million with an Industrial 5.5% 6.9% provide the same scale of opportunity other primary and secondary markets Industrial 7.0% 6.8% slightly year-over-year. The industrial average per-unit price of $112,000. as larger cities. However, investors in the U.S. Southeast, where the bid-ask Retail 7.4% 7.2% Retail 7.0% 6.9% sector led the way with a $72.8-million are still eager to place capital in spread is too high and competition is Office investment was down 30% (29%) increase in total sales volume Multi-Family 6.2% 6.0% the market. Companies considering too fierce. In fact, local year-over-year Multi-Family 6.9% 5.9% compared with first-half 2017. A key year-over-year in the first half of 2018. relocation continue to view the area industrial transaction volume for the transaction in this sector was Browning This decline was not alarming after positively, noting its overall quality of 12-month period ending in June 2018 Investments’ disposition of its 600,000-sf several high-profile CBD buildings and life, healthy job growth and limited new grew by 341% as $479 million in assets building located at 3870 Ronald Reagan suburban office parks traded in recent Investment Activity 1H 1H construction. There is a lot of money traded. Investment Activity 1H 1H 2017 2018 2017 2018 Parkway. years, skewing the results. The most chasing deals in Florida right now, and notable office transaction included 37% 25% Jacksonville is becoming increasingly The largest sale during first-half 2018 15% 5% Retail investment started to show some the quick exit of the Hearn Company was Farallon Capital Partners’ purchase 1H 2018 attractive to investors who cannot 1H 2018 signs of life as the total volume was up from its 2016 acquisition of BMO Plaza, 20% 25% of Flagler Center, a 12-building, 1.4-msf 9% 43% $1.3 achieve desired yields in higher-profile $1.1 24% year-over-year, but this property which was sold to Redico out of Ann BILLION 12% 14% markets such as Miami, Orlando and industrial portfolio, for $136 million – BILLION 18% 12% type remains the smallest sector by Arbor, MI after an 18-month hold. Office Tampa. or $97 psf. The portfolio was sold by total sales dollar volume among the capitalization rates continued to hover 31% 36% a joint-venture between Investcorp 58% 40% four major property types. Total retail at an average of 7.6% – on par with mid- Jacksonville’s investment sales dollar and Crocker Partners. Other significant investment volume was up $36 million year 2017. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY volume during the first half of 2018 was transactions included Gramercy’s OFFICE INDUSTRIAL RETAIL MULTI-FAMILY compared with first-half 2017. At the $1.1 billion – a 6% decrease year-over- purchase of an Amazon fulfillment current pace, the retail sector is poised year. In the first half, 54% of transaction center at 13333 103rd Street for for its best full-year result since 2014. Investment Volume volume involved private capital with $95.4 million, or $94 psf, and Colony Investment Volume

$3 institutional investors accounting for NorthStar’s acquisition of Pattillo $3 Multi-family assets offered the lowest 28% and publicly listed/REIT buyers Industrial’s Westside Industrial Park for average going-in cap rate, at 6%, as of comprising 16%. More than 80% of $77.5 million. mid-year 2018. This figure represented

$ BILLIONS (US) $2 the total square footage sold was in $ BILLIONS (US) $2 a decrease of 20 bps year-over-year. multi-family and industrial, two asset Total multi-family sales volume is on classes that have consistently exhibited pace to reach $1 billion for the calendar $1 declining vacancy rates, strong demand, $1 year. The sector’s first-half 2018 sales and compressing cap rates. volume was up $88 million, or 22%, compared with the same period in 2018. Local industrial investment activity has $0 $0 Local investment firm Barrett & Stokely 2013 2014 2015 2016 2017 1H 2018 gained significant ground in 2018 as 2013 2014 2015 2016 2017 1H 2018 remains bullish on the apartment Amazon grows its regional presence and OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 BMO Plaza Office $65,000,000 The Hearn Company REDICO 1 Flagler Center Industrial $136,000,000 Investcorp / Crocker Partners Farallon Capital Partners $146 psf $97 psf

2 3870 S. Ronald Reagan Parkway Industrial $39,300,000 Browning Investments Granite REIT 2 Amazon Fulfillment Center - Industrial $95,456,810 Hillwood Gramercy $66 psf 13333 103rd Street $94 psf

3 Overlook at Valley Ridge Multi-Family $36,000,000 Bluestone Properties Barrett & Stokely 3 Westside Industrial Park Industrial $77,500,000 Pattillo Industrial Colony NorthStar $111,111 per unit $60 psf

4 Summerwood on Towne Line Multi-Family $34,000,000 Bluestone Properties Barrett & Stokely 4 Sola Apartments Multi-Family $59,616,667 Flournoy Companies Beachwold Residential LLC $113,333 per unit $180,657 per unit

5 Double Creek Flats Multi-Family $31,500,000 Flaherty & Collins Properties Steadfast Income REIT 5 Lux at Sorrel Multi-Family $48,495,000 Davis Development Preferred Apartment Communities $131,250 per unit $183,000 per unit

38 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 39 Indianapolis Investment Market Jacksonville Investment Market

Investment activity slightly outpacing historical norms Select Avg. Cap Rates 1H 1H Multi-family and industrial sectors earn most transaction volume Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Investment activity in all property market, as demonstrated by its two- Office 7.6% 7.6% Investors largely perceive Jacksonville investors continue to view the metro Office 7.6% 7.6% sectors continued to be steady in the property acquisition from Bluestone as a tertiary market that does not area as a more affordable alternative to first half of 2018 with dollar volume up Properties totaling $70 million with an Industrial 5.5% 6.9% provide the same scale of opportunity other primary and secondary markets Industrial 7.0% 6.8% slightly year-over-year. The industrial average per-unit price of $112,000. as larger cities. However, investors in the U.S. Southeast, where the bid-ask Retail 7.4% 7.2% Retail 7.0% 6.9% sector led the way with a $72.8-million are still eager to place capital in spread is too high and competition is Office investment was down 30% (29%) increase in total sales volume Multi-Family 6.2% 6.0% the market. Companies considering too fierce. In fact, local year-over-year Multi-Family 6.9% 5.9% compared with first-half 2017. A key year-over-year in the first half of 2018. relocation continue to view the area industrial transaction volume for the transaction in this sector was Browning This decline was not alarming after positively, noting its overall quality of 12-month period ending in June 2018 Investments’ disposition of its 600,000-sf several high-profile CBD buildings and life, healthy job growth and limited new grew by 341% as $479 million in assets building located at 3870 Ronald Reagan suburban office parks traded in recent Investment Activity 1H 1H construction. There is a lot of money traded. Investment Activity 1H 1H 2017 2018 2017 2018 Parkway. years, skewing the results. The most chasing deals in Florida right now, and notable office transaction included 37% 25% Jacksonville is becoming increasingly The largest sale during first-half 2018 15% 5% Retail investment started to show some the quick exit of the Hearn Company was Farallon Capital Partners’ purchase 1H 2018 attractive to investors who cannot 1H 2018 signs of life as the total volume was up from its 2016 acquisition of BMO Plaza, 20% 25% of Flagler Center, a 12-building, 1.4-msf 9% 43% $1.3 achieve desired yields in higher-profile $1.1 24% year-over-year, but this property which was sold to Redico out of Ann BILLION 12% 14% markets such as Miami, Orlando and industrial portfolio, for $136 million – BILLION 18% 12% type remains the smallest sector by Arbor, MI after an 18-month hold. Office Tampa. or $97 psf. The portfolio was sold by total sales dollar volume among the capitalization rates continued to hover 31% 36% a joint-venture between Investcorp 58% 40% four major property types. Total retail at an average of 7.6% – on par with mid- Jacksonville’s investment sales dollar and Crocker Partners. Other significant investment volume was up $36 million year 2017. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY volume during the first half of 2018 was transactions included Gramercy’s OFFICE INDUSTRIAL RETAIL MULTI-FAMILY compared with first-half 2017. At the $1.1 billion – a 6% decrease year-over- purchase of an Amazon fulfillment current pace, the retail sector is poised year. In the first half, 54% of transaction center at 13333 103rd Street for for its best full-year result since 2014. Investment Volume volume involved private capital with $95.4 million, or $94 psf, and Colony Investment Volume

$3 institutional investors accounting for NorthStar’s acquisition of Pattillo $3 Multi-family assets offered the lowest 28% and publicly listed/REIT buyers Industrial’s Westside Industrial Park for average going-in cap rate, at 6%, as of comprising 16%. More than 80% of $77.5 million. mid-year 2018. This figure represented

$ BILLIONS (US) $2 the total square footage sold was in $ BILLIONS (US) $2 a decrease of 20 bps year-over-year. multi-family and industrial, two asset Total multi-family sales volume is on classes that have consistently exhibited pace to reach $1 billion for the calendar $1 declining vacancy rates, strong demand, $1 year. The sector’s first-half 2018 sales and compressing cap rates. volume was up $88 million, or 22%, compared with the same period in 2018. Local industrial investment activity has $0 $0 Local investment firm Barrett & Stokely 2013 2014 2015 2016 2017 1H 2018 gained significant ground in 2018 as 2013 2014 2015 2016 2017 1H 2018 remains bullish on the apartment Amazon grows its regional presence and OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 BMO Plaza Office $65,000,000 The Hearn Company REDICO 1 Flagler Center Industrial $136,000,000 Investcorp / Crocker Partners Farallon Capital Partners $146 psf $97 psf

2 3870 S. Ronald Reagan Parkway Industrial $39,300,000 Browning Investments Granite REIT 2 Amazon Fulfillment Center - Industrial $95,456,810 Hillwood Gramercy $66 psf 13333 103rd Street $94 psf

3 Overlook at Valley Ridge Multi-Family $36,000,000 Bluestone Properties Barrett & Stokely 3 Westside Industrial Park Industrial $77,500,000 Pattillo Industrial Colony NorthStar $111,111 per unit $60 psf

4 Summerwood on Towne Line Multi-Family $34,000,000 Bluestone Properties Barrett & Stokely 4 Sola Apartments Multi-Family $59,616,667 Flournoy Companies Beachwold Residential LLC $113,333 per unit $180,657 per unit

5 Double Creek Flats Multi-Family $31,500,000 Flaherty & Collins Properties Steadfast Income REIT 5 Lux at Sorrel Multi-Family $48,495,000 Davis Development Preferred Apartment Communities $131,250 per unit $183,000 per unit

38 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 39 Las Vegas Investment Market Long Island Investment Market

Industrial market is valley’s hottest sector Select Avg. Cap Rates 1H 1H Investment market slowing in some sectors Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Activity in the Southern Nevada The office investment market is picking Office 6.2% 6.5% A total of $1.4 billion in sales volume which are causing some landlords to Office 6.9% 6.8% investment sales market was robust up steam with several notable recent was recorded across all sectors on retain their assets. In the multi-family in the first half of 2018. Investors are sales. American Nevada unloaded the Industrial 6.3% 5.5% Long Island during the first half of sector, sales volume continued to Industrial 6.2% 6.1% deploying more capital in secondary bulk of its local portfolio. New office 2018, representing a 4% decline year- decrease, falling sharply (82%) year-over- Retail 6.5% 6.6% Retail 6.0% 5.7% markets like Las Vegas as primary markets investors are coming to Las Vegas from over-year. The market remains stable year to just $69.7 million in the first half become less affordable. Unemployment California, as local investment activity has Multi-Family 6.0% 5.5% as sellers look to monetize their assets of 2018. Multi-Family 5.5% 5.5% is on the decline, and the economy also picked up. With new construction before cap rates increase further as continues to show signs of improvement. becoming more expensive, investors are expected. Cap rates declined across all sectors Overall vacancy has declined across all turning their attention to repurposing between mid-year 2017 and mid- property types, and properties are selling under-utilized assets. One major office Investment Activity 1H 1H The retail sector once again led all asset year 2018 – except multi-family cap Investment Activity 1H 1H 2017 2018 2017 2018 with higher occupancy. Institutional- demand driver has been accessibility to classes with $856 million in sales during rates, which remained flat at 5.5%. grade and lower-grade properties are nearby retail that creates strong leasing 10% 19% the first half of 2018, representing 61% The market’s overall average cap 25% 17% of overall dollar volume. The office rate fell 20 bps year-over-year to 6% attracting new buyers to the market. of new mixed-use projects incorporating 1H 2018 1H 2018 10% 26% sector, while still active, posted $240 at mid-year 2018. This trend is not 10% 17% office, retail and, sometimes, residential $2.7 $1.4 The industrial market is currently the expected to continue as interest rates space. BILLION 28% 20% million in sales – down 34% year-over- BILLION 39% 61% hottest real estate sector in the Las Vegas year. Two of the largest office trades rise and investors strive for higher Valley. The overall average capitalization Investors continue to speculate on 51% 35% (1111 Franklin Avenue in Garden City returns. Steady investment activity is 26% 5% rate was 5.5% at mid-year 2018, while the future growth of all real estate and 1 Marcus Avenue in Lake Success) anticipated through the remainder of institutional-level investments were sectors. The population increased by OFFICE INDUSTRIAL RETAIL MULTI-FAMILY were driven by users’ specific needs as 2018 with some larger trades occurring OFFICE INDUSTRIAL RETAIL MULTI-FAMILY trading at 4.5%. Van Trust, Prologis and nearly 43,000 new residents in 2017, the former was bought by a developer as investors pursue some high-priced Panattoni are the most active developers and this growth is projected to escalate with a tenant already lined up and the assets in the market. of the newest state-of-the-art industrial 2% in 2018. The city will need more Investment Volume latter was purchased directly by a user. Investment Volume

facilities, which have attracted tenants retail amenities to serve the growing $7 Below-market replacement costs in both $3 such as Amazon, Fanatics, Sephora population, while office and industrial the office and retail sectors continue $6 and Bed Bath & Beyond. E-commerce demand are likely to increase to support to offer opportunities for value-add $5 and logistics tenants are the primary these new brands. Given the existing $ BILLIONS (US) acquisitions. $ BILLIONS (US) $2 occupants of the newest big-box construction trends and projected $4 construction. The outlook remains strong growth, the Las Vegas investment market The industrial sector recorded a year- $3 as a nationally recognized developer is anticipated to remain strong into the over-year increase in sales volume, $1 has recently acquired 40 acres as well foreseeable future. $2 which rose 56% to $234 million in first- half 2018 as some quality assets came as other sites for future industrial $1 development. to the market. There was still a lack of $0 $0 2013 2014 2015 2016 2017 1H 2018 large-scale, multi-asset industrial trades 2013 2014 2015 2016 2017 1H 2018 due to continuing rental-rate increases, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 1505 Wigwam Parkway Multi-Family $99,600,000 Wolff Company TM Equities, Inc. 1 One & Two Jericho Plaza Office $117,400,000 SL Green Taconic Capital / Triangle Capital Group $200,000 per unit $185 psf / Onyx Equities LLC / Credit Suisse

2 6592 West Lake Mead Boulevard Retail $87,000,000 Weingarten Realty Vestar Development 2 New Hyde Park Plaza Retail $74,500,000 Blackstone Clarion Partners / IPERS $187 psf $569 psf

3 3275 East Flamingo Road Multi-Family $72,000,000 TruAmerica Multifamily Blackstone / The ConAm Group of 3 1 Marcus Avenue Office $36,000,000 Sterling National Bank Northwell Health $137,405 per unit Companies $350 psf

4 2121 East Warm Springs Road Multi-Family $67,000,000 Heers Family Trust Guardian Life Insurance / Oaktree / 4 1111 Franklin Avenue Office $30,500,000 Sears Holdings Corp. Steel Equities $146,930 per unit TruAmerica Multifamily $173 psf

5 9550 West Sahara Avenue Multi-Family $66,400,000 Griffis Residential NNC Apartment Ventures 5 100 Merrick Road Office $22,100,000 Lincoln Equities Group / Investcorp Valley East Properties $200,000 per unit $160 psf

40 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 41 Las Vegas Investment Market Long Island Investment Market

Industrial market is valley’s hottest sector Select Avg. Cap Rates 1H 1H Investment market slowing in some sectors Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Activity in the Southern Nevada The office investment market is picking Office 6.2% 6.5% A total of $1.4 billion in sales volume which are causing some landlords to Office 6.9% 6.8% investment sales market was robust up steam with several notable recent was recorded across all sectors on retain their assets. In the multi-family in the first half of 2018. Investors are sales. American Nevada unloaded the Industrial 6.3% 5.5% Long Island during the first half of sector, sales volume continued to Industrial 6.2% 6.1% deploying more capital in secondary bulk of its local portfolio. New office 2018, representing a 4% decline year- decrease, falling sharply (82%) year-over- Retail 6.5% 6.6% Retail 6.0% 5.7% markets like Las Vegas as primary markets investors are coming to Las Vegas from over-year. The market remains stable year to just $69.7 million in the first half become less affordable. Unemployment California, as local investment activity has Multi-Family 6.0% 5.5% as sellers look to monetize their assets of 2018. Multi-Family 5.5% 5.5% is on the decline, and the economy also picked up. With new construction before cap rates increase further as continues to show signs of improvement. becoming more expensive, investors are expected. Cap rates declined across all sectors Overall vacancy has declined across all turning their attention to repurposing between mid-year 2017 and mid- property types, and properties are selling under-utilized assets. One major office Investment Activity 1H 1H The retail sector once again led all asset year 2018 – except multi-family cap Investment Activity 1H 1H 2017 2018 2017 2018 with higher occupancy. Institutional- demand driver has been accessibility to classes with $856 million in sales during rates, which remained flat at 5.5%. grade and lower-grade properties are nearby retail that creates strong leasing 10% 19% the first half of 2018, representing 61% The market’s overall average cap 25% 17% of overall dollar volume. The office rate fell 20 bps year-over-year to 6% attracting new buyers to the market. of new mixed-use projects incorporating 1H 2018 1H 2018 10% 26% sector, while still active, posted $240 at mid-year 2018. This trend is not 10% 17% office, retail and, sometimes, residential $2.7 $1.4 The industrial market is currently the expected to continue as interest rates space. BILLION 28% 20% million in sales – down 34% year-over- BILLION 39% 61% hottest real estate sector in the Las Vegas year. Two of the largest office trades rise and investors strive for higher Valley. The overall average capitalization Investors continue to speculate on 51% 35% (1111 Franklin Avenue in Garden City returns. Steady investment activity is 26% 5% rate was 5.5% at mid-year 2018, while the future growth of all real estate and 1 Marcus Avenue in Lake Success) anticipated through the remainder of institutional-level investments were sectors. The population increased by OFFICE INDUSTRIAL RETAIL MULTI-FAMILY were driven by users’ specific needs as 2018 with some larger trades occurring OFFICE INDUSTRIAL RETAIL MULTI-FAMILY trading at 4.5%. Van Trust, Prologis and nearly 43,000 new residents in 2017, the former was bought by a developer as investors pursue some high-priced Panattoni are the most active developers and this growth is projected to escalate with a tenant already lined up and the assets in the market. of the newest state-of-the-art industrial 2% in 2018. The city will need more Investment Volume latter was purchased directly by a user. Investment Volume

facilities, which have attracted tenants retail amenities to serve the growing $7 Below-market replacement costs in both $3 such as Amazon, Fanatics, Sephora population, while office and industrial the office and retail sectors continue $6 and Bed Bath & Beyond. E-commerce demand are likely to increase to support to offer opportunities for value-add $5 and logistics tenants are the primary these new brands. Given the existing $ BILLIONS (US) acquisitions. $ BILLIONS (US) $2 occupants of the newest big-box construction trends and projected $4 construction. The outlook remains strong growth, the Las Vegas investment market The industrial sector recorded a year- $3 as a nationally recognized developer is anticipated to remain strong into the over-year increase in sales volume, $1 has recently acquired 40 acres as well foreseeable future. $2 which rose 56% to $234 million in first- half 2018 as some quality assets came as other sites for future industrial $1 development. to the market. There was still a lack of $0 $0 2013 2014 2015 2016 2017 1H 2018 large-scale, multi-asset industrial trades 2013 2014 2015 2016 2017 1H 2018 due to continuing rental-rate increases, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 1505 Wigwam Parkway Multi-Family $99,600,000 Wolff Company TM Equities, Inc. 1 One & Two Jericho Plaza Office $117,400,000 SL Green Taconic Capital / Triangle Capital Group $200,000 per unit $185 psf / Onyx Equities LLC / Credit Suisse

2 6592 West Lake Mead Boulevard Retail $87,000,000 Weingarten Realty Vestar Development 2 New Hyde Park Plaza Retail $74,500,000 Blackstone Clarion Partners / IPERS $187 psf $569 psf

3 3275 East Flamingo Road Multi-Family $72,000,000 TruAmerica Multifamily Blackstone / The ConAm Group of 3 1 Marcus Avenue Office $36,000,000 Sterling National Bank Northwell Health $137,405 per unit Companies $350 psf

4 2121 East Warm Springs Road Multi-Family $67,000,000 Heers Family Trust Guardian Life Insurance / Oaktree / 4 1111 Franklin Avenue Office $30,500,000 Sears Holdings Corp. Steel Equities $146,930 per unit TruAmerica Multifamily $173 psf

5 9550 West Sahara Avenue Multi-Family $66,400,000 Griffis Residential NNC Apartment Ventures 5 100 Merrick Road Office $22,100,000 Lincoln Equities Group / Investcorp Valley East Properties $200,000 per unit $160 psf

40 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 41 Los Angeles Investment Market Memphis Investment Market

Office sales dip as multi-family and retail post increases Select Avg. Cap Rates 1H 1H Industrial and multi-family deals surge Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Los Angeles’ first-half 2018 overall dollar volume increased 40% year-over- Office 5.3% 5.5% The Memphis investment market Meanwhile, the office market lost Office 8.3% 8.5% commercial real estate investment year. An example of this intensity was the started strongly in the first half of 2018 significant ground in first-half 2018 with volume was relatively consistent, falling purchase of IMT Gallery 421, a 291-unit Industrial 4.9% 5.0% with total investment volume for all only $12 million in sales completed, Industrial 7.1% 6.8% only 3% year-over-year to $11.2 billion. multi-family building in Long Beach that property types reaching $686 million, although some potentially large deals Retail 5.3% 5.3% Retail 7.4% 7.8% By contrast, office building sales alone sold for $427,000 per unit at a 3.5% cap a 70% increase compared with the in the second half of the year could were down 38% year-over-year. Even rate. The buyer was Los Angeles-based Multi-Family 4.2% 4.1% same period in 2017. Strong market make up for the sector’s sluggish start. Multi-Family 8.0% 8.5% though fundamentals continue to IMT Residential. fundamentals, including low vacancies Similarly, local retail investment activity improve, this reduction was most likely and competitive rental rates, have slowed down, echoing a broader Trading activity and cap rates are driven by a confluence of reasons, attracted new investors to Memphis and national trend, due in part to the shift expected to continue to moderate, as including limited inventory for sale, a Investment Activity 1H 1H also prompted existing owners in the of consumer preferences to online Investment Activity 1H 1H investors and lenders are becoming 2017 2018 2017 2018 drawdown in investment from China market to expand their holdings. shopping. and low investment returns. Rents have increasingly selective. In the next 41% 26% 22% 2% 12 months, multi-family cap-rate The industrial sector accounted for 52% Overall, strong economic growth, not kept pace with the pricing of assets 1H 2018 1H 2018 compression will test investors. 19% 18% ($357 million) of total investment sales coupled with the expanded search for 22% 52% in most sectors. Many investors believe $11.2 $686 Investment returns will face pressure yield positively impacting secondary that the office market is morphing into BILLION 14% 17% in first-half 2018, a notable rebound MILLION 24% 8% a communal-type work environment from the inevitability of higher interest from the first half of 2017. Sales were markets, is expected to sustain cross- 26% 32% 38% and is micro-submarket-oriented. This rates, higher treasury-bill rates and the 39% primarily concentrated in the Southeast border investment in the industrial investor viewpoint makes it difficult slow rate of inflation. It is a great time to and DeSoto County submarkets with and office markets. With fundamentals OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY to justify current office sale prices for be selling, provided that buyers can find much of the activity comprising several strengthening across product types product other than core assets in strong their 1031 downlegs, or highest and best large portfolio transactions. Multi- and the economy continuing to grow, uses for capital. family property investment made investment levels should remain markets with heavy demand and limited Investment Volume Investment Volume competition. up the second-largest share (38%) of consistent, and sources of capital should $30 total first-half sales volume. The fact continue to change as new investors $2,000 Multi-family and retail investment sales that the rental market in Memphis is enter the market. $1,800 $25 grew 46% and 20%, respectively, year- growing in terms of number of renters $1,600 $1,400

over-year. Industrial volume decreased $ BILLIONS (US) as well as rental-rate increases is not $ BILLIONS (US) $20 $ MILLIONS (US) 10% in the first half of 2018 from the first lost on investors: nearly $263 million $1,200 half of 2017. $15 worth of multi-family assets traded $1,000 $800 $10 in the first half of 2018. If the current $600 Cap-rate compression continued only in pace continues, multi-family sales in $400 the multi-family sector as its average cap $5 2018 are poised to meet, or exceed, the $200 rate dropped 10 bps year-over-year to $503-million cyclical high set in 2015. $0 $0 4.1% at mid-year 2018. Demand for multi- 2013 2014 2015 2016 2017 1H 2018 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 family assets intensified as investment OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Project Europa Multi-Family $1,023,000,000 Carmel Partners Brookfield Property Group 1 Prologis MS Industrial Portfolio Industrial $92,700,000 Prologis Lexington Realty $536,164 per unit $62 psf

2 Corporate Center Pasadena Office $254,000,000 UBS Realty Investors LLC Coretrust Capital Partners, LLC 2 Exeter Mapletree U.S. Industrial Industrial $68,500,000 Exeter Property Group Mapletree Commercial $397 psf Portfolio $44 psf

3 The Wedbush Center Office $196,000,000 Lincoln Property Company Cerberus Capital Management, LP 3 Country Squire Apartments Multi-Family $62,000,000 CLK Properties / Colony NorthStar Birge & Held $411 psf $63,786 per unit

4 Water's Edge Office $190,000,000 DivcoWest Rockwood Capital LLC 4 Arium Shelby Farms Multi-Family $52,600,000 Carroll Organization Asden Properties $657 psf $50,723 per unit

5 The AirFlyte Office $167,500,000 CalPERS Swift Real Estate Partners 5 Memphis Depot Business Park Industrial $50,000,000 Mayfield Properties Ares Capital / Diamond Properties $293 psf $12 psf

42 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 43 Los Angeles Investment Market Memphis Investment Market

Office sales dip as multi-family and retail post increases Select Avg. Cap Rates 1H 1H Industrial and multi-family deals surge Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Los Angeles’ first-half 2018 overall dollar volume increased 40% year-over- Office 5.3% 5.5% The Memphis investment market Meanwhile, the office market lost Office 8.3% 8.5% commercial real estate investment year. An example of this intensity was the started strongly in the first half of 2018 significant ground in first-half 2018 with volume was relatively consistent, falling purchase of IMT Gallery 421, a 291-unit Industrial 4.9% 5.0% with total investment volume for all only $12 million in sales completed, Industrial 7.1% 6.8% only 3% year-over-year to $11.2 billion. multi-family building in Long Beach that property types reaching $686 million, although some potentially large deals Retail 5.3% 5.3% Retail 7.4% 7.8% By contrast, office building sales alone sold for $427,000 per unit at a 3.5% cap a 70% increase compared with the in the second half of the year could were down 38% year-over-year. Even rate. The buyer was Los Angeles-based Multi-Family 4.2% 4.1% same period in 2017. Strong market make up for the sector’s sluggish start. Multi-Family 8.0% 8.5% though fundamentals continue to IMT Residential. fundamentals, including low vacancies Similarly, local retail investment activity improve, this reduction was most likely and competitive rental rates, have slowed down, echoing a broader Trading activity and cap rates are driven by a confluence of reasons, attracted new investors to Memphis and national trend, due in part to the shift expected to continue to moderate, as including limited inventory for sale, a Investment Activity 1H 1H also prompted existing owners in the of consumer preferences to online Investment Activity 1H 1H investors and lenders are becoming 2017 2018 2017 2018 drawdown in investment from China market to expand their holdings. shopping. and low investment returns. Rents have increasingly selective. In the next 41% 26% 22% 2% 12 months, multi-family cap-rate The industrial sector accounted for 52% Overall, strong economic growth, not kept pace with the pricing of assets 1H 2018 1H 2018 compression will test investors. 19% 18% ($357 million) of total investment sales coupled with the expanded search for 22% 52% in most sectors. Many investors believe $11.2 $686 Investment returns will face pressure yield positively impacting secondary that the office market is morphing into BILLION 14% 17% in first-half 2018, a notable rebound MILLION 24% 8% a communal-type work environment from the inevitability of higher interest from the first half of 2017. Sales were markets, is expected to sustain cross- 26% 32% 38% and is micro-submarket-oriented. This rates, higher treasury-bill rates and the 39% primarily concentrated in the Southeast border investment in the industrial investor viewpoint makes it difficult slow rate of inflation. It is a great time to and DeSoto County submarkets with and office markets. With fundamentals OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY to justify current office sale prices for be selling, provided that buyers can find much of the activity comprising several strengthening across product types product other than core assets in strong their 1031 downlegs, or highest and best large portfolio transactions. Multi- and the economy continuing to grow, uses for capital. family property investment made investment levels should remain markets with heavy demand and limited Investment Volume Investment Volume competition. up the second-largest share (38%) of consistent, and sources of capital should $30 total first-half sales volume. The fact continue to change as new investors $2,000 Multi-family and retail investment sales that the rental market in Memphis is enter the market. $1,800 $25 grew 46% and 20%, respectively, year- growing in terms of number of renters $1,600 $1,400

over-year. Industrial volume decreased $ BILLIONS (US) as well as rental-rate increases is not $ BILLIONS (US) $20 $ MILLIONS (US) 10% in the first half of 2018 from the first lost on investors: nearly $263 million $1,200 half of 2017. $15 worth of multi-family assets traded $1,000 $800 $10 in the first half of 2018. If the current $600 Cap-rate compression continued only in pace continues, multi-family sales in $400 the multi-family sector as its average cap $5 2018 are poised to meet, or exceed, the $200 rate dropped 10 bps year-over-year to $503-million cyclical high set in 2015. $0 $0 4.1% at mid-year 2018. Demand for multi- 2013 2014 2015 2016 2017 1H 2018 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 family assets intensified as investment OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Project Europa Multi-Family $1,023,000,000 Carmel Partners Brookfield Property Group 1 Prologis MS Industrial Portfolio Industrial $92,700,000 Prologis Lexington Realty $536,164 per unit $62 psf

2 Corporate Center Pasadena Office $254,000,000 UBS Realty Investors LLC Coretrust Capital Partners, LLC 2 Exeter Mapletree U.S. Industrial Industrial $68,500,000 Exeter Property Group Mapletree Commercial $397 psf Portfolio $44 psf

3 The Wedbush Center Office $196,000,000 Lincoln Property Company Cerberus Capital Management, LP 3 Country Squire Apartments Multi-Family $62,000,000 CLK Properties / Colony NorthStar Birge & Held $411 psf $63,786 per unit

4 Water's Edge Office $190,000,000 DivcoWest Rockwood Capital LLC 4 Arium Shelby Farms Multi-Family $52,600,000 Carroll Organization Asden Properties $657 psf $50,723 per unit

5 The AirFlyte Office $167,500,000 CalPERS Swift Real Estate Partners 5 Memphis Depot Business Park Industrial $50,000,000 Mayfield Properties Ares Capital / Diamond Properties $293 psf $12 psf

42 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 43 Miami Investment Market Minneapolis Investment Market

Industrial vacancy rates fall to record lows Select Avg. Cap Rates 1H 1H First-half volume reaches $2.5 billion Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Investment sales volume remained the second quarter of 2018. The largest Office 6.7% 7.1% Minneapolis-St. Paul investment sales industrial sale price was $80 psf, while Office 6.1% 6.7% strong during the first half of 2018, industrial trade during the first half of activity remains strong as investors the sector’s average cap rate dropped approaching $2 billion – a 17% dip from 2018 was Duke Realty Corporation’s Industrial 6.6% 6.0% continue to pursue high-quality assets. 30 bps year-over-year to 7.4%. The Industrial 7.7% 7.4% the $2.4 billion recorded in the first half purchase of Countyline Corporate Park First-half 2018 sales volume was up 41% largest industrial transaction was the Retail 6.6% 5.4% Retail 6.8% 7.0% of 2017. The largest transaction was the in the Miami Lakes submarket for $180 year-over-year, totaling just shy of $2.5 $68-million sale of a 625,700-sf industrial sale of the Sabadell Financial Center in million, or $180 psf. Multi-Family 6.0% 5.4% billion compared with $1.8 billion in portfolio in Greenfield. Multi-Family 5.6% 6.3% the Brickell submarket for an impressive first-half 2017. The average capitalization In contrast, the retail sector recorded a $248.5 million, or $475 psf. The 522,892- The Wynwood area continues to thrive rate through mid-year 2018 was 6.9%, decrease year-over-year in dollar volume sf office building was purchased from as an investment hot spot after it was up 30 bps from the same period in 2017. as $213 million worth of assets traded in PGIM by a joint-venture between KKR rezoned to mixed-use three years ago. Investment Activity 1H 1H Investor interest is expected to persist as Investment Activity 1H 1H 2017 2018 the first half of 2018. The decline can be 2017 2018 and Parkway Properties. PGIM posted a With eight mixed-use projects already sales activity is well ahead of the pace in attributed to nationwide store closures lucrative profit of 35% after purchasing under construction, the transforming 30% 30% first-half 2017. 26% 43% arts district is also attracting new class announced by such big-box chains as the property in 2013 for $184 million. 1H 2018 1H 2018 A office development as evident with 25% 28% Office sales totaled slightly more than $1 Gander Mountain, Herberger’s, Toys ‘R’ 20% 24% $2 $2.5 projects like CUBE Wynwd, which billion in the first half of 2018, up 137% Us and Babies ‘R’ Us. In addition, several Economic growth continued to bolster BILLION 13% 19% BILLION 20% 9% investor demand as the unemployment includes a 90,000-sf office component from one year earlier. Fueling the rise in Sears, Kmart and JCPenney locations rate declined to 3.9% as of June 2018, a featuring a rooftop terrace and 11,400 sf 32% 23% overall dollar volume, multiple marquee have announced closures locally. Strip 34% 24% 60-bps drop year-over-year. During the of ground-floor retail. office buildings in the Minneapolis CBD centers and single-tenant properties trailing 12 months ending in June 2018, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY changed hands. The largest office sale look to be the preferred product types OFFICE INDUSTRIAL RETAIL MULTI-FAMILY total non-farm employment also grew Miami’s employment and economy are was Samsung Life Insurance’s purchase for investors. by 34,100 jobs. Following the opening expected in grow in 2018, especially with of City Center. The 51-story, class A of the Brightline express train service the recent approval of American Dream Investment Volume property sold for $320 million ($198 psf). Investment Volume Miami, a $4-billion megamall featuring connection at MiamiCentral in May 2018, $8 Other notable office transactions in the $8 it is expected that employment will 6.2 msf of retail and entertainment space. Minneapolis CBD were Shorenstein’s $7 $7 continue to rise as new talent begins to purchase of Capella Tower for $255 $6 $6

enter the market. $ BILLIONS (US) million ($182 psf) and LaSalle Investment $ BILLIONS (US) $5 Management's acquisition of T3 for $5 Industrial demand from the growing $4 $86.8 million ($388 psf). $4 e-commerce sector shows no sign of $3 $3 slowing down. Despite new construction Industrial dollar volume came in at $607 $2 $2 deliveries, robust demand for industrial million in the first half of 2018 as the $1 $1 assets has driven the sector’s vacancy sector’s dollar volume increased more $0 $0 rates to record lows with Miami’s overall 2013 2014 2015 2016 2017 1H 2018 than 70% year-over-year, representing 2013 2014 2015 2016 2017 1H 2018 vacancy rate recorded as 2.8% during 24% of the overall total. The average OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Sabadell Financial Center Office $248,500,000 PGIM KKR / Parkway Properties 1 City Center Office $320,000,000 HNA Group Samsung Life Insurance $475 psf $198 psf

2 Countyline Corporate Park Industrial $180,000,000 Florida East Coast Industries Duke Realty Corporation 2 Capella Tower Office $255,000,000 ASB Real Estate Shorenstein $180 psf $182 psf

3 Gables Aventura Multi-Family $149,000,000 Gables Residential RREEF Property Trust 3 Marquette Plaza Office $88,400,000 FRM Associates KBS Growth & Income REIT $372,500 per unit $169 psf

4 SunTrust International Center Office $127,000,000 Crocker Partners PCCP LLC 4 T3 Office $86,800,000 Hines LaSalle Investment Management $299 psf $388 psf

5 Doral Commons Retail $71,560,000 Terra Group Jamestown, LP 5 Greenfield MN Industrial Industrial $68,235,997 LSOP 3C II, LLC Eagle Ridge Partners $477 psf Portfolio $76 psf

44 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 45 Miami Investment Market Minneapolis Investment Market

Industrial vacancy rates fall to record lows Select Avg. Cap Rates 1H 1H First-half volume reaches $2.5 billion Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Investment sales volume remained the second quarter of 2018. The largest Office 6.7% 7.1% Minneapolis-St. Paul investment sales industrial sale price was $80 psf, while Office 6.1% 6.7% strong during the first half of 2018, industrial trade during the first half of activity remains strong as investors the sector’s average cap rate dropped approaching $2 billion – a 17% dip from 2018 was Duke Realty Corporation’s Industrial 6.6% 6.0% continue to pursue high-quality assets. 30 bps year-over-year to 7.4%. The Industrial 7.7% 7.4% the $2.4 billion recorded in the first half purchase of Countyline Corporate Park First-half 2018 sales volume was up 41% largest industrial transaction was the Retail 6.6% 5.4% Retail 6.8% 7.0% of 2017. The largest transaction was the in the Miami Lakes submarket for $180 year-over-year, totaling just shy of $2.5 $68-million sale of a 625,700-sf industrial sale of the Sabadell Financial Center in million, or $180 psf. Multi-Family 6.0% 5.4% billion compared with $1.8 billion in portfolio in Greenfield. Multi-Family 5.6% 6.3% the Brickell submarket for an impressive first-half 2017. The average capitalization In contrast, the retail sector recorded a $248.5 million, or $475 psf. The 522,892- The Wynwood area continues to thrive rate through mid-year 2018 was 6.9%, decrease year-over-year in dollar volume sf office building was purchased from as an investment hot spot after it was up 30 bps from the same period in 2017. as $213 million worth of assets traded in PGIM by a joint-venture between KKR rezoned to mixed-use three years ago. Investment Activity 1H 1H Investor interest is expected to persist as Investment Activity 1H 1H 2017 2018 the first half of 2018. The decline can be 2017 2018 and Parkway Properties. PGIM posted a With eight mixed-use projects already sales activity is well ahead of the pace in attributed to nationwide store closures lucrative profit of 35% after purchasing under construction, the transforming 30% 30% first-half 2017. 26% 43% arts district is also attracting new class announced by such big-box chains as the property in 2013 for $184 million. 1H 2018 1H 2018 A office development as evident with 25% 28% Office sales totaled slightly more than $1 Gander Mountain, Herberger’s, Toys ‘R’ 20% 24% $2 $2.5 projects like CUBE Wynwd, which billion in the first half of 2018, up 137% Us and Babies ‘R’ Us. In addition, several Economic growth continued to bolster BILLION 13% 19% BILLION 20% 9% investor demand as the unemployment includes a 90,000-sf office component from one year earlier. Fueling the rise in Sears, Kmart and JCPenney locations rate declined to 3.9% as of June 2018, a featuring a rooftop terrace and 11,400 sf 32% 23% overall dollar volume, multiple marquee have announced closures locally. Strip 34% 24% 60-bps drop year-over-year. During the of ground-floor retail. office buildings in the Minneapolis CBD centers and single-tenant properties trailing 12 months ending in June 2018, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY changed hands. The largest office sale look to be the preferred product types OFFICE INDUSTRIAL RETAIL MULTI-FAMILY total non-farm employment also grew Miami’s employment and economy are was Samsung Life Insurance’s purchase for investors. by 34,100 jobs. Following the opening expected in grow in 2018, especially with of City Center. The 51-story, class A of the Brightline express train service the recent approval of American Dream Investment Volume property sold for $320 million ($198 psf). Investment Volume Miami, a $4-billion megamall featuring connection at MiamiCentral in May 2018, $8 Other notable office transactions in the $8 it is expected that employment will 6.2 msf of retail and entertainment space. Minneapolis CBD were Shorenstein’s $7 $7 continue to rise as new talent begins to purchase of Capella Tower for $255 $6 $6

enter the market. $ BILLIONS (US) million ($182 psf) and LaSalle Investment $ BILLIONS (US) $5 Management's acquisition of T3 for $5 Industrial demand from the growing $4 $86.8 million ($388 psf). $4 e-commerce sector shows no sign of $3 $3 slowing down. Despite new construction Industrial dollar volume came in at $607 $2 $2 deliveries, robust demand for industrial million in the first half of 2018 as the $1 $1 assets has driven the sector’s vacancy sector’s dollar volume increased more $0 $0 rates to record lows with Miami’s overall 2013 2014 2015 2016 2017 1H 2018 than 70% year-over-year, representing 2013 2014 2015 2016 2017 1H 2018 vacancy rate recorded as 2.8% during 24% of the overall total. The average OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Sabadell Financial Center Office $248,500,000 PGIM KKR / Parkway Properties 1 City Center Office $320,000,000 HNA Group Samsung Life Insurance $475 psf $198 psf

2 Countyline Corporate Park Industrial $180,000,000 Florida East Coast Industries Duke Realty Corporation 2 Capella Tower Office $255,000,000 ASB Real Estate Shorenstein $180 psf $182 psf

3 Gables Aventura Multi-Family $149,000,000 Gables Residential RREEF Property Trust 3 Marquette Plaza Office $88,400,000 FRM Associates KBS Growth & Income REIT $372,500 per unit $169 psf

4 SunTrust International Center Office $127,000,000 Crocker Partners PCCP LLC 4 T3 Office $86,800,000 Hines LaSalle Investment Management $299 psf $388 psf

5 Doral Commons Retail $71,560,000 Terra Group Jamestown, LP 5 Greenfield MN Industrial Industrial $68,235,997 LSOP 3C II, LLC Eagle Ridge Partners $477 psf Portfolio $76 psf

44 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 45 Nashville Investment Market New Jersey Investment Market

Three sectors drive market as industrial sales dip Select Avg. Cap Rates 1H 1H Investors struggle to identify new opportunities Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Nashville deal flow was robust in the with first-half 2017, a lack of available Office 7.4% 7.3% New Jersey commercial real estate sold by JP Morgan Asset Management, Office 7.1% 6.6% first half of 2018 with total investment large single-asset and portfolio sales investment volume dropped almost 27% which held the property for about four volume up 8% from the same period in prompted dollar volume to dip. Industrial 7.2% 8.2% year-over-year in the first half of 2018 years. Industrial 5.4% 5.5% 2017 due primarily to strong office and as three of the four major asset classes Retail 6.4% 7.7% During the balance of 2018, deal Retail 6.2% 6.3% multi-family activity. Multi-family sales Despite several nationwide store recorded sales dollar volume reductions closures and e-commerce growth, local volume is not expected to pick up, as led the way with $622 million in dollar Multi-Family 5.8% 5.5% – with retail being the lone exception. Multi-Family 5.5% 5.3% investors are struggling to identify new volume, followed by office sales at $442 retail investment has already outpaced investment opportunities due to low million. The office sector registered a the full-year 2017 total due to numerous One of the largest office sale availability. This factor has essentially significant increase in dollar volume, large grocery-anchored shopping transactions in the first half of 2018 was created a catch-22 situation that may up 106% from the same period in 2017. centers trading in the first half of 2018. Investment Activity 1H 1H Signature Acquisitions’ purchase of The Investment Activity 1H 1H 2017 2018 only be solved by New Jersey investors 2017 2018 The largest transaction during the first The largest retail transaction was the Offices at Liberty Corner in Basking redeploying their acquired assets into six months of 2018 was the owner-user sale of the high-profile urban building 15% 29% Ridge. The three-property office park 28% 22% 305-311 Broadway for $32 million. The was sold by the Silverman Group for other real estate markets or withdrawing sale of the mid-rise office building 1H 2018 1H 2018 40,000-sf building, which is currently 27% 12% $74.6 million ($142 psf). The 526,784- their capital from real estate entirely. 27% 24% that houses Caterpillar Financial’s $1.5 $3.7 100% leased to Tequila Cowboy, sf complex was approximately 95% An interesting phenomenon worthy headquarters for $90.9 million. BILLION 16% 18% BILLION 12% 24% WannaB’s Karaoke Bar and multiple leased at the time of sale and is home of attention is the effect of the Multi-family sales continued to outpace restaurants, was purchased by the 42% 41% to several quality tenants, including federal government’s newly created 33% 30% all other sectors through the first half of owners of TC Restaurant Group. Many Ipsen Biopharmaceuticals, Major, Opportunity Zones program. The tax- 2018. While a lack of affordable housing country music celebrities have begun OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Lidsey & Africa, Hess Corporation and incentive provision has the potential to OFFICE INDUSTRIAL RETAIL MULTI-FAMILY remains a concern to many Nashville opening bars and restaurants on Lower Regeneron Pharmaceuticals. Meanwhile, attract capital from stockholders and residents, swelling per-unit rents and Broadway; as a result, the building’s a significant industrial transaction bondholders looking to invest in real rapid population growth have translated new owners are planning a 23,000-sf Investment Volume during the first half of the year was estate and defer capital gains. While the Investment Volume

to higher yields for multi-family expansion that will create two new $4 Blackstone REIT’s purchase of a national program is best suited for ground-up $12 investors. In the largest multi-family sale multi-level entertainment destinations. 146-property portfolio from Cabot development, it can still aid renovation during the first six months, Investors Properties. Of the 21.6 msf acquired in projects. $10 $3

Management purchased IMT 8th South, $ BILLIONS (US) the deal, more than 750,000 sf is located $ BILLIONS (US) $8 a 330-unit class A property, for $76.7 in northern New Jersey. million. $2 $6 The multi-family sector posted one of $4 Industrial sales volume decreased its largest transactions of the year in $1 drastically during the first half of 2018 Hoboken. The Rivington, a four-building, $2 following a record-setting 2017. While 240-unit residential complex, was sold $0 $0 the number of industrial transactions 2013 2014 2015 2016 2017 1H 2018 for $146 million to Equity Residential. 2013 2014 2015 2016 2017 1H 2018 increased slightly when compared The amenity-filled site, built in 1999, was OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Caterpillar Financial Center Office $90,900,000 Piedmont REIT Caterpillar 1 Orca Capital Apartment Multi-Family $190,400,000 Orca Capital Partners JCP Group $291 psf Portfolio $183,961 per unit

2 IMT 8 South Multi-Family $76,725,000 Alliance Residential Investors Management 2 The Rivington Multi-Family $146,000,000 JP Morgan Asset Management Equity Residential $232,500 per unit $608,333 per unit

3 Eight and Nine Corporate Office $73,000,000 JP Morgan / Hall Emery KBS Strategic Opportunity REIT 3 300 Prospect Avenue, Multi-Family $102,500,000 Goldman Sachs / Greystar / Kushner Companies Center $234 psf Hackensack $284,722 per unit Ivanhoé Cambridge

4 The Cleo Apartments Multi-Family $66,989,000 Liv Development Mautner-Glick Corp. / Spyglass Capital 4 Teterboro Landing Retail $93,500,000 PNC Realty Investors Catellus $230,203 per unit Partners $245 psf

5 Peyton Stakes Multi-Family $62,250,000 Proffitt Dixon Partners Mount Auburn Capital Group LLC 5 Cabot Canyon Industrial Industrial $85,200,000 Cabot Properties Blackstone REIT $250,000 per unit Portfolio $114 psf

46 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 47 Nashville Investment Market New Jersey Investment Market

Three sectors drive market as industrial sales dip Select Avg. Cap Rates 1H 1H Investors struggle to identify new opportunities Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Nashville deal flow was robust in the with first-half 2017, a lack of available Office 7.4% 7.3% New Jersey commercial real estate sold by JP Morgan Asset Management, Office 7.1% 6.6% first half of 2018 with total investment large single-asset and portfolio sales investment volume dropped almost 27% which held the property for about four volume up 8% from the same period in prompted dollar volume to dip. Industrial 7.2% 8.2% year-over-year in the first half of 2018 years. Industrial 5.4% 5.5% 2017 due primarily to strong office and as three of the four major asset classes Retail 6.4% 7.7% During the balance of 2018, deal Retail 6.2% 6.3% multi-family activity. Multi-family sales Despite several nationwide store recorded sales dollar volume reductions closures and e-commerce growth, local volume is not expected to pick up, as led the way with $622 million in dollar Multi-Family 5.8% 5.5% – with retail being the lone exception. Multi-Family 5.5% 5.3% investors are struggling to identify new volume, followed by office sales at $442 retail investment has already outpaced investment opportunities due to low million. The office sector registered a the full-year 2017 total due to numerous One of the largest office sale availability. This factor has essentially significant increase in dollar volume, large grocery-anchored shopping transactions in the first half of 2018 was created a catch-22 situation that may up 106% from the same period in 2017. centers trading in the first half of 2018. Investment Activity 1H 1H Signature Acquisitions’ purchase of The Investment Activity 1H 1H 2017 2018 only be solved by New Jersey investors 2017 2018 The largest transaction during the first The largest retail transaction was the Offices at Liberty Corner in Basking redeploying their acquired assets into six months of 2018 was the owner-user sale of the high-profile urban building 15% 29% Ridge. The three-property office park 28% 22% 305-311 Broadway for $32 million. The was sold by the Silverman Group for other real estate markets or withdrawing sale of the mid-rise office building 1H 2018 1H 2018 40,000-sf building, which is currently 27% 12% $74.6 million ($142 psf). The 526,784- their capital from real estate entirely. 27% 24% that houses Caterpillar Financial’s $1.5 $3.7 100% leased to Tequila Cowboy, sf complex was approximately 95% An interesting phenomenon worthy headquarters for $90.9 million. BILLION 16% 18% BILLION 12% 24% WannaB’s Karaoke Bar and multiple leased at the time of sale and is home of attention is the effect of the Multi-family sales continued to outpace restaurants, was purchased by the 42% 41% to several quality tenants, including federal government’s newly created 33% 30% all other sectors through the first half of owners of TC Restaurant Group. Many Ipsen Biopharmaceuticals, Major, Opportunity Zones program. The tax- 2018. While a lack of affordable housing country music celebrities have begun OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Lidsey & Africa, Hess Corporation and incentive provision has the potential to OFFICE INDUSTRIAL RETAIL MULTI-FAMILY remains a concern to many Nashville opening bars and restaurants on Lower Regeneron Pharmaceuticals. Meanwhile, attract capital from stockholders and residents, swelling per-unit rents and Broadway; as a result, the building’s a significant industrial transaction bondholders looking to invest in real rapid population growth have translated new owners are planning a 23,000-sf Investment Volume during the first half of the year was estate and defer capital gains. While the Investment Volume

to higher yields for multi-family expansion that will create two new $4 Blackstone REIT’s purchase of a national program is best suited for ground-up $12 investors. In the largest multi-family sale multi-level entertainment destinations. 146-property portfolio from Cabot development, it can still aid renovation during the first six months, Investors Properties. Of the 21.6 msf acquired in projects. $10 $3

Management purchased IMT 8th South, $ BILLIONS (US) the deal, more than 750,000 sf is located $ BILLIONS (US) $8 a 330-unit class A property, for $76.7 in northern New Jersey. million. $2 $6 The multi-family sector posted one of $4 Industrial sales volume decreased its largest transactions of the year in $1 drastically during the first half of 2018 Hoboken. The Rivington, a four-building, $2 following a record-setting 2017. While 240-unit residential complex, was sold $0 $0 the number of industrial transactions 2013 2014 2015 2016 2017 1H 2018 for $146 million to Equity Residential. 2013 2014 2015 2016 2017 1H 2018 increased slightly when compared The amenity-filled site, built in 1999, was OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Caterpillar Financial Center Office $90,900,000 Piedmont REIT Caterpillar 1 Orca Capital Apartment Multi-Family $190,400,000 Orca Capital Partners JCP Group $291 psf Portfolio $183,961 per unit

2 IMT 8 South Multi-Family $76,725,000 Alliance Residential Investors Management 2 The Rivington Multi-Family $146,000,000 JP Morgan Asset Management Equity Residential $232,500 per unit $608,333 per unit

3 Eight and Nine Corporate Office $73,000,000 JP Morgan / Hall Emery KBS Strategic Opportunity REIT 3 300 Prospect Avenue, Multi-Family $102,500,000 Goldman Sachs / Greystar / Kushner Companies Center $234 psf Hackensack $284,722 per unit Ivanhoé Cambridge

4 The Cleo Apartments Multi-Family $66,989,000 Liv Development Mautner-Glick Corp. / Spyglass Capital 4 Teterboro Landing Retail $93,500,000 PNC Realty Investors Catellus $230,203 per unit Partners $245 psf

5 Peyton Stakes Multi-Family $62,250,000 Proffitt Dixon Partners Mount Auburn Capital Group LLC 5 Cabot Canyon Industrial Industrial $85,200,000 Cabot Properties Blackstone REIT $250,000 per unit Portfolio $114 psf

46 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 47 New York Investment Market Oakland Investment Market

Investors not rattled by tariff policies Select Avg. Cap Rates 1H 1H Multi-family investment narrowly tops office and industrial Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Manhattan investment dollar volume Oxford Properties Group’s $700-million Office 4.7% 4.0% As a gateway to the greater East Bay, looking for a long-term hold. Available Office 6.9% 5.8% was up slightly (5%) year-over-year purchase of the historic St. John’s the Oakland market continues to land is scarce in the Oakland region during the first half of 2018. This Terminal site. These deals provide IndustrialRetail 4.2% 4.9% attract strong levels of both foreign as well as in the greater Bay Area. As Industrial 5.3% 5.3% increase, an improvement compared further evidence of investors' attraction and domestic investment. Population a result, sales of raw land and sites RetailMulti-Family 3.5% 3.6% Retail 6.0% 5.7% with the past few years, resulted from to mainly high-quality Manhattan office growth and increases in new designed for teardown redevelopment investors coming off the sidelines, assets. Multi-Family housing – together with proximity to will continue to set pricing records. Multi-Family 4.3% 5.0% Chinese capital returning to the market transportation, the port and shipping The supply-demand balance is starting after a slight hiatus and significant Cap rates for office product dropped – encourage investors to explore and to shift as new product comes online investment from foreign players – most 70 bps year-over-year to an average 4%, invest in this region. Employment is still to alleviate growing tenant demand for notably Canadian investors. while the retail average increased to Investment Activity 1H 1H growing and is forecasted to remain Investment Activity 1H 1H 2017 2018 2017 2018 4.9% from 4.2%. Multi-family cap rates positive during the remainder of 2018. all property types. This new supply will While there has been rising concern stayed consistent with the first-half 81% 77% also offer investors new opportunities 38% 28% about the Trump administration’s tariffs, 2018 average of 3.6%. Office product Yield-seeking investors, searching for to deploy capital. Demand is still strong 1H 2018 1H 2018 which could cause a momentary rise in accounted for nearly three-quarters 7% 9% high cash flow and stable returns over and will likely be the best indicator of 25% 30% $8.7 $2.6 of all volume in Manhattan in first-half the long term, are taxing the supply the market’s strength going forward. development and conversion costs and BILLION 12% 14% BILLION 11% 12% scare away foreign capital, the policies 2018, a factor that is consistent with of product for sale. To that end, tenant There is still a lot of capital chasing seem not to have rattled New York the full-year result in 2017. However, demand for all property types will properties as investors look to strike 26% 30% investors. the multi-family sector’s percentage positively affect asking rents over the deals ahead of a possible rise in interest of overall Manhattan dollar volume OFFICEOFFICEINDUSTRIALRETAIL RETAILMULTI-FAMILYMULTI-FAMILY remainder of 2018 and into 2019. Office rates later in 2018. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY First-half 2018 overall sales volume rose dropped to 14% during second-quarter and industrial rents are at historic highs, to $8.7 billion from $8.3 billion in first- 2018. If this trend continues, full-year while new multi-family units coming half 2017. Additionally, the first quarter multi-family investment will be down Investment Volume online keep rental rates elevated. In the Investment Volume of 2018 witnessed quarter-over-quarter compared with 2017. $40 first half of 2018, multi-family investment $8 gains in total sales and transaction narrowly topped the industrial and $35 $7 dollar volume, supported by Google While full-year 2018 sales volume is office sectors. This situation will likely parent company Alphabet’s purchase of not expected to reach the record $30 $6

$ BILLIONS (US) change in favor of office assets by $ BILLIONS (US) the Chelsea Market at 75 9th Avenue – a high of 2015, the continuation of large $25 year-end as the CIM Group listed five $5 $2.4-billion ($2,017 psf) trade – from transactions and an overall healthy $20 of its Oakland CBD properties in a new $4 Jamestown. That deal ranked as the investment sales market suggest that $15 portfolio for sale. The sale will likely $3 largest in first-half 2018. volume and pricing will remain stable $10 achieve a value of more than $1 billion. $2 throughout the rest of the year. All of the properties are well-leased Other top transactions included Fortress $5 $1 with strong potential for rental-rate Investment Group’s $1.53-billion $0 $0 2013 2014 2015 2016 2017 1H 2018 appreciation that will attract major 2013 2014 2015 2016 2017 1H 2018 purchase of 701 7th Avenue, and OFFICEOFFICEINDUSTRIALRETAIL RETAILMULTI-FAMILYMULTI-FAMILY interest among institutional investors OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 75 9th Avenue Office $2,397,501,899 Jamestown Alphabet, Inc. 1 2100 Powell Street Office $170,900,000 The Blackstone Group CBRE Global Investors $2,017 psf $494 psf

2 701 7th Avenue Mixed Use $1,530,000,000 Winthrop Realty Liquidating Trust Maefield Development / Fortress 2 Domain Oakland Apartments Multi-Family $140,000,000 Land and Houses U.S.A. Magnolia Capital $4,371 psf Investment Group $530,303 per unit

3 St. John's Terminal Office $700,000,000 Westbrook Partners / Atlas Capital Oxford Properties Group 3 1717-1739 Doolittle Drive & Industrial $100,500,000 Comstock Realty Partners Colony NorthStar $3,593 psf Group 2380-2388 Williams Street $172 psf

4 5 Bryant Park Office $640,000,000 The Blackstone Group Savanna 4 3596 Baumberg Avenue Industrial $93,500,000 The McShane Companies Deutsche Asset Management $939 psf $395 psf

5 1745 Broadway Office $633,000,000 Ivanhoé Cambridge / SL Green Invesco 5 The Streets of Brentwood Retail $85,800,000 DRA Advisors Harbert Management Corporation $939 psf $236 psf

48 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 49 New York Investment Market Oakland Investment Market

Investors not rattled by tariff policies Select Avg. Cap Rates 1H 1H Multi-family investment narrowly tops office and industrial Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Manhattan investment dollar volume Oxford Properties Group’s $700-million Office 4.7% 4.0% As a gateway to the greater East Bay, looking for a long-term hold. Available Office 6.9% 5.8% was up slightly (5%) year-over-year purchase of the historic St. John’s the Oakland market continues to land is scarce in the Oakland region during the first half of 2018. This Terminal site. These deals provide IndustrialRetail 4.2% 4.9% attract strong levels of both foreign as well as in the greater Bay Area. As Industrial 5.3% 5.3% increase, an improvement compared further evidence of investors' attraction and domestic investment. Population a result, sales of raw land and sites RetailMulti-Family 3.5% 3.6% Retail 6.0% 5.7% with the past few years, resulted from to mainly high-quality Manhattan office growth and increases in new designed for teardown redevelopment investors coming off the sidelines, assets. Multi-Family housing – together with proximity to will continue to set pricing records. Multi-Family 4.3% 5.0% Chinese capital returning to the market transportation, the port and shipping The supply-demand balance is starting after a slight hiatus and significant Cap rates for office product dropped – encourage investors to explore and to shift as new product comes online investment from foreign players – most 70 bps year-over-year to an average 4%, invest in this region. Employment is still to alleviate growing tenant demand for notably Canadian investors. while the retail average increased to Investment Activity 1H 1H growing and is forecasted to remain Investment Activity 1H 1H 2017 2018 2017 2018 4.9% from 4.2%. Multi-family cap rates positive during the remainder of 2018. all property types. This new supply will While there has been rising concern stayed consistent with the first-half 81% 77% also offer investors new opportunities 38% 28% about the Trump administration’s tariffs, 2018 average of 3.6%. Office product Yield-seeking investors, searching for to deploy capital. Demand is still strong 1H 2018 1H 2018 which could cause a momentary rise in accounted for nearly three-quarters 7% 9% high cash flow and stable returns over and will likely be the best indicator of 25% 30% $8.7 $2.6 of all volume in Manhattan in first-half the long term, are taxing the supply the market’s strength going forward. development and conversion costs and BILLION 12% 14% BILLION 11% 12% scare away foreign capital, the policies 2018, a factor that is consistent with of product for sale. To that end, tenant There is still a lot of capital chasing seem not to have rattled New York the full-year result in 2017. However, demand for all property types will properties as investors look to strike 26% 30% investors. the multi-family sector’s percentage positively affect asking rents over the deals ahead of a possible rise in interest of overall Manhattan dollar volume OFFICEOFFICEINDUSTRIALRETAIL RETAILMULTI-FAMILYMULTI-FAMILY remainder of 2018 and into 2019. Office rates later in 2018. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY First-half 2018 overall sales volume rose dropped to 14% during second-quarter and industrial rents are at historic highs, to $8.7 billion from $8.3 billion in first- 2018. If this trend continues, full-year while new multi-family units coming half 2017. Additionally, the first quarter multi-family investment will be down Investment Volume online keep rental rates elevated. In the Investment Volume of 2018 witnessed quarter-over-quarter compared with 2017. $40 first half of 2018, multi-family investment $8 gains in total sales and transaction narrowly topped the industrial and $35 $7 dollar volume, supported by Google While full-year 2018 sales volume is office sectors. This situation will likely parent company Alphabet’s purchase of not expected to reach the record $30 $6

$ BILLIONS (US) change in favor of office assets by $ BILLIONS (US) the Chelsea Market at 75 9th Avenue – a high of 2015, the continuation of large $25 year-end as the CIM Group listed five $5 $2.4-billion ($2,017 psf) trade – from transactions and an overall healthy $20 of its Oakland CBD properties in a new $4 Jamestown. That deal ranked as the investment sales market suggest that $15 portfolio for sale. The sale will likely $3 largest in first-half 2018. volume and pricing will remain stable $10 achieve a value of more than $1 billion. $2 throughout the rest of the year. All of the properties are well-leased Other top transactions included Fortress $5 $1 with strong potential for rental-rate Investment Group’s $1.53-billion $0 $0 2013 2014 2015 2016 2017 1H 2018 appreciation that will attract major 2013 2014 2015 2016 2017 1H 2018 purchase of 701 7th Avenue, and OFFICEOFFICEINDUSTRIALRETAIL RETAILMULTI-FAMILYMULTI-FAMILY interest among institutional investors OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 75 9th Avenue Office $2,397,501,899 Jamestown Alphabet, Inc. 1 2100 Powell Street Office $170,900,000 The Blackstone Group CBRE Global Investors $2,017 psf $494 psf

2 701 7th Avenue Mixed Use $1,530,000,000 Winthrop Realty Liquidating Trust Maefield Development / Fortress 2 Domain Oakland Apartments Multi-Family $140,000,000 Land and Houses U.S.A. Magnolia Capital $4,371 psf Investment Group $530,303 per unit

3 St. John's Terminal Office $700,000,000 Westbrook Partners / Atlas Capital Oxford Properties Group 3 1717-1739 Doolittle Drive & Industrial $100,500,000 Comstock Realty Partners Colony NorthStar $3,593 psf Group 2380-2388 Williams Street $172 psf

4 5 Bryant Park Office $640,000,000 The Blackstone Group Savanna 4 3596 Baumberg Avenue Industrial $93,500,000 The McShane Companies Deutsche Asset Management $939 psf $395 psf

5 1745 Broadway Office $633,000,000 Ivanhoé Cambridge / SL Green Invesco 5 The Streets of Brentwood Retail $85,800,000 DRA Advisors Harbert Management Corporation $939 psf $236 psf

48 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 49 Orange County Investment Market Orlando Investment Market

Little sway from investors in first half of 2018 Select Avg. Cap Rates 1H 1H Multi-family transaction volume continues to exceed expectations Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Investment sales volume maintained to be exhausted as record-high rental Office 6.4% 6.0% Economic fundamentals in Orlando wage growth and strong in-migration Office 7.2% 7.0% an even keel in Southern California’s rates persist in a market that has one remain solid with demand for quality are expected to continue to drive Orange County market during the first of the lowest home-ownership rates in Industrial 6.1% 4.9% properties largely outstripping the demand for apartments. Industrial 7.9% 6.9% half of 2018. The county is on track to the U.S., according to the U.S. Census availability of investment opportunities, Retail 4.9% 5.3% Major sales in the first half of 2018 Retail 7.2% 6.4% achieve sales volumes similar to those Bureau. A lack of affordable rental particularly in high-demand areas. included Preferred Apartment of 2017, indicating that record-high options persuaded investors to spend a Multi-Family 4.1% 4.6% Investment sales activity during the first Multi-Family 6.5% 5.6% Communities’ acquisition of the 221-unit volumes will likely continue for a fourth record average of $324,000 per unit in half of 2018 was strong with more than Retreat at Orlando for $81.7 million, or consecutive year. Total sales volume in the first half of 2018. Slight expansion $2.3 billion in total transaction volume. $370,000 per unit, and Camden Property the first half of 2018 approached $3.2 of cap rates, incurred over the past year, Interest rates are beginning to creep up Trust’s purchase of Camden North billion, decreasing a mere 6% from the is expected to be short-lived as rental- Investment Activity 1H 1H and debt remains readily available as Investment Activity 1H 1H 2017 2018 Quarter, a 333-unit mid-rise apartment 2017 2018 first half of 2017. Investor demand has rate growth begins to decelerate and private-equity investors actively seek property in downtown Orlando for waned slightly across each of the four interest rates rise. 32% 34% strong investment opportunities. 17% 11% $81 million, or $243,000 per unit. Retail sectors tracked although all sectors 1H 2018 1H 2018 The county’s industrial product 25% 25% The Orlando industrial market has been investment sales dollar volume in first- 7% 10% continue to achieve premium lease $3.2 $2.3 generated $791 million in first-half 2018 on fire for the last couple of years, half 2018 was 41% below the first-half rates amid low vacancy. BILLION 18% 16% BILLION 16% 13% sales, down from $834 million one year fueled in large part by the surging 2017 level. Investors continue to target For the sixth straight year, the office earlier. A record-high average price 26% 25% e-commerce and logistics industries, value-add opportunities with solid 60% 66% sector emerged with the largest first- ($199 psf) in the constricted industrial a strong increase in total construction upside potential near expanding retail half trading volume with just under sector may escalate as demand for last- OFFICE INDUSTRIAL RETAIL MULTI-FAMILY activity and broad-based industrial centers. All in all, the capital pool in OFFICE INDUSTRIAL RETAIL MULTI-FAMILY $1.1 billion in sales, nearly matching mile warehousing increases. Meanwhile, demand. In fact, the industrial sector Orlando remains relatively deep and is the mid-year 2017 total. However, the investor recognition of Orange County was the only one that recorded a year- expected to stay healthy over the next average office price decreased to $253 retail remained strong, albeit cautious, Investment Volume over-year increase (11%) in investment couple of years. Investment Volume

psf at mid-year 2018 from $279 psf with $522 million worth of sales volume $10 sales dollar volume in first-half 2018. $7 one year earlier. Office investors may in first-half 2018, down from $608 $9 Total investment sales dollar volume for $6 become more reserved as vacancy million in first-half 2017. $8 $7 the first six months of 2018 was down $5

continues to grow and an uptick of $ BILLIONS (US) $ BILLIONS (US) $6 26% compared with the same period speculative development is added to $4 the market. $5 one year earlier. The multi-family sector $3 $4 exceeded expectations as its share of

Multi-family sales narrowly achieved $3 overall volume rose to 65%, compared $2 the next-largest volume with $793 $2 with 38% recorded during first-half $1 million invested in first-half 2018, down $1 2017. Multi-family investment volume is $0 $0 from $862 million in first-half 2017. 2013 2014 2015 2016 2017 1H 2018 expected to remain robust in the second 2013 2014 2015 2016 2017 1H 2018 Investor interest in multi-family has yet half of 2018 as rising employment, slow OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Summit Office Campus, Aliso Office $157,000,000 RREEF America, LLC Rockpoint Group 1 Retreat at Orlando Multi-Family $81,721,250 Inland Real Estate Group Preferred Apartment Communities Viejo $326 psf $369,779 per unit

2 City Tower, Orange Office $147,300,000 Torchlight Investors KBS Strategic Opportunity REIT 2 Camden North Quarter Multi-Family $80,966,667 Pizzuti Companies Camden Property Trust $342 psf $243,143 per unit

3 Surf at 39 Apartments, Multi-Family $134,000,000 Lone Star Funds Interstate Equities Corporation 3 Sole at Casselberry Multi-Family $72,250,000 Bainbridge Companies TH Real Estate Huntington Beach $335,000 per unit $215,030 per unit

4 Alexan Aspect, Fullerton Multi-Family $131,000,000 Columbus Pacific Properties / Crow JPMorgan Chase & Co. 4 The Avenue Apartments Multi-Family $71,300,000 Starwood Capital BRT Apartments $404,320 per unit Holdings $136,590 per unit

5 Beckman Coulter Campus, Brea Industrial $115,250,000 NPDC-EY / NPDC-RI Brea Trust Hines 5 Lofts at Uptown Altamonte Multi-Family $68,830,000 Epoch Properties Wafra Real Estate $200 psf $212,438 per unit

50 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 51 Orange County Investment Market Orlando Investment Market

Little sway from investors in first half of 2018 Select Avg. Cap Rates 1H 1H Multi-family transaction volume continues to exceed expectations Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Investment sales volume maintained to be exhausted as record-high rental Office 6.4% 6.0% Economic fundamentals in Orlando wage growth and strong in-migration Office 7.2% 7.0% an even keel in Southern California’s rates persist in a market that has one remain solid with demand for quality are expected to continue to drive Orange County market during the first of the lowest home-ownership rates in Industrial 6.1% 4.9% properties largely outstripping the demand for apartments. Industrial 7.9% 6.9% half of 2018. The county is on track to the U.S., according to the U.S. Census availability of investment opportunities, Retail 4.9% 5.3% Major sales in the first half of 2018 Retail 7.2% 6.4% achieve sales volumes similar to those Bureau. A lack of affordable rental particularly in high-demand areas. included Preferred Apartment of 2017, indicating that record-high options persuaded investors to spend a Multi-Family 4.1% 4.6% Investment sales activity during the first Multi-Family 6.5% 5.6% Communities’ acquisition of the 221-unit volumes will likely continue for a fourth record average of $324,000 per unit in half of 2018 was strong with more than Retreat at Orlando for $81.7 million, or consecutive year. Total sales volume in the first half of 2018. Slight expansion $2.3 billion in total transaction volume. $370,000 per unit, and Camden Property the first half of 2018 approached $3.2 of cap rates, incurred over the past year, Interest rates are beginning to creep up Trust’s purchase of Camden North billion, decreasing a mere 6% from the is expected to be short-lived as rental- Investment Activity 1H 1H and debt remains readily available as Investment Activity 1H 1H 2017 2018 Quarter, a 333-unit mid-rise apartment 2017 2018 first half of 2017. Investor demand has rate growth begins to decelerate and private-equity investors actively seek property in downtown Orlando for waned slightly across each of the four interest rates rise. 32% 34% strong investment opportunities. 17% 11% $81 million, or $243,000 per unit. Retail sectors tracked although all sectors 1H 2018 1H 2018 The county’s industrial product 25% 25% The Orlando industrial market has been investment sales dollar volume in first- 7% 10% continue to achieve premium lease $3.2 $2.3 generated $791 million in first-half 2018 on fire for the last couple of years, half 2018 was 41% below the first-half rates amid low vacancy. BILLION 18% 16% BILLION 16% 13% sales, down from $834 million one year fueled in large part by the surging 2017 level. Investors continue to target For the sixth straight year, the office earlier. A record-high average price 26% 25% e-commerce and logistics industries, value-add opportunities with solid 60% 66% sector emerged with the largest first- ($199 psf) in the constricted industrial a strong increase in total construction upside potential near expanding retail half trading volume with just under sector may escalate as demand for last- OFFICE INDUSTRIAL RETAIL MULTI-FAMILY activity and broad-based industrial centers. All in all, the capital pool in OFFICE INDUSTRIAL RETAIL MULTI-FAMILY $1.1 billion in sales, nearly matching mile warehousing increases. Meanwhile, demand. In fact, the industrial sector Orlando remains relatively deep and is the mid-year 2017 total. However, the investor recognition of Orange County was the only one that recorded a year- expected to stay healthy over the next average office price decreased to $253 retail remained strong, albeit cautious, Investment Volume over-year increase (11%) in investment couple of years. Investment Volume

psf at mid-year 2018 from $279 psf with $522 million worth of sales volume $10 sales dollar volume in first-half 2018. $7 one year earlier. Office investors may in first-half 2018, down from $608 $9 Total investment sales dollar volume for $6 become more reserved as vacancy million in first-half 2017. $8 $7 the first six months of 2018 was down $5

continues to grow and an uptick of $ BILLIONS (US) $ BILLIONS (US) $6 26% compared with the same period speculative development is added to $4 the market. $5 one year earlier. The multi-family sector $3 $4 exceeded expectations as its share of

Multi-family sales narrowly achieved $3 overall volume rose to 65%, compared $2 the next-largest volume with $793 $2 with 38% recorded during first-half $1 million invested in first-half 2018, down $1 2017. Multi-family investment volume is $0 $0 from $862 million in first-half 2017. 2013 2014 2015 2016 2017 1H 2018 expected to remain robust in the second 2013 2014 2015 2016 2017 1H 2018 Investor interest in multi-family has yet half of 2018 as rising employment, slow OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Summit Office Campus, Aliso Office $157,000,000 RREEF America, LLC Rockpoint Group 1 Retreat at Orlando Multi-Family $81,721,250 Inland Real Estate Group Preferred Apartment Communities Viejo $326 psf $369,779 per unit

2 City Tower, Orange Office $147,300,000 Torchlight Investors KBS Strategic Opportunity REIT 2 Camden North Quarter Multi-Family $80,966,667 Pizzuti Companies Camden Property Trust $342 psf $243,143 per unit

3 Surf at 39 Apartments, Multi-Family $134,000,000 Lone Star Funds Interstate Equities Corporation 3 Sole at Casselberry Multi-Family $72,250,000 Bainbridge Companies TH Real Estate Huntington Beach $335,000 per unit $215,030 per unit

4 Alexan Aspect, Fullerton Multi-Family $131,000,000 Columbus Pacific Properties / Crow JPMorgan Chase & Co. 4 The Avenue Apartments Multi-Family $71,300,000 Starwood Capital BRT Apartments $404,320 per unit Holdings $136,590 per unit

5 Beckman Coulter Campus, Brea Industrial $115,250,000 NPDC-EY / NPDC-RI Brea Trust Hines 5 Lofts at Uptown Altamonte Multi-Family $68,830,000 Epoch Properties Wafra Real Estate $200 psf $212,438 per unit

50 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 51 Philadelphia Investment Market Phoenix Investment Market

Retail sector drops following successful year Select Avg. Cap Rates 1H 1H Deal volume increases across all property types Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Philadelphia’s overall first-half 2018 investment volume by the end of the Office 7.4% 7.5% Phoenix attracted more capital from Benefitting from the area’s lack of Office 7.2% 6.8% investment volume posted a 16% second quarter. Major office deals in institutional investors in the first half of natural disasters and lower business year-over-year increase, rising $420 the first half of 2018 included American Industrial 6.9% 6.6% 2018 compared with the first half of 2017. costs, data-center demand is influencing Industrial 7.0% 6.0% million above the mid-2017 total. Total Real Estate Partners Management’s The market’s strong growth is being the flex market. Data-center growth Retail 6.7% 6.2% Retail 6.4% 6.5% investment volume reached $3.1 billion purchase of 1600 Market Street for $160 sustained by favorable demographic is viewed as the next important during the first half of 2018. Industrial, million, Goldman Sachs’ $135.6-million Multi-Family 6.0% 5.8% and economic trends. Total volume evolution in the Phoenix commercial Multi-Family 5.9% 5.5% retail and multi-family average cap rates acquisition of 2000 Market Street for increased 33% across all property types property market. CyrusOne, a Texas all dipped from mid-year 2017 to mid- $135.6 million and Korea Investment with the highest percentage growth in data-center investment firm, is planning year 2018 with only the office average Management’s purchase of the new GSK the industrial sector (73%). Multi-family a 198-megawatt facility – its second seeing a rise of 10 bps. The overall North American headquarters. Investment Activity 1H 1H transactions dominated the market, project in Phoenix. EdgeCore Internet Investment Activity 1H 1H 2017 2018 2017 2018 average cap rate in Philadelphia fell 30 accounting for approximately 50% of the Real Estate LLC broke ground on bps year-over-year to 6.5%. The retail sector recorded the largest 41% 35% total dollar volume, due to continued its $150-million data center in Mesa 29% 24% drop in dollar volume. After comprising 1H 2018 demand in the rental-housing market. As in March 2018, starting its planned 1H 2018 In both the multi-family and industrial 25% of total investment dollar volume in 13% 24% 11% 15% $3.1 values increased, cap rates contracted $2-billion investment there. In January $5.8 first-half 2017, retail accounted for only sectors, transaction dollar volumes BILLION 25% 3% in all property types except retail. 2018, I/O Data Centers repurchased two BILLION 11% 11% were above first-half 2017 levels, 3% in first-half 2018. Retail’s lower dollar Industrial cap rates registered the largest data centers, which it had previously 21% 38% 49% increasing 108% and 110%, respectively. volume resulted from an 87% decline in reduction from mid-year 2017, dropping sold to Carter Validus Mission Critical 50% Philadelphia’s multi-family sector transactions compared with the same 100 bps to an average 6%. REIT in a sale-leaseback, for $142.5 OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY continued to perform well in terms period one year earlier. million. The largest traditional industrial of occupancy and demand, grabbing Multi-family accounted for four of the transaction in the first half of 2018 the largest share of sales with volume five largest transactions in first-half Investment Volume was Lincoln Property Company’s Investment Volume totaling close to $1.2 billion through the 2018 although per-unit pricing ranged $39.7-million purchase of 2500 W. Frye between $143,229 and $346,453. The mid-year mark. That figure represented a $8 Road for $248 psf. $12 $620-million increase from the mid-year average unit price increased 4.9% from $7 2017 level. the first half of 2017 to the first half $10 $6

$ BILLIONS (US) of 2018. At the end of second-quarter $ BILLIONS (US) $8 Despite experiencing a marginal (1%) $5 2017, nearly 19,000 units were under year-over-year decline in transaction $4 construction, and the pace remains $6 dollar volume, the office sector $3 constant in 2018 with more than 20,400 $4 accounted for three of the region’s $2 units underway. Current economic five largest transactions in first-half $2 $1 trends indicate rental and vacancy rates 2018. Office investment dollar volume will continue on healthy trajectories, $0 $0 decreased by more than $12 million 2013 2014 2015 2016 2017 1H 2018 encouraging further investment. 2013 2014 2015 2016 2017 1H 2018 but still accounted for 35% of overall OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Evo at Cira Centre South Multi-Family $197,500,000 Brandywine Realty Trust Mapletree Investments 1 Optima Sonoran Village Multi-Family $205,100,000 DeBartolo Development Principal RE Investors $569,164 per unit $346,453 per unit

2 1600 Market Street Office $160,000,000 Equity Commonwealth American Real Estate Partners 2 Dakota at McDowell Mountain Multi-Family $160,100,000 UBS Realty Advisors CBRE Global Investors $194 psf Management, LLC Ranch $217,527 per unit

3 3601 Market Street Multi-Family $140,000,000 Southern Land Company FPA Multifamily, LLC 3 Westgate City Center Retail $133,000,000 iStar Financial YAM Properties $385,675 per unit $262 psf

4 2000 Market Street Office $135,600,000 Gemini Rosemont Commercial Real Goldman Sachs & Co. 4 Ten 01 on the Lake Multi-Family $115,000,000 Picerne Group PGIM Real Estate $204 psf Estate $219,885 per unit

5 GSK North American HQ Office $130,500,000 Liberty Property Trust Korea Investment Management Co. 5 Red Mountain Villas Multi-Family $110,000,000 Weidner Apartment Homes Knightvest Capital $628 psf $143,229 per unit

52 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 53 Philadelphia Investment Market Phoenix Investment Market

Retail sector drops following successful year Select Avg. Cap Rates 1H 1H Deal volume increases across all property types Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Philadelphia’s overall first-half 2018 investment volume by the end of the Office 7.4% 7.5% Phoenix attracted more capital from Benefitting from the area’s lack of Office 7.2% 6.8% investment volume posted a 16% second quarter. Major office deals in institutional investors in the first half of natural disasters and lower business year-over-year increase, rising $420 the first half of 2018 included American Industrial 6.9% 6.6% 2018 compared with the first half of 2017. costs, data-center demand is influencing Industrial 7.0% 6.0% million above the mid-2017 total. Total Real Estate Partners Management’s The market’s strong growth is being the flex market. Data-center growth Retail 6.7% 6.2% Retail 6.4% 6.5% investment volume reached $3.1 billion purchase of 1600 Market Street for $160 sustained by favorable demographic is viewed as the next important during the first half of 2018. Industrial, million, Goldman Sachs’ $135.6-million Multi-Family 6.0% 5.8% and economic trends. Total volume evolution in the Phoenix commercial Multi-Family 5.9% 5.5% retail and multi-family average cap rates acquisition of 2000 Market Street for increased 33% across all property types property market. CyrusOne, a Texas all dipped from mid-year 2017 to mid- $135.6 million and Korea Investment with the highest percentage growth in data-center investment firm, is planning year 2018 with only the office average Management’s purchase of the new GSK the industrial sector (73%). Multi-family a 198-megawatt facility – its second seeing a rise of 10 bps. The overall North American headquarters. Investment Activity 1H 1H transactions dominated the market, project in Phoenix. EdgeCore Internet Investment Activity 1H 1H 2017 2018 2017 2018 average cap rate in Philadelphia fell 30 accounting for approximately 50% of the Real Estate LLC broke ground on bps year-over-year to 6.5%. The retail sector recorded the largest 41% 35% total dollar volume, due to continued its $150-million data center in Mesa 29% 24% drop in dollar volume. After comprising 1H 2018 demand in the rental-housing market. As in March 2018, starting its planned 1H 2018 In both the multi-family and industrial 25% of total investment dollar volume in 13% 24% 11% 15% $3.1 values increased, cap rates contracted $2-billion investment there. In January $5.8 first-half 2017, retail accounted for only sectors, transaction dollar volumes BILLION 25% 3% in all property types except retail. 2018, I/O Data Centers repurchased two BILLION 11% 11% were above first-half 2017 levels, 3% in first-half 2018. Retail’s lower dollar Industrial cap rates registered the largest data centers, which it had previously 21% 38% 49% increasing 108% and 110%, respectively. volume resulted from an 87% decline in reduction from mid-year 2017, dropping sold to Carter Validus Mission Critical 50% Philadelphia’s multi-family sector transactions compared with the same 100 bps to an average 6%. REIT in a sale-leaseback, for $142.5 OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY continued to perform well in terms period one year earlier. million. The largest traditional industrial of occupancy and demand, grabbing Multi-family accounted for four of the transaction in the first half of 2018 the largest share of sales with volume five largest transactions in first-half Investment Volume was Lincoln Property Company’s Investment Volume totaling close to $1.2 billion through the 2018 although per-unit pricing ranged $39.7-million purchase of 2500 W. Frye between $143,229 and $346,453. The mid-year mark. That figure represented a $8 Road for $248 psf. $12 $620-million increase from the mid-year average unit price increased 4.9% from $7 2017 level. the first half of 2017 to the first half $10 $6

$ BILLIONS (US) of 2018. At the end of second-quarter $ BILLIONS (US) $8 Despite experiencing a marginal (1%) $5 2017, nearly 19,000 units were under year-over-year decline in transaction $4 construction, and the pace remains $6 dollar volume, the office sector $3 constant in 2018 with more than 20,400 $4 accounted for three of the region’s $2 units underway. Current economic five largest transactions in first-half $2 $1 trends indicate rental and vacancy rates 2018. Office investment dollar volume will continue on healthy trajectories, $0 $0 decreased by more than $12 million 2013 2014 2015 2016 2017 1H 2018 encouraging further investment. 2013 2014 2015 2016 2017 1H 2018 but still accounted for 35% of overall OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Evo at Cira Centre South Multi-Family $197,500,000 Brandywine Realty Trust Mapletree Investments 1 Optima Sonoran Village Multi-Family $205,100,000 DeBartolo Development Principal RE Investors $569,164 per unit $346,453 per unit

2 1600 Market Street Office $160,000,000 Equity Commonwealth American Real Estate Partners 2 Dakota at McDowell Mountain Multi-Family $160,100,000 UBS Realty Advisors CBRE Global Investors $194 psf Management, LLC Ranch $217,527 per unit

3 3601 Market Street Multi-Family $140,000,000 Southern Land Company FPA Multifamily, LLC 3 Westgate City Center Retail $133,000,000 iStar Financial YAM Properties $385,675 per unit $262 psf

4 2000 Market Street Office $135,600,000 Gemini Rosemont Commercial Real Goldman Sachs & Co. 4 Ten 01 on the Lake Multi-Family $115,000,000 Picerne Group PGIM Real Estate $204 psf Estate $219,885 per unit

5 GSK North American HQ Office $130,500,000 Liberty Property Trust Korea Investment Management Co. 5 Red Mountain Villas Multi-Family $110,000,000 Weidner Apartment Homes Knightvest Capital $628 psf $143,229 per unit

52 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 53 Pittsburgh Investment Market Raleigh-Durham Investment Market

Retail and multi-family sectors drive activity Select Avg. Cap Rates 1H 1H Multi-family and office sales dominate activity Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Total investment activity across the delivered a premium price for KGA, Office 7.9% 8.9% While investment activity has slowed volume. Industrial sales totaled $124 Office 6.6% 6.2% Pittsburgh investment market was helping to boost retail-sector sales in some regions, the Raleigh-Durham million, down 64% compared with the down $135 million (22%) year-over-year volume by 53% year-over-year to $210 Industrial 5.6% 5.7% region continues to experience robust first half of 2017 – when a combination Industrial 7.4% 7.4% during the first six months of 2018 as million. demand. Office, industrial, retail and of data center sales and sales of newly Retail 6.9% 7.2% Retail 6.7% 7.1% overall dollar volume of $492 million multi-family sales totaled $2.4 billion constructed product drove volume to an Office investment activity and overall was recorded. The retail sector posted Multi-Family 7.1% 6.8% during the first half of 2018, up 46% unusually high level. Retail sales totaled Multi-Family 5.7% 5.1% the highest trading volume, followed by dollar volume were down year-over- versus the first half of 2017. Raleigh- $130 million in the first half of 2018, the multi-family and office sectors. The year with total sales falling 66% to $104 Durham’s office market, in particular, down 27% from the same period in 2017. trend of out-of-town investors entering million. Noteworthy office transactions has drawn increased attention in recent Raleigh-Durham investment activity the market continued through mid-2018 included the sale of 501 Technology Investment Activity 1H 1H months as class A vacancy remains in Investment Activity 1H 1H 2017 2018 will remain strong over the next 12 2017 2018 albeit at a slower pace when compared Drive, a fully leased 98,314-sf building the single digits and asking rental rates months as investors increasingly turn with recent years. in Southpointe, purchased by the Aztec 48% 21% face sustained upward pressure. Office 25% 44% Fund of Mexico for $20.25 million. to secondary markets in search of more 1H 2018 sales totaled $1.1 billion in the first half 1H 2018 The sale of Ascent 430, a 320-unit Pittsburgh-based Walnut Capital closed 13% 9% upside opportunities. Office and multi- 21% 5% $492 of 2018, accounting for 44% of total $2.4 on a building formerly occupied by family sales will continue to dominate apartment complex in Wexford, PA, MILLION 22% 43% dollar volume. This figure, up 157% from BILLION 11% 5% was the largest investment transaction the Pittsburgh Athletic Association in the first half of 2017, was driven in large in the near term and likely push overall 17% 27% 43% recorded in first-half 2018. The property Oakland, PA situated on the University part by an increase in portfolio sales. volume beyond the 2017 level. 46% was acquired by Graycliff Capital of Pittsburgh’s uptown urban campus. Partners for $61 million. Also in the The sale price for the 90,000-sf building OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Multi-family attracted $1.1 billion in OFFICE INDUSTRIAL RETAIL MULTI-FAMILY multi-family sector, the Eagle Ridge was $12.6 million. The property will be investment during the first half of Apartments site comprising 352 units, repositioned for a mix of office and 2018, up 54% versus the first half of located in Monroeville, PA, was sold to retail uses. Investment Volume 2017. Despite a wave of construction Investment Volume

Merion Partners for $40 million. That $1,400 completions in the last two years, $5 price represented a 53% value increase Although first-half 2018 investment investors remain hungry for both core activity was not as brisk or impressive $1,200 from the asset’s previous trade in 2010. and value-add opportunities. The $4 as the year prior, the Pittsburgh market $1,000 $ MILLIONS (US)

$ BILLIONS (US) region’s robust population and job $ BILLIONS (US) In the retail sector, 111 Siena Drive, a remained stable. Activity is expected to $800 growth, combined with a tight housing $3 40,000-sf building occupied by Whole pick up as 2018 draws to a close. $600 market, are driving strong occupancy Foods, was sold for $24.4 million. rates and positive rental-rate growth – $2 $400 The seller was Pittsburgh-based despite abundant new supply. $1 development firm KGA Partners and $200 the buyer was Spectrum Properties Industrial and retail sales were sparse $0 $0 of Dallas. This property’s prominent 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 in the first half of 2018 with each asset 2013 2014 2015 2016 2017 1H 2018 location and excellent anchor tenancy class representing just 5% of total OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Ascent 430 Multi-Family $61,012,500 The NRP Group, LLC Graycliff Capital Partners 1 Venture Center & Alliance Office $171,999,903 Heitman TPG / Parkway Property Investments $191,626 per unit Center $277 psf

2 Eagle Ridge Apartments Multi-Family $40,000,000 Iron River Management Merion Realty Partners 2 Lenovo Enterprise Campus Office $135,300,000 Arzan Financial Group Sentinel Real Estate $113,636 per unit $279 psf

3 111 Siena Drive Retail $24,438,000 Simon Property Group, Inc. Ross Park S&S LLC 3 Midtown Plaza Office $127,000,000 Kane Realty / KBS Realty Advisors Lionstone Investments $619 psf $385 psf

4 501 Technology Drive Office $20,250,000 Laurus Corporation The Aztec Fund 4 Meridian Business Campus Office $95,764,478 Investcorp Accesso Partners $206 psf $163 psf

5 4215 5th Avenue Office $12,600,000 Pittsburgh Athletic Association Walnut Capital 5 BullHouse Multi-Family $76,250,000 Woodfield Investments / The Carlyle Lantower Residential $140 psf $250,000 per unit Group

54 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 55 Pittsburgh Investment Market Raleigh-Durham Investment Market

Retail and multi-family sectors drive activity Select Avg. Cap Rates 1H 1H Multi-family and office sales dominate activity Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Total investment activity across the delivered a premium price for KGA, Office 7.9% 8.9% While investment activity has slowed volume. Industrial sales totaled $124 Office 6.6% 6.2% Pittsburgh investment market was helping to boost retail-sector sales in some regions, the Raleigh-Durham million, down 64% compared with the down $135 million (22%) year-over-year volume by 53% year-over-year to $210 Industrial 5.6% 5.7% region continues to experience robust first half of 2017 – when a combination Industrial 7.4% 7.4% during the first six months of 2018 as million. demand. Office, industrial, retail and of data center sales and sales of newly Retail 6.9% 7.2% Retail 6.7% 7.1% overall dollar volume of $492 million multi-family sales totaled $2.4 billion constructed product drove volume to an Office investment activity and overall was recorded. The retail sector posted Multi-Family 7.1% 6.8% during the first half of 2018, up 46% unusually high level. Retail sales totaled Multi-Family 5.7% 5.1% the highest trading volume, followed by dollar volume were down year-over- versus the first half of 2017. Raleigh- $130 million in the first half of 2018, the multi-family and office sectors. The year with total sales falling 66% to $104 Durham’s office market, in particular, down 27% from the same period in 2017. trend of out-of-town investors entering million. Noteworthy office transactions has drawn increased attention in recent Raleigh-Durham investment activity the market continued through mid-2018 included the sale of 501 Technology Investment Activity 1H 1H months as class A vacancy remains in Investment Activity 1H 1H 2017 2018 will remain strong over the next 12 2017 2018 albeit at a slower pace when compared Drive, a fully leased 98,314-sf building the single digits and asking rental rates months as investors increasingly turn with recent years. in Southpointe, purchased by the Aztec 48% 21% face sustained upward pressure. Office 25% 44% Fund of Mexico for $20.25 million. to secondary markets in search of more 1H 2018 sales totaled $1.1 billion in the first half 1H 2018 The sale of Ascent 430, a 320-unit Pittsburgh-based Walnut Capital closed 13% 9% upside opportunities. Office and multi- 21% 5% $492 of 2018, accounting for 44% of total $2.4 on a building formerly occupied by family sales will continue to dominate apartment complex in Wexford, PA, MILLION 22% 43% dollar volume. This figure, up 157% from BILLION 11% 5% was the largest investment transaction the Pittsburgh Athletic Association in the first half of 2017, was driven in large in the near term and likely push overall 17% 27% 43% recorded in first-half 2018. The property Oakland, PA situated on the University part by an increase in portfolio sales. volume beyond the 2017 level. 46% was acquired by Graycliff Capital of Pittsburgh’s uptown urban campus. Partners for $61 million. Also in the The sale price for the 90,000-sf building OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Multi-family attracted $1.1 billion in OFFICE INDUSTRIAL RETAIL MULTI-FAMILY multi-family sector, the Eagle Ridge was $12.6 million. The property will be investment during the first half of Apartments site comprising 352 units, repositioned for a mix of office and 2018, up 54% versus the first half of located in Monroeville, PA, was sold to retail uses. Investment Volume 2017. Despite a wave of construction Investment Volume

Merion Partners for $40 million. That $1,400 completions in the last two years, $5 price represented a 53% value increase Although first-half 2018 investment investors remain hungry for both core activity was not as brisk or impressive $1,200 from the asset’s previous trade in 2010. and value-add opportunities. The $4 as the year prior, the Pittsburgh market $1,000 $ MILLIONS (US)

$ BILLIONS (US) region’s robust population and job $ BILLIONS (US) In the retail sector, 111 Siena Drive, a remained stable. Activity is expected to $800 growth, combined with a tight housing $3 40,000-sf building occupied by Whole pick up as 2018 draws to a close. $600 market, are driving strong occupancy Foods, was sold for $24.4 million. rates and positive rental-rate growth – $2 $400 The seller was Pittsburgh-based despite abundant new supply. $1 development firm KGA Partners and $200 the buyer was Spectrum Properties Industrial and retail sales were sparse $0 $0 of Dallas. This property’s prominent 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 in the first half of 2018 with each asset 2013 2014 2015 2016 2017 1H 2018 location and excellent anchor tenancy class representing just 5% of total OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Ascent 430 Multi-Family $61,012,500 The NRP Group, LLC Graycliff Capital Partners 1 Venture Center & Alliance Office $171,999,903 Heitman TPG / Parkway Property Investments $191,626 per unit Center $277 psf

2 Eagle Ridge Apartments Multi-Family $40,000,000 Iron River Management Merion Realty Partners 2 Lenovo Enterprise Campus Office $135,300,000 Arzan Financial Group Sentinel Real Estate $113,636 per unit $279 psf

3 111 Siena Drive Retail $24,438,000 Simon Property Group, Inc. Ross Park S&S LLC 3 Midtown Plaza Office $127,000,000 Kane Realty / KBS Realty Advisors Lionstone Investments $619 psf $385 psf

4 501 Technology Drive Office $20,250,000 Laurus Corporation The Aztec Fund 4 Meridian Business Campus Office $95,764,478 Investcorp Accesso Partners $206 psf $163 psf

5 4215 5th Avenue Office $12,600,000 Pittsburgh Athletic Association Walnut Capital 5 BullHouse Multi-Family $76,250,000 Woodfield Investments / The Carlyle Lantower Residential $140 psf $250,000 per unit Group

54 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 55 Sacramento Investment Market San Antonio Investment Market

Total investment dollar volume nearly doubles Select Avg. Cap Rates 1H 1H Retail and multi-family see the most growth Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

The Sacramento Valley commercial real within Sacramento’s city limits. The deal Office 6.8% 5.6% San Antonio commercial real estate buildings, hoping for higher returns. The Office 7.3% 7.0% estate market registered $2.3 billion in had a 6.6% capitalization rate. investment sales activity in the first industrial sector continues its steady sales during the first half of 2018. This Industrial 6.0% 6.0% half of 2018 edged slightly higher streak as more than 5 msf in product has Industrial 7.5% 6.9% figure was nearly double the investment Multi-family investors were active in than in the first half of 2017 thanks to changed hands every year since 2012 Retail 6.9% 6.6% Retail 6.7% 7.0% dollar volume recorded in the first the Sacramento Valley, recording $642 increasing consumer confidence and – including 2015 and 2017, when more million in trades during the first half half of 2017, when $1.4 billion in trades Multi-Family 5.9% 5.3% the continued recovery of the energy than 10 msf traded. Multi-Family 6.0% 5.7% occurred. Furthering the performance of 2018, a significant increase year- industry. The metro is a healthy tertiary increase, sales activity in each asset class over-year. Sacramento offers a more market and has become an attractive In 2017, each property type recorded increased when compared with one year affordable urban alternative to larger target for investors and developers its highest sales dollar volume total earlier. surrounding metros with many Bay Area Investment Activity 1H 1H who have been squeezed out of since the economic recovery began in Investment Activity 1H 1H 2017 2018 2017 2018 employees choosing to reside in the primary and secondary markets. The 2010 – except retail, which posted its The office sector accounted for the valley and commute to work. 45% 33% IH-35 corridor between Austin and San lowest level in four years. However, retail 11% 18% largest share of investment volume in Antonio continues to record substantial recorded very strong growth in first-half Going forward, the Sacramento Valley 1H 2018 10% 18% 1H 2018 20% 7% the first half of 2018 with $748 million economic and population growth and 2018, increasing 108% year-over-year. will continue to measure stable growth $2.3 $1.7 in trades compared with $620 million BILLION 24% 21% urbanization. This trend has helped the Sales of all asset types finished first-half BILLION 6% 12% in sales volume and investments. in first-half 2017. The largest deal by market achieve consistent sales growth 2018 above their year-earlier marks – Strong employment growth and a 22% 28% 63% 63% volume in the first half of 2018 was over the last five years with 2018 also except industrial, which is coming off more affordable urban lifestyle are Shorenstein Properties’ acquisition on track to surpass 2017’s full-year sales its strongest year ever. All in all, this contributing to ongoing vacancy OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY of the U.S. Bank Tower in downtown volume. In 2017, full-year total sales positive momentum is expected to declines and rent increases in the Sacramento. The 336,000-sf office tower were nearly $800 million higher across continue through the rest of 2018 and market, giving local investors continued traded for $161 million at a 6.75% cap all property types when compared with beyond. confidence. Investment Volume Investment Volume rate. Industrial sales volume was also 2016. The pace of growth has slowed in strong, ending the first half of 2018 with $5 2018, but the market retains its positive $5 $407 million in trades compared with momentum. $132 million during the first half of 2017. $4 $4

The Blackstone Group acquired the $ BILLIONS (US) Office sales growth has tended to follow $ BILLIONS (US) Sierra View Business Park, a 712,000-sf $3 the highways with northern submarkets $3 industrial project, for $58.25 million. such as North Central, Northwest and The retail sector measured $491 million $2 Far Northwest seeing the highest asking $2 in transactions during the first half of prices per rentable square foot. In all $1 $1 2018, up from $328 million in the first asset classes, investors are moving away half of 2017. TA Realty paid $25 million from pricier core properties and are $0 $0 to acquire Arden Watt Marketplace, a 2013 2014 2015 2016 2017 1H 2018 now seeking value-add opportunities 2013 2014 2015 2016 2017 1H 2018

138,000-sf shopping center located OFFICE INDUSTRIAL RETAIL MULTI-FAMILY in suburbs or obsolete class B and C OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 U.S. Bank Tower Office $161,000,000 Britannia Pacific Properties Shorenstein Properties, LLC 1 Elian Luxury Apartments Multi-Family $96,625,000 Lone Star Funds FPA Multifamily $439 psf $179,267 per unit

2 1751 E. Roseville Parkway, Multi-Family $148,700,000 Kennedy-Wilson Properties, Ltd. Blackstone Real Estate Income Trust, 2 The Flats at Big Tex Multi-Family $67,000,000 The NRP Group, LLC The Accend Companies Roseville $242,973 per unit Inc. $199,404 per unit

3 Depot Park Industrial $127,790,000 Fischer Properties The Blackstone Group LP 3 Ridgeline at Rogers Ranch Multi-Family $53,625,096 Embrey Partners, Ltd. Benimax Investment Group, Inc. $47 psf $179,348 per unit

4 Roseville Innovation Park Industrial $93,500,000 Farallon Capital Management, LLC Stonemont Financial Group 4 Landmark Grandview Multi-Family $53,400,000 Oden Hughes, LLC B&M Management Co. $209 psf $150,000 per unit

5 Sierra View Business Park Industrial $58,250,000 Longmeadow Development The Blackstone Group LP 5 Legacy Flats Multi-Family $40,621,690 White-Conlee Development PEM Real Estate Group $82 psf $131,038 per unit

56 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 57 Sacramento Investment Market San Antonio Investment Market

Total investment dollar volume nearly doubles Select Avg. Cap Rates 1H 1H Retail and multi-family see the most growth Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

The Sacramento Valley commercial real within Sacramento’s city limits. The deal Office 6.8% 5.6% San Antonio commercial real estate buildings, hoping for higher returns. The Office 7.3% 7.0% estate market registered $2.3 billion in had a 6.6% capitalization rate. investment sales activity in the first industrial sector continues its steady sales during the first half of 2018. This Industrial 6.0% 6.0% half of 2018 edged slightly higher streak as more than 5 msf in product has Industrial 7.5% 6.9% figure was nearly double the investment Multi-family investors were active in than in the first half of 2017 thanks to changed hands every year since 2012 Retail 6.9% 6.6% Retail 6.7% 7.0% dollar volume recorded in the first the Sacramento Valley, recording $642 increasing consumer confidence and – including 2015 and 2017, when more million in trades during the first half half of 2017, when $1.4 billion in trades Multi-Family 5.9% 5.3% the continued recovery of the energy than 10 msf traded. Multi-Family 6.0% 5.7% occurred. Furthering the performance of 2018, a significant increase year- industry. The metro is a healthy tertiary increase, sales activity in each asset class over-year. Sacramento offers a more market and has become an attractive In 2017, each property type recorded increased when compared with one year affordable urban alternative to larger target for investors and developers its highest sales dollar volume total earlier. surrounding metros with many Bay Area Investment Activity 1H 1H who have been squeezed out of since the economic recovery began in Investment Activity 1H 1H 2017 2018 2017 2018 employees choosing to reside in the primary and secondary markets. The 2010 – except retail, which posted its The office sector accounted for the valley and commute to work. 45% 33% IH-35 corridor between Austin and San lowest level in four years. However, retail 11% 18% largest share of investment volume in Antonio continues to record substantial recorded very strong growth in first-half Going forward, the Sacramento Valley 1H 2018 10% 18% 1H 2018 20% 7% the first half of 2018 with $748 million economic and population growth and 2018, increasing 108% year-over-year. will continue to measure stable growth $2.3 $1.7 in trades compared with $620 million BILLION 24% 21% urbanization. This trend has helped the Sales of all asset types finished first-half BILLION 6% 12% in sales volume and investments. in first-half 2017. The largest deal by market achieve consistent sales growth 2018 above their year-earlier marks – Strong employment growth and a 22% 28% 63% 63% volume in the first half of 2018 was over the last five years with 2018 also except industrial, which is coming off more affordable urban lifestyle are Shorenstein Properties’ acquisition on track to surpass 2017’s full-year sales its strongest year ever. All in all, this contributing to ongoing vacancy OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY of the U.S. Bank Tower in downtown volume. In 2017, full-year total sales positive momentum is expected to declines and rent increases in the Sacramento. The 336,000-sf office tower were nearly $800 million higher across continue through the rest of 2018 and market, giving local investors continued traded for $161 million at a 6.75% cap all property types when compared with beyond. confidence. Investment Volume Investment Volume rate. Industrial sales volume was also 2016. The pace of growth has slowed in strong, ending the first half of 2018 with $5 2018, but the market retains its positive $5 $407 million in trades compared with momentum. $132 million during the first half of 2017. $4 $4

The Blackstone Group acquired the $ BILLIONS (US) Office sales growth has tended to follow $ BILLIONS (US) Sierra View Business Park, a 712,000-sf $3 the highways with northern submarkets $3 industrial project, for $58.25 million. such as North Central, Northwest and The retail sector measured $491 million $2 Far Northwest seeing the highest asking $2 in transactions during the first half of prices per rentable square foot. In all $1 $1 2018, up from $328 million in the first asset classes, investors are moving away half of 2017. TA Realty paid $25 million from pricier core properties and are $0 $0 to acquire Arden Watt Marketplace, a 2013 2014 2015 2016 2017 1H 2018 now seeking value-add opportunities 2013 2014 2015 2016 2017 1H 2018

138,000-sf shopping center located OFFICE INDUSTRIAL RETAIL MULTI-FAMILY in suburbs or obsolete class B and C OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 U.S. Bank Tower Office $161,000,000 Britannia Pacific Properties Shorenstein Properties, LLC 1 Elian Luxury Apartments Multi-Family $96,625,000 Lone Star Funds FPA Multifamily $439 psf $179,267 per unit

2 1751 E. Roseville Parkway, Multi-Family $148,700,000 Kennedy-Wilson Properties, Ltd. Blackstone Real Estate Income Trust, 2 The Flats at Big Tex Multi-Family $67,000,000 The NRP Group, LLC The Accend Companies Roseville $242,973 per unit Inc. $199,404 per unit

3 Depot Park Industrial $127,790,000 Fischer Properties The Blackstone Group LP 3 Ridgeline at Rogers Ranch Multi-Family $53,625,096 Embrey Partners, Ltd. Benimax Investment Group, Inc. $47 psf $179,348 per unit

4 Roseville Innovation Park Industrial $93,500,000 Farallon Capital Management, LLC Stonemont Financial Group 4 Landmark Grandview Multi-Family $53,400,000 Oden Hughes, LLC B&M Management Co. $209 psf $150,000 per unit

5 Sierra View Business Park Industrial $58,250,000 Longmeadow Development The Blackstone Group LP 5 Legacy Flats Multi-Family $40,621,690 White-Conlee Development PEM Real Estate Group $82 psf $131,038 per unit

56 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 57 San Diego County Investment Market San Francisco Investment Market

Investors display renewed enthusiasm for retail Select Avg. Cap Rates 1H 1H Tech capital shows signs of downturn Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Investment dollar volume in the San 2017. Office prices gained momentum, Office 5.4% 7.1% During the first half of 2018, San Francisco the property for $48 million. Office 4.9% 4.8% Diego County market rose 17% year- achieving an average of $324 psf at mid- investment sales displayed signs of over-year to $3.3 billion in the first half year 2018 – up from $251 psf one year Industrial 6.3% 7.1% a cooldown. A total of $3.1 billion in With limited land availability, rising Industrial 3.7% 4.9% of 2018, up from $2.8 billion in first- earlier. Meanwhile, the industrial sector transactions was recorded during construction costs and low housing Retail 6.1% 5.4% Retail 4.4% 4.9% half 2017. The county’s overall average generated $440 million in first-half 2018 the first half of 2018, reflecting a 13% affordability, San Francisco is facing a development problem. On the multi- capitalization rate increased 40 bps sales, a slight decrease from $496 million Multi-Family 5.0% 4.8% decrease from the first half of 2017. This Multi-Family 3.6% 3.7% year-over-year to 6.1%. at mid-year 2017. reduction is likely attributable to rising family front, supply has been lagging interest rates and investors having less behind demand. In the first half of 2018, After leading the way in 2017 with 34% The retail sector generated the largest confidence now that the Bay Area’s San Francisco recorded a 23% increase of market share, the multi-family sector sales volume in San Diego with $1.2 Investment Activity 1H 1H economic expansion has peaked. Despite in multi-family investment dollar volume Investment Activity 1H 1H registered a deceleration in first-half 2017 2018 2017 2018 billion in the first half of 2018, surging decreased sales volume, San Francisco as $504 million in transactions were 2018, generating $790 million. That total from $500 million in the first half of 2017. 23% 27% continues to demonstrate positive signs of completed. The deals included the 72% 72% Total retail sales received a significant was down markedly from $1.2 billion in notable sale of the 196-unit Potrero 1H 2018 employment growth. With an average cap 1H 2018 boost from the refinancing transaction the first half of 2017. In spite of record 17% 13% Launch complex. However, larger 3% 7% $3.3 rate of 4.6% at mid-year 2018, the market $3.1 for Parkway Plaza in El Cajon, valued at occupancy and rental rates, construction industrial-market transactions brought BILLION 18% 36% continues to be a target for institutional BILLION 13% 5% starts have slowed in the past year due $405 million, or $307 psf. This was an investors – due in part to its expanding that sector’s first-half total to nearly $200 to regulatory restrictions and increasing 42% 24% 12% 16% allocated portion of a larger transaction tech industry and overall stability. million – which represented a record 75% by Starwood Capital Group involving construction costs. Additionally, a local increase from the first half of 2017. The the procurement of funds from the government push for more affordable- OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Office investment volume decreased 13% largest industrial sale in the first half of OFFICE INDUSTRIAL RETAIL MULTI-FAMILY commercial-mortgage bond market and housing construction is less appealing year-over-year to $2.2 billion in the first 2018 involved the Lion Building, which a loan from Goldman Sachs. However, to developers and investors than half of 2018. Notable activity included the was sold for $67.3 million. the retail sector performed extremely the waning trend of luxury housing Investment Volume sale of the 657,115-sf Wells Fargo building. Investment Volume

well even without this outlier, separately construction. $9 In February, Allianz Real Estate purchased $8 accumulating $791 million in sales dollar the asset from Columbia Property Trust $8 $7 volume. Investor interest is expected to $7 for a record-breaking $607.8 million, or $6

increase while San Diego retail adapts $ BILLIONS (US) $6 $927 psf. $ BILLIONS (US) $5 to evolving consumer expectations and $5 a growing population, pushing rents Retail investments dropped 69% to $140 $4 $4 higher and keeping vacancy tight. million in the first half of 2018, compared $3 $3 with nearly $866 million in first-half 2017. $2 $2 The office sector was the next-highest Notably, the largest retail transaction $1 performing sector, totaling $887 million $1 recorded during the first half of 2018 was $0 $0 in the first half of 2018 and exceeding 2013 2014 2015 2016 2017 1H 2018 the Diamond Heights Shopping Center. 2013 2014 2015 2016 2017 1H 2018 the $656 million recorded by mid-year In January, Donahue Schriber purchased OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Summers Ridge, Sorrento Mesa Office $148,650,000 Quidel Corporation Alexandria Real Estate Equities 1 Wells Fargo Building Office $607,786,488 Columbia Property Trust Allianz Real Estate of America $469 psf $927 psf

2 Domain San Diego, Kearny Mesa Multi-Family $132,500,000 Essex Property Trust Goldman Sachs 2 275 Battery Street Office $412,500,000 Rockpoint Group Northwestern Mututal $347,769 per unit $868 psf

3 Sofi Shadowridge, Vista Multi-Family $115,000,000 Invesco Pacific Urban Residential 3 123 Mission Street Office $290,000,000 HNA Group Northwood Investors $366,242 per unit $839 psf

4 Gateway at Torrey Hills, Del Mar Office $105,000,000 Prudential Financial, Inc. The Irvine Company 4 270 Brannan Street Office $202,000,000 SKS Investments Mitsui Fudosan America Heights $531 psf $1,115 psf

5 Stonecrest, Kearny Mesa Office $100,300,000 TIAA Pendulum Property Partners 5 100 Spear Street Office $163,250,000 Prudential Real Estate Investors Vanbarton Group $307 psf $804 psf

58 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 59 San Diego County Investment Market San Francisco Investment Market

Investors display renewed enthusiasm for retail Select Avg. Cap Rates 1H 1H Tech capital shows signs of downturn Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Investment dollar volume in the San 2017. Office prices gained momentum, Office 5.4% 7.1% During the first half of 2018, San Francisco the property for $48 million. Office 4.9% 4.8% Diego County market rose 17% year- achieving an average of $324 psf at mid- investment sales displayed signs of over-year to $3.3 billion in the first half year 2018 – up from $251 psf one year Industrial 6.3% 7.1% a cooldown. A total of $3.1 billion in With limited land availability, rising Industrial 3.7% 4.9% of 2018, up from $2.8 billion in first- earlier. Meanwhile, the industrial sector transactions was recorded during construction costs and low housing Retail 6.1% 5.4% Retail 4.4% 4.9% half 2017. The county’s overall average generated $440 million in first-half 2018 the first half of 2018, reflecting a 13% affordability, San Francisco is facing a development problem. On the multi- capitalization rate increased 40 bps sales, a slight decrease from $496 million Multi-Family 5.0% 4.8% decrease from the first half of 2017. This Multi-Family 3.6% 3.7% year-over-year to 6.1%. at mid-year 2017. reduction is likely attributable to rising family front, supply has been lagging interest rates and investors having less behind demand. In the first half of 2018, After leading the way in 2017 with 34% The retail sector generated the largest confidence now that the Bay Area’s San Francisco recorded a 23% increase of market share, the multi-family sector sales volume in San Diego with $1.2 Investment Activity 1H 1H economic expansion has peaked. Despite in multi-family investment dollar volume Investment Activity 1H 1H registered a deceleration in first-half 2017 2018 2017 2018 billion in the first half of 2018, surging decreased sales volume, San Francisco as $504 million in transactions were 2018, generating $790 million. That total from $500 million in the first half of 2017. 23% 27% continues to demonstrate positive signs of completed. The deals included the 72% 72% Total retail sales received a significant was down markedly from $1.2 billion in notable sale of the 196-unit Potrero 1H 2018 employment growth. With an average cap 1H 2018 boost from the refinancing transaction the first half of 2017. In spite of record 17% 13% Launch complex. However, larger 3% 7% $3.3 rate of 4.6% at mid-year 2018, the market $3.1 for Parkway Plaza in El Cajon, valued at occupancy and rental rates, construction industrial-market transactions brought BILLION 18% 36% continues to be a target for institutional BILLION 13% 5% starts have slowed in the past year due $405 million, or $307 psf. This was an investors – due in part to its expanding that sector’s first-half total to nearly $200 to regulatory restrictions and increasing 42% 24% 12% 16% allocated portion of a larger transaction tech industry and overall stability. million – which represented a record 75% by Starwood Capital Group involving construction costs. Additionally, a local increase from the first half of 2017. The the procurement of funds from the government push for more affordable- OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Office investment volume decreased 13% largest industrial sale in the first half of OFFICE INDUSTRIAL RETAIL MULTI-FAMILY commercial-mortgage bond market and housing construction is less appealing year-over-year to $2.2 billion in the first 2018 involved the Lion Building, which a loan from Goldman Sachs. However, to developers and investors than half of 2018. Notable activity included the was sold for $67.3 million. the retail sector performed extremely the waning trend of luxury housing Investment Volume sale of the 657,115-sf Wells Fargo building. Investment Volume

well even without this outlier, separately construction. $9 In February, Allianz Real Estate purchased $8 accumulating $791 million in sales dollar the asset from Columbia Property Trust $8 $7 volume. Investor interest is expected to $7 for a record-breaking $607.8 million, or $6

increase while San Diego retail adapts $ BILLIONS (US) $6 $927 psf. $ BILLIONS (US) $5 to evolving consumer expectations and $5 a growing population, pushing rents Retail investments dropped 69% to $140 $4 $4 higher and keeping vacancy tight. million in the first half of 2018, compared $3 $3 with nearly $866 million in first-half 2017. $2 $2 The office sector was the next-highest Notably, the largest retail transaction $1 performing sector, totaling $887 million $1 recorded during the first half of 2018 was $0 $0 in the first half of 2018 and exceeding 2013 2014 2015 2016 2017 1H 2018 the Diamond Heights Shopping Center. 2013 2014 2015 2016 2017 1H 2018 the $656 million recorded by mid-year In January, Donahue Schriber purchased OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Summers Ridge, Sorrento Mesa Office $148,650,000 Quidel Corporation Alexandria Real Estate Equities 1 Wells Fargo Building Office $607,786,488 Columbia Property Trust Allianz Real Estate of America $469 psf $927 psf

2 Domain San Diego, Kearny Mesa Multi-Family $132,500,000 Essex Property Trust Goldman Sachs 2 275 Battery Street Office $412,500,000 Rockpoint Group Northwestern Mututal $347,769 per unit $868 psf

3 Sofi Shadowridge, Vista Multi-Family $115,000,000 Invesco Pacific Urban Residential 3 123 Mission Street Office $290,000,000 HNA Group Northwood Investors $366,242 per unit $839 psf

4 Gateway at Torrey Hills, Del Mar Office $105,000,000 Prudential Financial, Inc. The Irvine Company 4 270 Brannan Street Office $202,000,000 SKS Investments Mitsui Fudosan America Heights $531 psf $1,115 psf

5 Stonecrest, Kearny Mesa Office $100,300,000 TIAA Pendulum Property Partners 5 100 Spear Street Office $163,250,000 Prudential Real Estate Investors Vanbarton Group $307 psf $804 psf

58 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 59 San Jose/Silicon Vally Investment Market San Mateo Investment Market

Office prices gain momentum Select Avg. Cap Rates 1H 1H Cap rates drop significantly Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Silicon Valley investment dollar volume in Silicon Valley, reaching $458 million Office 5.8% 5.7% San Mateo County recorded $2.2 Multi-family investment activity was Office 4.2% 4.8% was strong during the first half of 2018, in the first half of 2018. Multi-family billion worth of commercial property strong during the first half of 2018, totaling more than $4 billion in sales, up development in the region has jumped Industrial 5.2% 6.4% investment sales during the first half totaling more than $563 million Industrial 6.9% 4.8% slightly from the first half of 2017. during the past few years as housing of 2018, up 95% from the $1.1 billion compared with $98 million one year Retail 4.6% 4.8% Retail 6.1% 4.8% has struggled to maintain pace with the registered during the first half of earlier. Tipping the scale were two The office sector accounted for 42%, or demands of a growing population. Multi-Family 4.4% 4.4% 2017. Capitalization rates dropped luxury apartment complex sales. Multi-Family 4.0% 3.6% $1.7 billion, of the market’s sales volume significantly year-over-year to an Located in Foster City and Menlo Park, in first-half 2018. Office prices gained The core economic drivers in Silicon average 4.5%, down from 5.3% at mid- the two properties were part of a momentum, commanding an average of Valley give investors a positive outlook year 2017. portfolio sale and closed with a price $473 psf as of mid-year 2018 – up from on their investment returns. Rental Investment Activity 1H 1H tag of more than $340,000 per unit. Investment Activity 1H 1H $431 psf one year earlier. Meanwhile, the rates across all sectors continue to 2017 2018 Office assets dominated investment 2017 2018 industrial sector generated $1.1 billion climb as vacancy remains tight and 51% 42% activity during the first half of 2018 with Overall investment activity was robust 36% 49% in the first half of 2018, declining slightly unemployment stays low at 2.9% as $1.1 billion in sales – accounting for during the first half of 2018 and, if it 1H 2018 1H 2018 from mid-year 2017. Industrial product of June 2018. In the biggest shift in 28% 27% 49% of total deal volume and nearly a continues its pace through the second 10% 21% $4 prices average more than $245 psf, as investment activity, tech titans have twofold increase compared with the first half of the year, dollar volume will $2.2 BILLION 4% 20% BILLION 45% 4% the market has measured increased sales become some of the market’s biggest half of 2017. A major contributor to the surpass totals recorded in the prior volume over the last few years. It should landlords. 17% 11% increase in sales volume was the quality two years. Any stall in investment 9% 26% be noted, however, that many of the of assets sold. Claiming the highest activity throughout the remainder of largest deals of the last few years have OFFICE INDUSTRIAL RETAIL MULTI-FAMILY price per square foot was an asset in the the year would not result from a lack of OFFICE INDUSTRIAL RETAIL MULTI-FAMILY been linked to redevelopment projects, Sand Hill submarket, where Alameda investor interest, but rather from limited as office construction in the region has Realty Partners acquired 2180 Sand Hill availability of supply. skyrocketed and much of the obsolete Investment Volume Road for more than $1,800 psf. Investment Volume

industrial product has been phased out. $14 $5 Retail asset sales totaled only $80 million Retail asset sales soared with $797 $12 in the first half of 2018. Notable sales $4 million in volume in first-half 2018, more $10 included Bearcat Properties’ acquisition $ BILLIONS (US) $ BILLIONS (US) than the total volume measured in all of Peninsula Infiniti, a car-dealership $3 $8 of 2017. Notable transactions included site in Redwood City, for $18.1 million. $6 the sale of a Macy’s department store Industrial investors were active during $2

located in Sunnyvale. A partnership $4 the first half of 2018, trading more than between Sares-Regis Group and Hunter $461 million worth of product – more $1 $2 Storm, LLC acquired the property for than four times the sector's total volume $0 $0 $95 million. The multi-family sector 2013 2014 2015 2016 2017 1H 2018 measured in the first half of 2017. 2013 2014 2015 2016 2017 1H 2018 also generated significant sales volume OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 1001 N. Shoreline Boulevard, Office $169,946,278 Carlyle Group / Calvano Development Stockbridge Capital Group LLC 1 Kilroy Oyster Point Industrial $308,000,000 Greenland USA Kilroy Realty Corporation Mountain View $1,377 psf $787 psf

2 601 California Avenue, Palo Alto Office $145,100,000 The Blackstone Group LP Morgan Stanley Services Group Inc. 2 One Hundred Grand Multi-Family $250,000,000 Los Angeles County Employees PGIM, Inc. $1,300 psf Apartments $530 psf Retirement Association

3 Valley Tech Centre Office $144,500,000 DivcoWest Lincoln Property Company 3 Clearview Business Park Office $217,000,000 RREEF Management LLC Goldman Sachs Asset Management LP $308 psf $572 psf

4 385 Sherman Avenue, Palo Alto Office $138,000,000 JP Morgan Asset Management American Realty Advisors 4 DC Station Office $114,500,000 Global Securitization Service LLC Cerberus Capital Management / $2,030 psf $299 psf Harvest Properties

5 Embarcadero Place Office $136,000,000 Hudson Pacific Properties, Inc. Alexandria Real Estate Equities, Inc. 5 2180 Sand Hill Road, Menlo Park Office $82,500,000 Hudson Pacific Properties, Inc. Alameda Realty Partners, LLC $692 psf $1,808 psf

60 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 61 San Jose/Silicon Vally Investment Market San Mateo Investment Market

Office prices gain momentum Select Avg. Cap Rates 1H 1H Cap rates drop significantly Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

Silicon Valley investment dollar volume in Silicon Valley, reaching $458 million Office 5.8% 5.7% San Mateo County recorded $2.2 Multi-family investment activity was Office 4.2% 4.8% was strong during the first half of 2018, in the first half of 2018. Multi-family billion worth of commercial property strong during the first half of 2018, totaling more than $4 billion in sales, up development in the region has jumped Industrial 5.2% 6.4% investment sales during the first half totaling more than $563 million Industrial 6.9% 4.8% slightly from the first half of 2017. during the past few years as housing of 2018, up 95% from the $1.1 billion compared with $98 million one year Retail 4.6% 4.8% Retail 6.1% 4.8% has struggled to maintain pace with the registered during the first half of earlier. Tipping the scale were two The office sector accounted for 42%, or demands of a growing population. Multi-Family 4.4% 4.4% 2017. Capitalization rates dropped luxury apartment complex sales. Multi-Family 4.0% 3.6% $1.7 billion, of the market’s sales volume significantly year-over-year to an Located in Foster City and Menlo Park, in first-half 2018. Office prices gained The core economic drivers in Silicon average 4.5%, down from 5.3% at mid- the two properties were part of a momentum, commanding an average of Valley give investors a positive outlook year 2017. portfolio sale and closed with a price $473 psf as of mid-year 2018 – up from on their investment returns. Rental Investment Activity 1H 1H tag of more than $340,000 per unit. Investment Activity 1H 1H $431 psf one year earlier. Meanwhile, the rates across all sectors continue to 2017 2018 Office assets dominated investment 2017 2018 industrial sector generated $1.1 billion climb as vacancy remains tight and 51% 42% activity during the first half of 2018 with Overall investment activity was robust 36% 49% in the first half of 2018, declining slightly unemployment stays low at 2.9% as $1.1 billion in sales – accounting for during the first half of 2018 and, if it 1H 2018 1H 2018 from mid-year 2017. Industrial product of June 2018. In the biggest shift in 28% 27% 49% of total deal volume and nearly a continues its pace through the second 10% 21% $4 prices average more than $245 psf, as investment activity, tech titans have twofold increase compared with the first half of the year, dollar volume will $2.2 BILLION 4% 20% BILLION 45% 4% the market has measured increased sales become some of the market’s biggest half of 2017. A major contributor to the surpass totals recorded in the prior volume over the last few years. It should landlords. 17% 11% increase in sales volume was the quality two years. Any stall in investment 9% 26% be noted, however, that many of the of assets sold. Claiming the highest activity throughout the remainder of largest deals of the last few years have OFFICE INDUSTRIAL RETAIL MULTI-FAMILY price per square foot was an asset in the the year would not result from a lack of OFFICE INDUSTRIAL RETAIL MULTI-FAMILY been linked to redevelopment projects, Sand Hill submarket, where Alameda investor interest, but rather from limited as office construction in the region has Realty Partners acquired 2180 Sand Hill availability of supply. skyrocketed and much of the obsolete Investment Volume Road for more than $1,800 psf. Investment Volume

industrial product has been phased out. $14 $5 Retail asset sales totaled only $80 million Retail asset sales soared with $797 $12 in the first half of 2018. Notable sales $4 million in volume in first-half 2018, more $10 included Bearcat Properties’ acquisition $ BILLIONS (US) $ BILLIONS (US) than the total volume measured in all of Peninsula Infiniti, a car-dealership $3 $8 of 2017. Notable transactions included site in Redwood City, for $18.1 million. $6 the sale of a Macy’s department store Industrial investors were active during $2

located in Sunnyvale. A partnership $4 the first half of 2018, trading more than between Sares-Regis Group and Hunter $461 million worth of product – more $1 $2 Storm, LLC acquired the property for than four times the sector's total volume $0 $0 $95 million. The multi-family sector 2013 2014 2015 2016 2017 1H 2018 measured in the first half of 2017. 2013 2014 2015 2016 2017 1H 2018 also generated significant sales volume OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 1001 N. Shoreline Boulevard, Office $169,946,278 Carlyle Group / Calvano Development Stockbridge Capital Group LLC 1 Kilroy Oyster Point Industrial $308,000,000 Greenland USA Kilroy Realty Corporation Mountain View $1,377 psf $787 psf

2 601 California Avenue, Palo Alto Office $145,100,000 The Blackstone Group LP Morgan Stanley Services Group Inc. 2 One Hundred Grand Multi-Family $250,000,000 Los Angeles County Employees PGIM, Inc. $1,300 psf Apartments $530 psf Retirement Association

3 Valley Tech Centre Office $144,500,000 DivcoWest Lincoln Property Company 3 Clearview Business Park Office $217,000,000 RREEF Management LLC Goldman Sachs Asset Management LP $308 psf $572 psf

4 385 Sherman Avenue, Palo Alto Office $138,000,000 JP Morgan Asset Management American Realty Advisors 4 DC Station Office $114,500,000 Global Securitization Service LLC Cerberus Capital Management / $2,030 psf $299 psf Harvest Properties

5 Embarcadero Place Office $136,000,000 Hudson Pacific Properties, Inc. Alexandria Real Estate Equities, Inc. 5 2180 Sand Hill Road, Menlo Park Office $82,500,000 Hudson Pacific Properties, Inc. Alameda Realty Partners, LLC $692 psf $1,808 psf

60 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 61 St. Louis Investment Market Tampa Investment Market

Multi-family sector remains the strongest performer Select Avg. Cap Rates 1H 1H Strong economic fundamentals and steady demand fuel activity Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

St. Louis commercial real estate continue to involve properties with Office 9.0% 7.6% The Tampa-St. Petersburg-Clearwater office development in the sought- Office 7.5% 7.4% investment volume rose 57% year-over- redevelopment potential and high metropolitan statistical area was ranked after Westshore area. Starwood Capital year in the first half of 2018 as sales vacancies located next to highways Industrial 7.6% 8.5% as one of the top 20 U.S. Markets to purchased the assets from TIAA-CREF Industrial 6.9% 6.8% were higher in the industrial, retail and or major roadways running through Watch for overall real estate prospects for $143.1 million, or $260 psf. A year- Retail 7.6% 7.7% Retail 6.4% 6.8% multi-family sectors. This large overall population centers. in the Emerging Trends in Real Estate 2018 over-year decrease in office transaction increase bodes well for 2018 investment Multi-Family 8.9% 7.3% report published by PwC and the Urban volume through June 2018 was largely Multi-Family 6.6% 5.8% First-half 2018 office sales declined dollar volume to meet, or exceed, the Land Institute. Many investors seeking due to the absence of large-scale 16% year-over-year, but the sector’s full-year 2017 total. The multi-family opportunities in gateway markets are activity in the urban core, as most of average cap rate decreased 140 bps to sector continued to be the market’s facing fierce competition and being the key product had already traded 7.6%. With no substantial speculative strongest performer in first-half 2018. Investment Activity 1H 1H priced out of those markets due to their hands in recent years. The strong first- Investment Activity 1H 1H office buildings being built or planned, 2017 2018 2017 2018 The top five overall sales transactions yield requirements, and are turning half 2018 multi-family sales included vacancy rates will continue to decrease involved apartment properties, and 23% 12% their attention to secondary markets like Camden Property Trust’s purchase of 26% 17% while rental rates increase – a trend that the multi-family market’s investment 1H 2018 Tampa Bay. Camden Pier District, a 358-unit project 1H 2018 should prompt more owners to put their 18% 12% 6% 9% dollar volume exceeded the combined in downtown St. Petersburg, for $126.3 $1.9 properties up for sale. $866 total for the office, industrial and retail MILLION 20% 21% Thanks to strong economic million, or approximately $353,000 per BILLION 19% 15% sectors. Multi-family cap rates fell 160 fundamentals and steady demand, unit. It is expected that 2018 will continue to 39% 55% 49% 59% bps year-over-year to an average 7.3%. investment sales activity during the be a good year for investment sales. It first half of 2018 was robust with $1.9 Tampa’s investment market is still will be interesting to see if they reach, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Industrial investment activity in the first billion in total transaction volume. While flush with capital. Investors are eager or exceed, the volumes achieved in half of 2018 was on par with first-half the industrial and multi-family sectors to purchase office product based on 2017. St. Louis continues to record an 2017. Investors continued to show strong outperformed the volume recorded the sector’s strong performance in increasing number of transactions and interest in industrial properties as the Investment Volume through mid-year 2017, total volume recent years, shrinking unemployment Investment Volume interest from out-of-state investors average cap rate increased 90 bps year- $2,000 for Tampa Bay was down 17% overall. numbers, limited new supply and $6 seeking a stable market with better over-year to 8.5%. With cap rates higher $1,800 The multi-family sector accounted relatively high cap rates compared with returns than those found in coastal $5 than in other markets and speculative $1,600 for significantly more than half of all the industrial, retail, and multi-family markets.

$ MILLIONS (US) $1,400 properties being leased up, industrial $ BILLIONS (US) transaction volume recorded during asset classes. $ BILLIONS (US) $4 sales are expected to pick up in the $1,200 first-half 2018, followed by the office second half of the year. $1,000 market with $323.5 million. First-half $3 $800 2018 industrial and retail volumes $2 $600 Retail asset sales increased 61% totaled $448 million. $400 compared with first-half 2017. $1 Meanwhile, the average retail cap rate $200 The largest transaction in first-half $0 $0 held steady, posting a marginal 10- 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 2018 was the sale of Urban Centre I 2013 2014 2015 2016 2017 1H 2018 bps increase to 7.7%. Retail asset sales & II, a two-building, class A trophy OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 The Orion Multi-Family $80,000,000 Mills Properties Brass Enterprises 1 Urban Centre I & II Office $143,100,000 TIAA-CREF Starwood Capital $451,977 per unit $260 psf

2 Sun Valley Lake Apartments Multi-Family $64,150,000 Priderock Capital Partners B&M Management Co. 2 Camden Pier District Multi-Family $126,300,000 American Land Ventures Camden Property Trust $94,338 per unit $352,793 per unit

3 The Villages at General Grant Multi-Family $50,253,807 GEM Property Management Monarch Investment and Management 3 The Cove Apartments Multi-Family $96,500,000 Lubert-Adler / Laramar Group Gamma Real Estate Capital $91,370 per unit $140,058 per unit

4 245 Union Boulevard Multi-Family $47,800,000 Village Green Emerald Equity Group 4 Lexington Park at Westchase Multi-Family $82,000,000 Pollack Shores Real Estate Group Greystar $119,500 per unit $205,000 per unit

5 The Fields Highland Lofts Multi-Family $44,400,000 KBS Legacy Partners Apartment REIT Rialto Holdings LLC 5 Tuscany Bay Multi-Family $66,034,000 IMT Real Estate Group Starlight U.S. Multi-Family Funds $222,000 per unit $178,470 per unit

62 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 62 avisonyoung.com 63 St. Louis Investment Market Tampa Investment Market

Multi-family sector remains the strongest performer Select Avg. Cap Rates 1H 1H Strong economic fundamentals and steady demand fuel activity Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

St. Louis commercial real estate continue to involve properties with Office 9.0% 7.6% The Tampa-St. Petersburg-Clearwater office development in the sought- Office 7.5% 7.4% investment volume rose 57% year-over- redevelopment potential and high metropolitan statistical area was ranked after Westshore area. Starwood Capital year in the first half of 2018 as sales vacancies located next to highways Industrial 7.6% 8.5% as one of the top 20 U.S. Markets to purchased the assets from TIAA-CREF Industrial 6.9% 6.8% were higher in the industrial, retail and or major roadways running through Watch for overall real estate prospects for $143.1 million, or $260 psf. A year- Retail 7.6% 7.7% Retail 6.4% 6.8% multi-family sectors. This large overall population centers. in the Emerging Trends in Real Estate 2018 over-year decrease in office transaction increase bodes well for 2018 investment Multi-Family 8.9% 7.3% report published by PwC and the Urban volume through June 2018 was largely Multi-Family 6.6% 5.8% First-half 2018 office sales declined dollar volume to meet, or exceed, the Land Institute. Many investors seeking due to the absence of large-scale 16% year-over-year, but the sector’s full-year 2017 total. The multi-family opportunities in gateway markets are activity in the urban core, as most of average cap rate decreased 140 bps to sector continued to be the market’s facing fierce competition and being the key product had already traded 7.6%. With no substantial speculative strongest performer in first-half 2018. Investment Activity 1H 1H priced out of those markets due to their hands in recent years. The strong first- Investment Activity 1H 1H office buildings being built or planned, 2017 2018 2017 2018 The top five overall sales transactions yield requirements, and are turning half 2018 multi-family sales included vacancy rates will continue to decrease involved apartment properties, and 23% 12% their attention to secondary markets like Camden Property Trust’s purchase of 26% 17% while rental rates increase – a trend that the multi-family market’s investment 1H 2018 Tampa Bay. Camden Pier District, a 358-unit project 1H 2018 should prompt more owners to put their 18% 12% 6% 9% dollar volume exceeded the combined in downtown St. Petersburg, for $126.3 $1.9 properties up for sale. $866 total for the office, industrial and retail MILLION 20% 21% Thanks to strong economic million, or approximately $353,000 per BILLION 19% 15% sectors. Multi-family cap rates fell 160 fundamentals and steady demand, unit. It is expected that 2018 will continue to 39% 55% 49% 59% bps year-over-year to an average 7.3%. investment sales activity during the be a good year for investment sales. It first half of 2018 was robust with $1.9 Tampa’s investment market is still will be interesting to see if they reach, OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Industrial investment activity in the first billion in total transaction volume. While flush with capital. Investors are eager or exceed, the volumes achieved in half of 2018 was on par with first-half the industrial and multi-family sectors to purchase office product based on 2017. St. Louis continues to record an 2017. Investors continued to show strong outperformed the volume recorded the sector’s strong performance in increasing number of transactions and interest in industrial properties as the Investment Volume through mid-year 2017, total volume recent years, shrinking unemployment Investment Volume interest from out-of-state investors average cap rate increased 90 bps year- $2,000 for Tampa Bay was down 17% overall. numbers, limited new supply and $6 seeking a stable market with better over-year to 8.5%. With cap rates higher $1,800 The multi-family sector accounted relatively high cap rates compared with returns than those found in coastal $5 than in other markets and speculative $1,600 for significantly more than half of all the industrial, retail, and multi-family markets.

$ MILLIONS (US) $1,400 properties being leased up, industrial $ BILLIONS (US) transaction volume recorded during asset classes. $ BILLIONS (US) $4 sales are expected to pick up in the $1,200 first-half 2018, followed by the office second half of the year. $1,000 market with $323.5 million. First-half $3 $800 2018 industrial and retail volumes $2 $600 Retail asset sales increased 61% totaled $448 million. $400 compared with first-half 2017. $1 Meanwhile, the average retail cap rate $200 The largest transaction in first-half $0 $0 held steady, posting a marginal 10- 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 2018 was the sale of Urban Centre I 2013 2014 2015 2016 2017 1H 2018 bps increase to 7.7%. Retail asset sales & II, a two-building, class A trophy OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 The Orion Multi-Family $80,000,000 Mills Properties Brass Enterprises 1 Urban Centre I & II Office $143,100,000 TIAA-CREF Starwood Capital $451,977 per unit $260 psf

2 Sun Valley Lake Apartments Multi-Family $64,150,000 Priderock Capital Partners B&M Management Co. 2 Camden Pier District Multi-Family $126,300,000 American Land Ventures Camden Property Trust $94,338 per unit $352,793 per unit

3 The Villages at General Grant Multi-Family $50,253,807 GEM Property Management Monarch Investment and Management 3 The Cove Apartments Multi-Family $96,500,000 Lubert-Adler / Laramar Group Gamma Real Estate Capital $91,370 per unit $140,058 per unit

4 245 Union Boulevard Multi-Family $47,800,000 Village Green Emerald Equity Group 4 Lexington Park at Westchase Multi-Family $82,000,000 Pollack Shores Real Estate Group Greystar $119,500 per unit $205,000 per unit

5 The Fields Highland Lofts Multi-Family $44,400,000 KBS Legacy Partners Apartment REIT Rialto Holdings LLC 5 Tuscany Bay Multi-Family $66,034,000 IMT Real Estate Group Starlight U.S. Multi-Family Funds $222,000 per unit $178,470 per unit

62 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 62 avisonyoung.com 63 Washington, DC Investment Market West Palm Beach Investment Market

Multi-family investment doubles, office remains strongest performer Select Avg. Cap Rates 1H 1H Multi-family investment triples due to positive in-migration Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

The Washington, DC metro area multi-family cap rate, currently at 5%, Office 5.9% 6.4% Investment sales activity in Palm Beach complex within the Royal Palm Beach Office 6.7% 7.0% registered substantial growth in has sustained a downward trend year- County soared during the first half submarket. Stockbridge Capital Group investment volume in the first half of over-year since the second quarter of Industrial 7.1% 7.2% of 2018 to an impressive $1.7 billion, purchased the property for $120 million, Industrial 6.6% 6.7% 2018, increasing 22% year-over-year 2015. Retail investment sales increased already outpacing 2017’s full-year or $342,857 per unit, and the sale was Retail 6.0% 6.5% Retail 6.6% 6.8% to approximately $9.8 billion. Growth 39% year-over-year to $1.3 billion, sales volume of $1.1 billion. While just one of 24 multi-family transactions in multi-family property sales activity primarily due to bulk portfolio sales. Multi-Family 5.2% 5.0% gains in sales volume were recorded completed during the first half of 2018. Multi-Family 5.5% 5.6% accounted largely for this increase. The As many large traditional retail brands across almost all sectors, multi-family It is expected that the increase in supply availability of debt will support liquidity closed stores in response to changing dominated all asset types, contributing could lead to a slight slowdown as it and the continuation of recent sales consumer trends, the sector’s cap rates 54% of total dollar volume during takes time for the market to absorb the trends. increased to 6.5% in the second quarter Investment Activity 1H 1H the first half of 2018. Investor interest assets. Investment Activity 1H 1H 2017 2018 2017 2018 of 2018. Industrial sales totaled $974 remains strong as key economic Office investment in 2018 began with million and exhibited a 36% increase 57% 42% fundamentals persist in the area. The largest sale recorded during the 30% 23% a burst of activity as EXAN Capital’s first half of 2018 was the $179.3-million year-over-year compared with the 1H 2018 According to the Bureau of Labor 1H 2018 $145-million purchase of 900 G Street, 9% 10% ($106 psf) sale of the Boca Raton 14% 6% first half of 2017. The development of $9.8 Statistics, the non-seasonally adjusted $1.7 NW set a record for the highest per- Innovation Campus. The 1.7-msf office distribution centers and the expansion BILLION 12% 14% unemployment rate declined to 3.9% as BILLION 27% 16% square-foot market rate, at $1,278, of the data-center market in the of June 2018, a 30-bps drop year-over- park was purchased by a joint-venture 22% 34% 30% 54% in January. Total office asset sales Northern Virginia and Maryland suburbs year. Construction demand, due to a rise partnership between Crocker Partners decreased 10% year-over-year in the constituted much of this investment in multi-family development, boosted and Rialto Capital Management. Investor OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY first half of 2018 to $4.2 billion, but the activity. employment growth, adding 3,100 new interest in office assets is likely to persist sector still accounted for 42% of all jobs to the market year-over-year as of in Palm Beach County as the sector’s In contrast to national trends, cross- investment sales. The average cap rate June 2018. strong market fundamentals continue for office investment sales increased 50 border investment continues to Investment Volume to improve due to positive absorption, Investment Volume

bps year-over-year to 6.4%. Northern fuel the DC metro market, alone $25 Driven by strong positive in-migration rising lease rates and limited new $4 Virginia assets dominated sales activity, comprising more than a quarter of buyer of a younger demographic and retirees, supply. covering 50% of office sales dollar composition. Growth in multi-family $20 multi-family sales volume more than $3

volume. and industrial sector sales, particularly $ BILLIONS (US) tripled during the first half of 2018, $ BILLIONS (US) in the suburban markets, and demand $15 recording $908 million compared with In other sectors, multi-family investment for well-situated office properties will be the $264 million recorded during the $2 sales volume increased 92% year-over- sustained in the second half of 2018. $10 first half of 2017. There are nearly 3,000 year to $3.3 billion in the first half of multi-family units under construction in $1 $5 2018. The average price per apartment Palm Beach County with 1,500 expected unit continues to increase, and multi- to deliver by the end of 2018. The largest family investment sales will likely rise $0 $0 2013 2014 2015 2016 2017 1H 2018 multi-family transaction was the sale of 2013 2014 2015 2016 2017 1H 2018 as the year progresses. The average OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Quaye at Wellington, a 350-unit class B OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Washington Building, Office $254,500,000 Clarion Partners Eastbanc OBO Meag 1 Boca Raton Innovation Campus Office $179,346,744 Farallon Capital Management / Next Crocker Partners / Rialto Capital Washington, DC $1,190 psf $106 psf Tier HD Management

2 Arlington Tower, Office $250,000,000 Tishman Speyer Washington REIT 2 Quaye at Wellington Multi-Family $120,000,000 HG Management Stockbridge Capital Group Arlington, VA $628 psf $342,857 per unit

3 Greensboro Station Office $244,000,000 The Meridian Group MetLife RE Investors / Mubadala 3 Gables Marbella Multi-Family $112,000,000 Gables Residential Heitman Capital Management (95% interest), Tysons, VA $385 psf Investment $377,104 per unit

4 One Dulles Tower, Office $226,000,000 Federal Capital Harbor Group International 4 Advenir at PGA Multi-Family $97,237,500 Elco Landmark Residential / BRT Advenir Inc. Fairfax, VA $560 psf $179,405 per unit Apartments / DeBartolo Development

5 Village at Leesburg, Retail $226,000,000 Cypress Equities Rappaport 5 Allure Boca Raton Multi-Family $92,120,053 Rock Acquisitions / Tate Capital Real Estate GID Leesburg, VA $414 psf $326,667 per unit Solutions / Danburg Management Corp.

64 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 65 Washington, DC Investment Market West Palm Beach Investment Market

Multi-family investment doubles, office remains strongest performer Select Avg. Cap Rates 1H 1H Multi-family investment triples due to positive in-migration Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

The Washington, DC metro area multi-family cap rate, currently at 5%, Office 5.9% 6.4% Investment sales activity in Palm Beach complex within the Royal Palm Beach Office 6.7% 7.0% registered substantial growth in has sustained a downward trend year- County soared during the first half submarket. Stockbridge Capital Group investment volume in the first half of over-year since the second quarter of Industrial 7.1% 7.2% of 2018 to an impressive $1.7 billion, purchased the property for $120 million, Industrial 6.6% 6.7% 2018, increasing 22% year-over-year 2015. Retail investment sales increased already outpacing 2017’s full-year or $342,857 per unit, and the sale was Retail 6.0% 6.5% Retail 6.6% 6.8% to approximately $9.8 billion. Growth 39% year-over-year to $1.3 billion, sales volume of $1.1 billion. While just one of 24 multi-family transactions in multi-family property sales activity primarily due to bulk portfolio sales. Multi-Family 5.2% 5.0% gains in sales volume were recorded completed during the first half of 2018. Multi-Family 5.5% 5.6% accounted largely for this increase. The As many large traditional retail brands across almost all sectors, multi-family It is expected that the increase in supply availability of debt will support liquidity closed stores in response to changing dominated all asset types, contributing could lead to a slight slowdown as it and the continuation of recent sales consumer trends, the sector’s cap rates 54% of total dollar volume during takes time for the market to absorb the trends. increased to 6.5% in the second quarter Investment Activity 1H 1H the first half of 2018. Investor interest assets. Investment Activity 1H 1H 2017 2018 2017 2018 of 2018. Industrial sales totaled $974 remains strong as key economic Office investment in 2018 began with million and exhibited a 36% increase 57% 42% fundamentals persist in the area. The largest sale recorded during the 30% 23% a burst of activity as EXAN Capital’s first half of 2018 was the $179.3-million year-over-year compared with the 1H 2018 According to the Bureau of Labor 1H 2018 $145-million purchase of 900 G Street, 9% 10% ($106 psf) sale of the Boca Raton 14% 6% first half of 2017. The development of $9.8 Statistics, the non-seasonally adjusted $1.7 NW set a record for the highest per- Innovation Campus. The 1.7-msf office distribution centers and the expansion BILLION 12% 14% unemployment rate declined to 3.9% as BILLION 27% 16% square-foot market rate, at $1,278, of the data-center market in the of June 2018, a 30-bps drop year-over- park was purchased by a joint-venture 22% 34% 30% 54% in January. Total office asset sales Northern Virginia and Maryland suburbs year. Construction demand, due to a rise partnership between Crocker Partners decreased 10% year-over-year in the constituted much of this investment in multi-family development, boosted and Rialto Capital Management. Investor OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY first half of 2018 to $4.2 billion, but the activity. employment growth, adding 3,100 new interest in office assets is likely to persist sector still accounted for 42% of all jobs to the market year-over-year as of in Palm Beach County as the sector’s In contrast to national trends, cross- investment sales. The average cap rate June 2018. strong market fundamentals continue for office investment sales increased 50 border investment continues to Investment Volume to improve due to positive absorption, Investment Volume

bps year-over-year to 6.4%. Northern fuel the DC metro market, alone $25 Driven by strong positive in-migration rising lease rates and limited new $4 Virginia assets dominated sales activity, comprising more than a quarter of buyer of a younger demographic and retirees, supply. covering 50% of office sales dollar composition. Growth in multi-family $20 multi-family sales volume more than $3

volume. and industrial sector sales, particularly $ BILLIONS (US) tripled during the first half of 2018, $ BILLIONS (US) in the suburban markets, and demand $15 recording $908 million compared with In other sectors, multi-family investment for well-situated office properties will be the $264 million recorded during the $2 sales volume increased 92% year-over- sustained in the second half of 2018. $10 first half of 2017. There are nearly 3,000 year to $3.3 billion in the first half of multi-family units under construction in $1 $5 2018. The average price per apartment Palm Beach County with 1,500 expected unit continues to increase, and multi- to deliver by the end of 2018. The largest family investment sales will likely rise $0 $0 2013 2014 2015 2016 2017 1H 2018 multi-family transaction was the sale of 2013 2014 2015 2016 2017 1H 2018 as the year progresses. The average OFFICE INDUSTRIAL RETAIL MULTI-FAMILY Quaye at Wellington, a 350-unit class B OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Washington Building, Office $254,500,000 Clarion Partners Eastbanc OBO Meag 1 Boca Raton Innovation Campus Office $179,346,744 Farallon Capital Management / Next Crocker Partners / Rialto Capital Washington, DC $1,190 psf $106 psf Tier HD Management

2 Arlington Tower, Office $250,000,000 Tishman Speyer Washington REIT 2 Quaye at Wellington Multi-Family $120,000,000 HG Management Stockbridge Capital Group Arlington, VA $628 psf $342,857 per unit

3 Greensboro Station Office $244,000,000 The Meridian Group MetLife RE Investors / Mubadala 3 Gables Marbella Multi-Family $112,000,000 Gables Residential Heitman Capital Management (95% interest), Tysons, VA $385 psf Investment $377,104 per unit

4 One Dulles Tower, Office $226,000,000 Federal Capital Harbor Group International 4 Advenir at PGA Multi-Family $97,237,500 Elco Landmark Residential / BRT Advenir Inc. Fairfax, VA $560 psf $179,405 per unit Apartments / DeBartolo Development

5 Village at Leesburg, Retail $226,000,000 Cypress Equities Rappaport 5 Allure Boca Raton Multi-Family $92,120,053 Rock Acquisitions / Tate Capital Real Estate GID Leesburg, VA $414 psf $326,667 per unit Solutions / Danburg Management Corp.

64 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 65 Westchester County Investment Market

Promise of higher yields sustains sales Select Avg. Cap Rates 1H 1H Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

More than $570 million in total sales Office and multi-family cap rates trended Office 9.0% 8.8% Office volume was registered in Westchester modestly downward, averaging 8.8% and Mexico County in first-half 2018, nearly identical to 5.6%, respectively, while the most recent Industrial 7.8% 7.8% Industrial the result achieved in the first half of 2017. sales of premium office buildings saw cap Retail 8.0% 8.3% Retail The industrial and retail sectors posted rates dip as low as 6.5%. 68 Mexico City decreases in sales volume of 47% and 24%, Multi-Family 6.1% 5.6% Multi-Family respectively, while office and multi-family The outlook for the remainder of 2018 property sales increased by 1% and 15%, indicates that Westchester County will respectively. continue to be fertile ground for value- add investments. The persisting trend Investment Activity 1H 1H Investment Activity 1H 1H Figuring prominently in the first half of of home rental versus home ownership 2017 2018 2017 2018 2018 was the sale of the 300-unit Talleyrand and the tightening apartment rental 38% 39% Apartments in Tarrytown to private real market in Manhattan bode well for 1H 2018 1H 2018 estate firm DSF Group for $91 million. multi-family sales in Westchester. 3% 2% $571 The office sector recorded two of the Continued store closings and the effects MILLION 22% 17% largest deals with the sales of Westchester of e-commerce on bricks-and-mortar Financial Center in White Plains to Ginsburg sales will put downward price pressure 36% 42% Development Companies for $83 million on all retail space classes and present and Reckson Executive Park in Rye Brook to high-yield opportunities to value-add OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY George Comfort and Sons for $55 million. investors. Lastly, a more limited supply Both properties will reportedly be subject and opportunities for repurposing vacant to considerable renovation and adaptive or obsolete business parks should fuel Investment Volume Investment Volume

reuse in what will likely be mixed-use additional value-add investment in the $1,800

facilities. office sector. $1,600

$1,400 Average per-square-foot pricing in the $ BILLIONS (US) $ BILLIONS (US) $ MILLIONS (US) $1,200 office and retail sectors increased by 34% $1,000 and 37% year-over-year, respectively. A $800 notable transaction in the retail sector $600 involved Rivertowns Square, an eight- building retail complex in Dobbs Ferry $400 that sold for $592 psf – 53% higher than $200 $0 the overall average price per square foot 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 2013 2014 2015 2016 2017 1H 2018 in 2017. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Talleyrand Apartments Multi-Family $91,020,436 Equity Residential DSF Group $324 psf

2 Westchester Financial Center Office $83,000,000 Mack-Cali Realty Corporation Ginsburg Development Companies $145 psf

3 Rivertowns Square Retail Retail $68,900,000 Saber RE Advisors / Rabin Alexander Regency Centers $528 psf

4 Reckson Executive Park Office $54,999,935 SL Green Realty Corp LLC George Comfort & Sons $101 psf

5 100 Manhattanville Road Office $49,800,000 SEB ImmoInvest / Savills Fund Caceis $171 psf Management GmbH

66 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 67 Westchester County Investment Market

Promise of higher yields sustains sales Select Avg. Cap Rates 1H 1H Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

More than $570 million in total sales Office and multi-family cap rates trended Office 9.0% 8.8% Office volume was registered in Westchester modestly downward, averaging 8.8% and Mexico County in first-half 2018, nearly identical to 5.6%, respectively, while the most recent Industrial 7.8% 7.8% Industrial the result achieved in the first half of 2017. sales of premium office buildings saw cap Retail 8.0% 8.3% Retail The industrial and retail sectors posted rates dip as low as 6.5%. 68 Mexico City decreases in sales volume of 47% and 24%, Multi-Family 6.1% 5.6% Multi-Family respectively, while office and multi-family The outlook for the remainder of 2018 property sales increased by 1% and 15%, indicates that Westchester County will respectively. continue to be fertile ground for value- add investments. The persisting trend Investment Activity 1H 1H Investment Activity 1H 1H Figuring prominently in the first half of of home rental versus home ownership 2017 2018 2017 2018 2018 was the sale of the 300-unit Talleyrand and the tightening apartment rental 38% 39% Apartments in Tarrytown to private real market in Manhattan bode well for 1H 2018 1H 2018 estate firm DSF Group for $91 million. multi-family sales in Westchester. 3% 2% $571 The office sector recorded two of the Continued store closings and the effects MILLION 22% 17% largest deals with the sales of Westchester of e-commerce on bricks-and-mortar Financial Center in White Plains to Ginsburg sales will put downward price pressure 36% 42% Development Companies for $83 million on all retail space classes and present and Reckson Executive Park in Rye Brook to high-yield opportunities to value-add OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY George Comfort and Sons for $55 million. investors. Lastly, a more limited supply Both properties will reportedly be subject and opportunities for repurposing vacant to considerable renovation and adaptive or obsolete business parks should fuel Investment Volume Investment Volume

reuse in what will likely be mixed-use additional value-add investment in the $1,800

facilities. office sector. $1,600

$1,400 Average per-square-foot pricing in the $ BILLIONS (US) $ BILLIONS (US) $ MILLIONS (US) $1,200 office and retail sectors increased by 34% $1,000 and 37% year-over-year, respectively. A $800 notable transaction in the retail sector $600 involved Rivertowns Square, an eight- building retail complex in Dobbs Ferry $400 that sold for $592 psf – 53% higher than $200 $0 the overall average price per square foot 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 2013 2014 2015 2016 2017 1H 2018 in 2017. OFFICE INDUSTRIAL RETAIL MULTI-FAMILY OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Talleyrand Apartments Multi-Family $91,020,436 Equity Residential DSF Group $324 psf

2 Westchester Financial Center Office $83,000,000 Mack-Cali Realty Corporation Ginsburg Development Companies $145 psf

3 Rivertowns Square Retail Retail $68,900,000 Saber RE Advisors / Rabin Alexander Regency Centers $528 psf

4 Reckson Executive Park Office $54,999,935 SL Green Realty Corp LLC George Comfort & Sons $101 psf

5 100 Manhattanville Road Office $49,800,000 SEB ImmoInvest / Savills Fund Caceis $171 psf Management GmbH

66 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 67 Mexico City Investment Market

Market benefits from highly skilled and specialized workforce Select Avg. Cap Rates 1H 1H 2017 2018

Mexico’s stable and healthy with 23% of that total designated for Office 7.4% 8.3% macroeconomic fundamentals have commercial real estate investment. United Kingdom made the country a well-regarded Industrial 7.2% 8.0% destination for global investment capital. Mexico City recorded almost US$9 billion in overall commercial real estate Retail 8.2% 8.2% Among emerging markets, Mexico is Coventry (Midlands) investment volume in the first half of 70 one of the most open economies for Multi-Family 7.6% 9.3% international trade and investment, 2018, up 11% compared with the first 71 London according to the United Nations half of 2017. Multi-family investments Conference on Trade and Development. delivered the majority of sales volume The country also offers one of the most with 76% ($6.7 billion). The office sector Investment Activity 1H 1H 72 Manchester 2017 2018 favourable growth forecasts among followed in second place with 13% emerging markets, just behind China ($1.2 billion). Meanwhile, retail assets 13% 13% and India (according to the International represented 7% of the overall total, 1H 2018 3% 4% Monetary Fund’s World Economic and industrial property investment $8.9 made up 4%. The main demand drivers BILLION Outlook Update, 2018), empowered by 6% 7% a growing employment trend with a are a resilient economy, supply-chain 78% 76% highly skilled and specialized workforce. modernization, employment growth and Unemployment was 3.4% in June 2018. increasing consumer spending among OFFICE INDUSTRIAL RETAIL MULTI-FAMILY These factors make the country very a rapidly emerging middle class with attractive to global and domestic rising incomes. Demand for industrial space in Mexico City largely comes from commercial real estate investors looking Investment Volume for rent-producing properties with solid the growing e-commerce, logistics and transportation sectors. rental rates and strategic locations. New $18 opportunities for institutional investors $16 Net initial yields of 8.2% for retail assets include CKDs and FIBRAS (the Mexican $14 remained consistent year-over-year at equivalent of REITs). $ BILLIONS (US) $12 mid-year 2018. The average multi-family $10 Additional competitive pressure has yield registered an increase of 170 bps $8 been put on the Mexican commercial to 9.3%, while office rates rose 90 bps $6 property market as a result of the to an average of 8.3% and the average $4 relatively recent entry of local pension industrial yield grew 80 bps year-over- $2 funds (AFORES) into the nation’s real year to 8%. $0 estate capital markets. AFORES have 2013 20162014 2015 20172016 20171H 20181H 2018

more than US$27 billion to invest OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Montes Urales No. 620, Col. Office $60,000,000 BBVA Bancomer Fibra Uno Lomas de Chapultepec $3,511 per sq. m

2 HD17 Portfolio (La Pilita, CEDIS Retail / Industrial $26,873,460 Undisclosed Fibra HD Heineken, Plaza Vía San Juan) $914 per sq. m

3 Sentura Tlalnepantla Retail $21,800,000 Iurbana Fibra Shop $690 per sq. m

4 HD18 Portfolio (Ternium / Industrial / Office $13,400,581 Undisclosed Fibra HD Corporativo Bosques de las Lomas) $1,167 per sq. m

5 HD18 Portfolio (Corporativo Office $11,472,181 Undisclosed Fibra HD Periférico Sur) $2,469 per sq. m

68 Avison Young Fall 2018 Commercial Real Estate Investment Review Mexico City Investment Market

Market benefits from highly skilled and specialized workforce Select Avg. Cap Rates 1H 1H 2017 2018

Mexico’s stable and healthy with 23% of that total designated for Office 7.4% 8.3% macroeconomic fundamentals have commercial real estate investment. United Kingdom made the country a well-regarded Industrial 7.2% 8.0% destination for global investment capital. Mexico City recorded almost US$9 billion in overall commercial real estate Retail 8.2% 8.2% Among emerging markets, Mexico is Coventry (Midlands) investment volume in the first half of 70 one of the most open economies for Multi-Family 7.6% 9.3% international trade and investment, 2018, up 11% compared with the first 71 London according to the United Nations half of 2017. Multi-family investments Conference on Trade and Development. delivered the majority of sales volume The country also offers one of the most with 76% ($6.7 billion). The office sector Investment Activity 1H 1H 72 Manchester 2017 2018 favourable growth forecasts among followed in second place with 13% emerging markets, just behind China ($1.2 billion). Meanwhile, retail assets 13% 13% and India (according to the International represented 7% of the overall total, 1H 2018 3% 4% Monetary Fund’s World Economic and industrial property investment $8.9 made up 4%. The main demand drivers BILLION Outlook Update, 2018), empowered by 6% 7% a growing employment trend with a are a resilient economy, supply-chain 78% 76% highly skilled and specialized workforce. modernization, employment growth and Unemployment was 3.4% in June 2018. increasing consumer spending among OFFICE INDUSTRIAL RETAIL MULTI-FAMILY These factors make the country very a rapidly emerging middle class with attractive to global and domestic rising incomes. Demand for industrial space in Mexico City largely comes from commercial real estate investors looking Investment Volume for rent-producing properties with solid the growing e-commerce, logistics and transportation sectors. rental rates and strategic locations. New $18 opportunities for institutional investors $16 Net initial yields of 8.2% for retail assets include CKDs and FIBRAS (the Mexican $14 remained consistent year-over-year at equivalent of REITs). $ BILLIONS (US) $12 mid-year 2018. The average multi-family $10 Additional competitive pressure has yield registered an increase of 170 bps $8 been put on the Mexican commercial to 9.3%, while office rates rose 90 bps $6 property market as a result of the to an average of 8.3% and the average $4 relatively recent entry of local pension industrial yield grew 80 bps year-over- $2 funds (AFORES) into the nation’s real year to 8%. $0 estate capital markets. AFORES have 2013 20162014 2015 20172016 20171H 20181H 2018

more than US$27 billion to invest OFFICE INDUSTRIAL RETAIL MULTI-FAMILY

Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Montes Urales No. 620, Col. Office $60,000,000 BBVA Bancomer Fibra Uno Lomas de Chapultepec $3,511 per sq. m

2 HD17 Portfolio (La Pilita, CEDIS Retail / Industrial $26,873,460 Undisclosed Fibra HD Heineken, Plaza Vía San Juan) $914 per sq. m

3 Sentura Tlalnepantla Retail $21,800,000 Iurbana Fibra Shop $690 per sq. m

4 HD18 Portfolio (Ternium / Industrial / Office $13,400,581 Undisclosed Fibra HD Corporativo Bosques de las Lomas) $1,167 per sq. m

5 HD18 Portfolio (Corporativo Office $11,472,181 Undisclosed Fibra HD Periférico Sur) $2,469 per sq. m

68 Avison Young Fall 2018 Commercial Real Estate Investment Review Coventry (Midlands) Investment Market London Investment Market

Industrial sector attracts new investors Select Avg. Cap Rates 1H 1H City continues to show considerable resilience Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

All sectors of the Midlands investment sites and investments. The total value Downtown Class AA Office 5.0% 6.0% London’s commercial real estate market London has retained its safe-haven Downtown Class AA Office 4.0% 4.0% market remain robust and there is of industrial transactions declined 8% has continued to show remarkable status, resulting in the continued flow of Suburban Class A Office 6.0% 7.3% Suburban Class A Office 5.0% 5.0% still fierce competition for prime year-over-year to £508 million in the resilience in the face of stiff headwinds. capital from abroad. Overseas investors product. The market is the subject of first half of 2018. The decline in volume Single-Tenant Industrial 4.8% 4.8% Over the past two years, the market accounted for 60% of all office, industrial Single-Tenant Industrial 4.3% 4.0% significant interest from all sectors of is attributed to a scarcity of product Multi-Tenant Industrial 5.8% 5.5% has endured significant political and and retail investment transactions in Multi-Tenant Industrial 5.0% 4.3% the investment community, particularly available for sale. Indeed, this shortage economic uncertainty caused by the EU Greater London during first-half 2018. In Tier I Regional Mall 5.3% 6.2% Tier I Regional Mall 5.5% 5.8% local authorities and REITs. has resulted in increased demand referendum result, the shock result of terms of office sales within the City of for speculative construction of new the snap election and growing tensions London submarket, overseas investors The total value of investment distribution and warehousing facilities. between the U.S. and China, which accounted for 81% of the £4.1 billion transactions in the first half of 2018 was The largest transaction in this sector Investment Activity 1H 1H have raised fears of a trade war that transacted. Asian investors continued to InvestmentInvestment ActivityActivity 1H 1H 2017 2018 2017 2018 nearly identical to the first-half 2017 was the sale of Midlands Logistics Park could have global economic impacts. lead the charge, accounting for 59% of mark. The largest deal in the office in Corby, which produced a capital 35% 33% Therefore, it would be reasonable to the overseas investors in Greater London 81%87% 87%68% sector in first-half 2018 was the sale of value of £81.8 million and a net initial 1H 2018 assume that the London property during the first half. It is interesting to 1H 2018 55 Colmore Row in Birmingham by IM yield of 5%. This transaction accounted ₤1.3 41% 38% market would be negatively impacted. note that many U.S. investors are now ₤9 7%4% 3%9% Properties to European Cities Fund for a for nearly 29% of the total value of BILLION However, London has retained its global divesting in the U.K. They represented BILLION price of £98 million and an initial yield transactions and the purchaser, Tritax reputation as a safe haven and is still just 7% of the overseas money invested 24% 29% 15%6% 10%23% of 4.9%. This single deal accounted for REIT Plc, accounted for more than half one of the most attractive places to in first-half 2018, compared with 21% in 22% of total office investment in the of all industrial-asset transactions in the conduct business. first-half 2017. OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL Midlands area. Midlands market. In the first half of 2018, Greater London Although many investors believe storm The retail sector recorded an increase in sales of office, industrial and retail clouds are forming on the horizon for volume year-over-year with capital value Investment Volume assets totalled £9 billion. Although some areas of the U.K. market, London Investment Volume rising 24%. The sector’s largest deal in £5 this figure represents a 10% drop is expected to continue to be resilient £25 first-half 2018 was Selly Oak Retail Park compared with the same period in 2017, despite Brexit uncertainty and potential

in Birmingham, which was purchased BILLIONS BILLIONS £4

£ BILLIONS £ € it is 9% above the five-year average. headwinds in the global economy. € BILLIONS £ £20 by M&G Real Estate for £95 million and Office transactions in Greater London a net initial yield of 5%. This transaction £3 accounted for nearly £7.9 billion of that £15 alone accounted for almost one quarter total – greatly boosted by the number of investment volume by capital value in £2 of sales involving large trophy assets, £10 the retail sector. such as CK Asset Holdings’ acquisition £1 £5 of 5 Broadgate from British Land for £1 The industrial sector continues to be billion. competitive with various new market £0 £0 2013 2014 2015 2016 2017 1H 2018 2013 2014 20152015 20162016 20172017 1H1H 2018 2018 entrants keen to acquire development OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 55 Colmore Row Office £98,000,000 IM Properties European Cities Fund 1 5 Broadgate Office £1,000,000,000 British Land / GIC Real Estate CK Asset Holdings Ltd. £622 psf £1,429 psf

2 Selly Oak Retail Park Retail £95,360,000 Landsec Plc / J Sainbury Plc M&G Real Estate 2 Ropemaker Place Office £650,000,000 Gingko Treet Investment HanWha Life Ho Bee Land Ltd. £515 psf £1,081 psf

3 Midlands Logistics Park Industrial £81,800,000 Frogmore Development Ltd / Tritax Big Box REIT 3 Riverbank House, Swan Lane Office £400,000,000 Evans Randall Zeno Capital £97 psf Mulberry Property Development £1,250 psf

4 Warth Park Raunds Industrial £71,200,000 Roxhill Development Tritax Big Box REIT 4 40 Leadenhall Street Office £365,000,000 TH Real Estate CC Lan / CSI Properties / Asia Standard £108 psf £373 psf International Group / ITC Properties Group

5 One Angel Square Office £64,000,000 Northamptonshire County Council Canada Life Assurance 5 20 Old Bailey Office £341,000,000 Blackstone Real Estate Mirae Asset Daewoo £427 psf £1,440 psf

70 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 71 Coventry (Midlands) Investment Market London Investment Market

Industrial sector attracts new investors Select Avg. Cap Rates 1H 1H City continues to show considerable resilience Select Avg. Cap Rates 1H 1H 2017 2018 2017 2018

All sectors of the Midlands investment sites and investments. The total value Downtown Class AA Office 5.0% 6.0% London’s commercial real estate market London has retained its safe-haven Downtown Class AA Office 4.0% 4.0% market remain robust and there is of industrial transactions declined 8% has continued to show remarkable status, resulting in the continued flow of Suburban Class A Office 6.0% 7.3% Suburban Class A Office 5.0% 5.0% still fierce competition for prime year-over-year to £508 million in the resilience in the face of stiff headwinds. capital from abroad. Overseas investors product. The market is the subject of first half of 2018. The decline in volume Single-Tenant Industrial 4.8% 4.8% Over the past two years, the market accounted for 60% of all office, industrial Single-Tenant Industrial 4.3% 4.0% significant interest from all sectors of is attributed to a scarcity of product Multi-Tenant Industrial 5.8% 5.5% has endured significant political and and retail investment transactions in Multi-Tenant Industrial 5.0% 4.3% the investment community, particularly available for sale. Indeed, this shortage economic uncertainty caused by the EU Greater London during first-half 2018. In Tier I Regional Mall 5.3% 6.2% Tier I Regional Mall 5.5% 5.8% local authorities and REITs. has resulted in increased demand referendum result, the shock result of terms of office sales within the City of for speculative construction of new the snap election and growing tensions London submarket, overseas investors The total value of investment distribution and warehousing facilities. between the U.S. and China, which accounted for 81% of the £4.1 billion transactions in the first half of 2018 was The largest transaction in this sector Investment Activity 1H 1H have raised fears of a trade war that transacted. Asian investors continued to InvestmentInvestment ActivityActivity 1H 1H 2017 2018 2017 2018 nearly identical to the first-half 2017 was the sale of Midlands Logistics Park could have global economic impacts. lead the charge, accounting for 59% of mark. The largest deal in the office in Corby, which produced a capital 35% 33% Therefore, it would be reasonable to the overseas investors in Greater London 81%87% 87%68% sector in first-half 2018 was the sale of value of £81.8 million and a net initial 1H 2018 assume that the London property during the first half. It is interesting to 1H 2018 55 Colmore Row in Birmingham by IM yield of 5%. This transaction accounted ₤1.3 41% 38% market would be negatively impacted. note that many U.S. investors are now ₤9 7%4% 3%9% Properties to European Cities Fund for a for nearly 29% of the total value of BILLION However, London has retained its global divesting in the U.K. They represented BILLION price of £98 million and an initial yield transactions and the purchaser, Tritax reputation as a safe haven and is still just 7% of the overseas money invested 24% 29% 15%6% 10%23% of 4.9%. This single deal accounted for REIT Plc, accounted for more than half one of the most attractive places to in first-half 2018, compared with 21% in 22% of total office investment in the of all industrial-asset transactions in the conduct business. first-half 2017. OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL Midlands area. Midlands market. In the first half of 2018, Greater London Although many investors believe storm The retail sector recorded an increase in sales of office, industrial and retail clouds are forming on the horizon for volume year-over-year with capital value Investment Volume assets totalled £9 billion. Although some areas of the U.K. market, London Investment Volume rising 24%. The sector’s largest deal in £5 this figure represents a 10% drop is expected to continue to be resilient £25 first-half 2018 was Selly Oak Retail Park compared with the same period in 2017, despite Brexit uncertainty and potential

in Birmingham, which was purchased BILLIONS BILLIONS £4

£ BILLIONS £ € it is 9% above the five-year average. headwinds in the global economy. € BILLIONS £ £20 by M&G Real Estate for £95 million and Office transactions in Greater London a net initial yield of 5%. This transaction £3 accounted for nearly £7.9 billion of that £15 alone accounted for almost one quarter total – greatly boosted by the number of investment volume by capital value in £2 of sales involving large trophy assets, £10 the retail sector. such as CK Asset Holdings’ acquisition £1 £5 of 5 Broadgate from British Land for £1 The industrial sector continues to be billion. competitive with various new market £0 £0 2013 2014 2015 2016 2017 1H 2018 2013 2014 20152015 20162016 20172017 1H1H 2018 2018 entrants keen to acquire development OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Top 5 Investment Sales by Price - First Half 2018 Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 55 Colmore Row Office £98,000,000 IM Properties European Cities Fund 1 5 Broadgate Office £1,000,000,000 British Land / GIC Real Estate CK Asset Holdings Ltd. £622 psf £1,429 psf

2 Selly Oak Retail Park Retail £95,360,000 Landsec Plc / J Sainbury Plc M&G Real Estate 2 Ropemaker Place Office £650,000,000 Gingko Treet Investment HanWha Life Ho Bee Land Ltd. £515 psf £1,081 psf

3 Midlands Logistics Park Industrial £81,800,000 Frogmore Development Ltd / Tritax Big Box REIT 3 Riverbank House, Swan Lane Office £400,000,000 Evans Randall Zeno Capital £97 psf Mulberry Property Development £1,250 psf

4 Warth Park Raunds Industrial £71,200,000 Roxhill Development Tritax Big Box REIT 4 40 Leadenhall Street Office £365,000,000 TH Real Estate CC Lan / CSI Properties / Asia Standard £108 psf £373 psf International Group / ITC Properties Group

5 One Angel Square Office £64,000,000 Northamptonshire County Council Canada Life Assurance 5 20 Old Bailey Office £341,000,000 Blackstone Real Estate Mirae Asset Daewoo £427 psf £1,440 psf

70 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 71 Manchester Investment Market

Strong domestic demand, public sector investment buoy market Select Avg. Cap Rates 1H 1H 2017 2018

In the first half of 2018, Manchester’s offices is reflected in national take-up Downtown Class AA Office 5.0% 4.8% commercial real estate market registered figures showing the sector accounted Germany Suburban Class A Office 6.8% 6.5% a marginal 4% year-over-year decrease for 35% of total investment volume – in investment dollar volume. The fall its highest share since 2009. While the Single-Tenant Industrial 4.8% 4.5% was the result of a 93% drop in retail predicted supply of grade A offices in Multi-Tenant Industrial 5.8% 5.5% 74 Berlin investment dollar volume – and masked Manchester for the next two years has Tier I Regional Mall 5.3% 5.3% a 47% increase in city-centre office increased by 20% to 1.5 msf, the level 75 Duesseldorf transaction proceeds. of city-centre take-up has been robust with first-half take-up of 769,400 sf – a Frankfurt Industrial investment dollar volume substantial (58%) increase compared Investment Activity 1H 1H 76 2017 2018 fell by 12% compared with first-half with first-half 2017. These supply-and- 2017. The drop was more a reflection demand dynamics are expected to 58% 88% 77 Hamburg of the lack of available stock rather continue exerting upward pressure on 1H 2018 than sentiment for the industrial- rents. ₤399 10% 9% 78 Munich and-logistics sector, which continues MILLION to attract strong investor interest. 32% 2% High demand and low supply in the industrial-and-logistics market have resulted in corresponding downward OFFICE INDUSTRIAL RETAIL yield pressure, which is expected to continue through the remainder of 2018. Significant Greater Manchester industrial Investment Volume

transactions completed during first-half £1,400 2018 included the sale of Olympic Court £1,200 BILLIONS in Salford Quays to the Isle of Wight MILLIONS £ BILLIONS £ € £ Council for nearly £10.9 million (4.6% £1,000

yield). £800

Investment activity in the city-centre £600

office market reached £353 million in £400 the first half of 2018 – a significant (47%) £200 uplift year-over-year. The increase in £0 demand has been driven largely by U.K. 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 institutions, whose focus on regional OFFICE INDUSTRIAL RETAIL

Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Two New Bailey Office £113,000,000 English Cities Fund Aviva Investors Global Services Ltd. £595 psf

2 3 Hardman Square Office £107,250,000 M&G Real Estate Ltd. Royal London Asset Management £564 psf

3 Eleven York Street Office £50,000,000 Kier Property Developments Ltd. Aviva Investors Global Services Ltd. £592 psf

4 Zenith Building Office £31,500,000 AM Alpha GmbH Bet 365 Group Ltd. £424 psf

5 81 Fountain Street Office £22,500,000 Aprirose Ltd. BlackRock Investment Management £558 psf (UK) Ltd.

72 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 73 Manchester Investment Market

Strong domestic demand, public sector investment buoy market Select Avg. Cap Rates 1H 1H 2017 2018

In the first half of 2018, Manchester’s offices is reflected in national take-up Downtown Class AA Office 5.0% 4.8% commercial real estate market registered figures showing the sector accounted Germany Suburban Class A Office 6.8% 6.5% a marginal 4% year-over-year decrease for 35% of total investment volume – in investment dollar volume. The fall its highest share since 2009. While the Single-Tenant Industrial 4.8% 4.5% was the result of a 93% drop in retail predicted supply of grade A offices in Multi-Tenant Industrial 5.8% 5.5% 74 Berlin investment dollar volume – and masked Manchester for the next two years has Tier I Regional Mall 5.3% 5.3% a 47% increase in city-centre office increased by 20% to 1.5 msf, the level 75 Duesseldorf transaction proceeds. of city-centre take-up has been robust with first-half take-up of 769,400 sf – a Frankfurt Industrial investment dollar volume substantial (58%) increase compared Investment Activity 1H 1H 76 2017 2018 fell by 12% compared with first-half with first-half 2017. These supply-and- 2017. The drop was more a reflection demand dynamics are expected to 58% 88% 77 Hamburg of the lack of available stock rather continue exerting upward pressure on 1H 2018 than sentiment for the industrial- rents. ₤399 10% 9% 78 Munich and-logistics sector, which continues MILLION to attract strong investor interest. 32% 2% High demand and low supply in the industrial-and-logistics market have resulted in corresponding downward OFFICE INDUSTRIAL RETAIL yield pressure, which is expected to continue through the remainder of 2018. Significant Greater Manchester industrial Investment Volume

transactions completed during first-half £1,400 2018 included the sale of Olympic Court £1,200 BILLIONS in Salford Quays to the Isle of Wight MILLIONS £ BILLIONS £ € £ Council for nearly £10.9 million (4.6% £1,000

yield). £800

Investment activity in the city-centre £600

office market reached £353 million in £400 the first half of 2018 – a significant (47%) £200 uplift year-over-year. The increase in £0 demand has been driven largely by U.K. 20132013 20142014 20152015 20162016 20172017 1H1H 2018 2018 institutions, whose focus on regional OFFICE INDUSTRIAL RETAIL

Top 5 Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Two New Bailey Office £113,000,000 English Cities Fund Aviva Investors Global Services Ltd. £595 psf

2 3 Hardman Square Office £107,250,000 M&G Real Estate Ltd. Royal London Asset Management £564 psf

3 Eleven York Street Office £50,000,000 Kier Property Developments Ltd. Aviva Investors Global Services Ltd. £592 psf

4 Zenith Building Office £31,500,000 AM Alpha GmbH Bet 365 Group Ltd. £424 psf

5 81 Fountain Street Office £22,500,000 Aprirose Ltd. BlackRock Investment Management £558 psf (UK) Ltd.

72 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 73 Berlin Investment Market Duesseldorf Investment Market

Alternative asset types gain popularity with investors Select Prime Yields 1H 1H Market builds on strong 2017 results Select Prime Yields 1H 1H 2017 2018 2017 2018 Overall commercial real estate office sector as Berlin continues to Duesseldorf, the capital of the federal The soon-to-be-completed Fürst & Office 3.10% 2.90% Office 3.90% 3.40% investment in Berlin during the first half boast the lowest office vacancy rate in state of North Rhine-Westphalia, is the Friedrich office building combines of 2018 totalled €3 billion – up slightly Germany. Increasing rental rates justify smallest among Avison Young’s German new construction with the façade of Industrial 5.00% 4.50% Industrial 4.95% 4.45% from €2.9 billion one year earlier. Among investments despite rising purchase markets with some 639,000 inhabitants. a historical building. MGM Real Estate prices. The city is below the radar of acquired it from Art-Invest for nearly Germany’s largest cities, Berlin ranked Retail 3.30% 3.00% Retail 3.50% 3.50% third behind Munich and Frankfurt. international investors when compared €116 million as a forward deal. Design In the first half of 2017, the office, Accordingly, yields continued to fall with other major German cities. In the Offices has already prelet approximately retail and industrial sectors together year-over-year, and the German capital, first half of 2018, 36% of investment one third of the space. Apart from that, accounted for 78% (€2.3 billion) of at least in the office sector, has set the sales volume in Duesseldorf commercial investment volume was mainly driven the total commercial investment national prime yield at 2.90% (down 20 Investment Activity 1H 1H real estate was international in origin, by single-asset transactions, mostly for Investment Activity 1H 1H 2017 2018 2017 2018 volume; however, the three established bps year-over-year). The retail prime compared with 43% for Germany as a less than €25 million. yield decreased to 3.00% from 3.30% segments only reached 58% (€1.7 81% 76% whole. 84% 85% during the same period. Industrial Due to increased demand for assets billion) during first-half 2018 as hotels, 1H 2018 1H 2018 prime yields registered the strongest Nonetheless, the Duesseldorf in prime locations with good rental mixed-use assets and development €1.7 4% 2% €925 14% 11% income, Duesseldorf's prime yields for land continued to gain importance. The compression, dropping 50 bps over the BILLION investment market achieved an MILLION course of the year to 4.50% in June 2018. outstanding first-half 2018 result with both office and industrial fell 50 bps largest deal during the first six months 2% 15% 22% over the course of the year. At the end 4% of 2018 was the purchase of a Hilton- sales volume of €1.3 billion (up 40% While economic uncertainties have of June 2018, the office prime yield was branded hotel, which Aroundtown SA year-over-year) for all commercial real increased worldwide, the German OFFICE INDUSTRIAL RETAIL recorded at 3.40%, and the prime yield OFFICE INDUSTRIAL RETAIL purchased from Park Hotels & Resorts for estate assets. The market is building market has remained unaffected to date. for industrial properties was 4.45%. €297 million. on strong full-year results in 2017, Berlin will, therefore, continue to be when investment volume was €3 By contrast, retail prime yields have Development land acquisitions and a focus of domestic and international Investment Volume billion. During first-half 2017, the office, remained stable at 3.50% for nearly 18 Investment Volume investors, and investment volumes and forward-purchase deals are trends in 7 € retail and industrial sectors together months. 3 € other major cities, but they do not yields are expected to remain stable. represented 86% of overall investment 6 € Market activity is expected to continue BILLIONS BILLIONS activity (€818 million). In first-half 2018,

shape the market as much as they do in € € 5 € to pick up through 2018. Yields may fall the vibrant and growing city of Berlin. their share was 70% (€925 million). In 2 € off in individual cases; but the bottom Construction activity is elevated in the 4 € both cases, the largest contribution seems to have been reached and yields city as developers increase densification came from sales of office properties. In 3 € are expected to remain stable, at least in and capitalize on the potential of the first six months of 2018, the office 1 € the short term. brownfield-site redevelopments. 2 € sector posted transactions totalling

Developments are often sold to an 1 € €788 million, an increase of 15% year-

investor prior to completion. The over-year. 0 € 0 € supply of space cannot meet the 20132015 2014 20162015 20162017 2017 1H1H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018

growing demand – especially in the OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Hilton Berlin Hotel 297,000,000 € Park Hotels & Resorts Aroundtown SA 1 Fürst & Friedrich Office 115,900,000 € Art-Invest M&G Real Estate 494,000 € per suite 7,696 € per sq. m

2 Rocket Tower Office 160,000,000 € Amundi Ilmarinen 2 Toulouser Allee 19A-23A Office 52,000,000 € Undisclosed Real IS AG 6,531 € per sq. m 5,825 € per sq. m

3 Development Land Portfolio Land 90,000,000 € Undisclosed Centrum 3 Green Yards Office 40,500,000 € Curzon Advisors OBO Kildare Partners Ashtrom Properties 1,870 € per sq. m

4 Stresemann Campus Office 71,000,000 € Aerium Group Undisclosed 4 Erkrather Straße 345-349 Office 20,000,000 € TBR Immobilien Consulting GmbH Undisclosed 4,820 € per sq. m 2,000 € per sq. m

5 Stralauer Allee 15-16 Land 65,000,000 € Ideal Versicherung RFR Holding 5 LIOS Mixed Use 8,100,000 € Undisclosed Sirius Real Estate 4,851 € per sq. m 931 € per sq. m

74 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 75 Berlin Investment Market Duesseldorf Investment Market

Alternative asset types gain popularity with investors Select Prime Yields 1H 1H Market builds on strong 2017 results Select Prime Yields 1H 1H 2017 2018 2017 2018 Overall commercial real estate office sector as Berlin continues to Duesseldorf, the capital of the federal The soon-to-be-completed Fürst & Office 3.10% 2.90% Office 3.90% 3.40% investment in Berlin during the first half boast the lowest office vacancy rate in state of North Rhine-Westphalia, is the Friedrich office building combines of 2018 totalled €3 billion – up slightly Germany. Increasing rental rates justify smallest among Avison Young’s German new construction with the façade of Industrial 5.00% 4.50% Industrial 4.95% 4.45% from €2.9 billion one year earlier. Among investments despite rising purchase markets with some 639,000 inhabitants. a historical building. MGM Real Estate prices. The city is below the radar of acquired it from Art-Invest for nearly Germany’s largest cities, Berlin ranked Retail 3.30% 3.00% Retail 3.50% 3.50% third behind Munich and Frankfurt. international investors when compared €116 million as a forward deal. Design In the first half of 2017, the office, Accordingly, yields continued to fall with other major German cities. In the Offices has already prelet approximately retail and industrial sectors together year-over-year, and the German capital, first half of 2018, 36% of investment one third of the space. Apart from that, accounted for 78% (€2.3 billion) of at least in the office sector, has set the sales volume in Duesseldorf commercial investment volume was mainly driven the total commercial investment national prime yield at 2.90% (down 20 Investment Activity 1H 1H real estate was international in origin, by single-asset transactions, mostly for Investment Activity 1H 1H 2017 2018 2017 2018 volume; however, the three established bps year-over-year). The retail prime compared with 43% for Germany as a less than €25 million. yield decreased to 3.00% from 3.30% segments only reached 58% (€1.7 81% 76% whole. 84% 85% during the same period. Industrial Due to increased demand for assets billion) during first-half 2018 as hotels, 1H 2018 1H 2018 prime yields registered the strongest Nonetheless, the Duesseldorf in prime locations with good rental mixed-use assets and development €1.7 4% 2% €925 14% 11% income, Duesseldorf's prime yields for land continued to gain importance. The compression, dropping 50 bps over the BILLION investment market achieved an MILLION course of the year to 4.50% in June 2018. outstanding first-half 2018 result with both office and industrial fell 50 bps largest deal during the first six months 2% 15% 22% over the course of the year. At the end 4% of 2018 was the purchase of a Hilton- sales volume of €1.3 billion (up 40% While economic uncertainties have of June 2018, the office prime yield was branded hotel, which Aroundtown SA year-over-year) for all commercial real increased worldwide, the German OFFICE INDUSTRIAL RETAIL recorded at 3.40%, and the prime yield OFFICE INDUSTRIAL RETAIL purchased from Park Hotels & Resorts for estate assets. The market is building market has remained unaffected to date. for industrial properties was 4.45%. €297 million. on strong full-year results in 2017, Berlin will, therefore, continue to be when investment volume was €3 By contrast, retail prime yields have Development land acquisitions and a focus of domestic and international Investment Volume billion. During first-half 2017, the office, remained stable at 3.50% for nearly 18 Investment Volume investors, and investment volumes and forward-purchase deals are trends in 7 € retail and industrial sectors together months. 3 € other major cities, but they do not yields are expected to remain stable. represented 86% of overall investment 6 € Market activity is expected to continue BILLIONS BILLIONS activity (€818 million). In first-half 2018,

shape the market as much as they do in € € 5 € to pick up through 2018. Yields may fall the vibrant and growing city of Berlin. their share was 70% (€925 million). In 2 € off in individual cases; but the bottom Construction activity is elevated in the 4 € both cases, the largest contribution seems to have been reached and yields city as developers increase densification came from sales of office properties. In 3 € are expected to remain stable, at least in and capitalize on the potential of the first six months of 2018, the office 1 € the short term. brownfield-site redevelopments. 2 € sector posted transactions totalling

Developments are often sold to an 1 € €788 million, an increase of 15% year-

investor prior to completion. The over-year. 0 € 0 € supply of space cannot meet the 20132015 2014 20162015 20162017 2017 1H1H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018

growing demand – especially in the OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Hilton Berlin Hotel 297,000,000 € Park Hotels & Resorts Aroundtown SA 1 Fürst & Friedrich Office 115,900,000 € Art-Invest M&G Real Estate 494,000 € per suite 7,696 € per sq. m

2 Rocket Tower Office 160,000,000 € Amundi Ilmarinen 2 Toulouser Allee 19A-23A Office 52,000,000 € Undisclosed Real IS AG 6,531 € per sq. m 5,825 € per sq. m

3 Development Land Portfolio Land 90,000,000 € Undisclosed Centrum 3 Green Yards Office 40,500,000 € Curzon Advisors OBO Kildare Partners Ashtrom Properties 1,870 € per sq. m

4 Stresemann Campus Office 71,000,000 € Aerium Group Undisclosed 4 Erkrather Straße 345-349 Office 20,000,000 € TBR Immobilien Consulting GmbH Undisclosed 4,820 € per sq. m 2,000 € per sq. m

5 Stralauer Allee 15-16 Land 65,000,000 € Ideal Versicherung RFR Holding 5 LIOS Mixed Use 8,100,000 € Undisclosed Sirius Real Estate 4,851 € per sq. m 931 € per sq. m

74 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 75 Frankfurt Investment Market Hamburg Investment Market

City poised to benefit from Brexit fallout Select Prime Yields 1H 1H Investment volume amounts to €2.3 billion Select Prime Yields 1H 1H 2017 2018 2017 2018 Frankfurt, Germany’s finance and Office prime yields decreased 35 bps Hamburg’s commercial real estate Yields remained relatively stable year- Office 3.60% 3.25% Office 3.30% 3.20% banking metropolis, remained a year-over-year to 3.25% at mid-year investment market closed 2017 with over-year, particularly for core office popular investment target for investors 2018. Meanwhile, industrial prime yields a sound full-year result of €3.4 billion assets and core retail assets – with Industrial 4.95% 4.45% Industrial 4.95% 4.45% in the first half of 2018, especially for decreased to 4.45% from 4.95%, and overall. Thanks to one of the largest-ever both averaging 3.20% at mid-year 2018 the prime high-street retail yield held registered deals in Hamburg – whereby (down 10 bps and 20 bps year-over-year, those seeking trophy assets. Thus, the Retail 3.55% 3.50% Retail 3.40% 3.20% country’s largest single transaction of relatively firm, falling just five bps to medical-care pension funds acquired the respectively). Only industrial prime yields the first half was signed in Frankfurt as 3.50% in June 2018. Springer district from Momeni for €400 continued to decline steadily, falling 10 a civic centre was sold to Aroundtown million – the investment market had bps since the start of 2018 and 50 bps SA by WealthCap for €500 million. Frankfurt is poised to benefit from an excellent start to 2018. Investment year-over-year to 4.45%. In addition, two office high-rise Brexit-related fallout, offering a Investment Activity 1H 1H volume for all sectors in commercial Investment Activity 1H 1H 2017 2018 Hamburg will remain a sought-after 2017 2018 acquisitions (Gallileo for €356 million relatively low cost of living and excellent real estate amounted to €2.3 billion in transportation and data infrastructure. investment location in the second and TSK1 for €300 million) were among 100% 98% the first half of 2018, an increase of 69% 85% 84% (The city is competing with Paris and half of the year with investors’ focus the country’s largest deals completed in 1H 2018 compared with the same period one year 1H 2018 Dublin to be an alternative for finance remaining on the office segment. In the first six months. €2.7 0% 2% earlier. The established sectors – office, €1.6 4% 6% firms relocating facilities from the U.K.) BILLION retail and industrial – amounted to 71% retail, the emphasis – as in other regions BILLION The market posted a strong full-year Furthermore, important institutions, (€1.6 billion) of total investment. – is increasingly on big-box stores, 0% 11% 10% result of €6.6 billion in 2017 for all such as the ECB and Deutsche Börse, 0% supermarkets and local supply centres. commercial segments. With €5.9 billion are already located in the city, and the In particular, office investments drew The consequences of shifting consumer worth of office, retail and industrial sales banking-and-finance sector has been OFFICE INDUSTRIAL RETAIL the focus of investors. The office trends in the high-street segment are OFFICE INDUSTRIAL RETAIL completed, Frankfurt ranked second well-established for decades locally. letting market is quite diversified with becoming more and more visible in the only to Berlin. That high activity level These factors will continue to support vacancy rates the lowest they have form of shuttered storefronts and rising was maintained through the first half of Frankfurt’s appeal to investors. Investment Volume been since 2000; consequently, rents vacancy – which are also apparent in Investment Volume 4 € 2018. By the end of June 2018, Frankfurt 7 € are facing upward pressure. Investors Hamburg’s city centre. However, good was second in the country (behind want to benefit from this performance. retail real estate will continue to find 6 € BILLIONS BILLIONS Accordingly, office investments buyers and achieve below-average yields. Munich) with an overall commercial real € € 3 € estate investment volume of €3.3 billion 5 € accounted for the lion's share of

(up 59% year-over-year). The office, 4 € investment with €1.4 billion in trades (up 2 € retail and industrial sectors generated 71% year-over-year) in first-half 2018. 3 € 83% (€2.7 billion) – an increase of 43% year-over-year. While office contributed 2 € The investor profile in the first half of 1 € 2018 was primarily domestic with 78% the largest share, retail property sales 1 € of purchasers based in Germany – well remained limited. Industrial real estate, 0 € 0 € above the national average of 57% and on the other hand, was in demand – 20132015 2014 20162015 20162017 2017 1H1H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018 even surpassing Duesseldorf. with first-half sales of €45 million. OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Civic Center Office 500,000,000 € WealthCap Aroundtown 1 Springer Quartier Office 400,000,000 € Momeni / Black Horse Pension funds (joint venture) 5,671 € per sq. m 6,558 € per sq. m

2 Gallileo Office 356,000,000 € Triuva Capitaland 2 Olympus Office 250,000,000 € DIH Deutsche Immobilien Holding Ärzteversorgung Westfalen-Lippe / 8,786 € per sq. m 5,320 € per sq. m Hines

3 TSK1 Office 300,000,000 € Officefirst Credit Suisse 3 Sumatrakontor Office 180,000,000 € Officefirst Real IS AG 4,583 € per sq. m 5,866 € per sq. m

4 Altes Polizeiprasidium Frankfurt Land 213,000,000 € State of Hesse Gerchgroup 4 Deichtorcenter Office 90,000,000 € Standard Life Westbrook Partners 13,772 € per sq. m 4,813 € per sq. m

5 Bockenheimer Warte (BBW) Office 140,000,000 € Aurec Real Estate Europe / Aerium Group 5 Office 3001 Office 56,000,000 € Orion Capital Managers TLG Immobilien 4,018 € per sq. m Menora Mivtachim 2,402 € per sq. m

76 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 77 Frankfurt Investment Market Hamburg Investment Market

City poised to benefit from Brexit fallout Select Prime Yields 1H 1H Investment volume amounts to €2.3 billion Select Prime Yields 1H 1H 2017 2018 2017 2018 Frankfurt, Germany’s finance and Office prime yields decreased 35 bps Hamburg’s commercial real estate Yields remained relatively stable year- Office 3.60% 3.25% Office 3.30% 3.20% banking metropolis, remained a year-over-year to 3.25% at mid-year investment market closed 2017 with over-year, particularly for core office popular investment target for investors 2018. Meanwhile, industrial prime yields a sound full-year result of €3.4 billion assets and core retail assets – with Industrial 4.95% 4.45% Industrial 4.95% 4.45% in the first half of 2018, especially for decreased to 4.45% from 4.95%, and overall. Thanks to one of the largest-ever both averaging 3.20% at mid-year 2018 the prime high-street retail yield held registered deals in Hamburg – whereby (down 10 bps and 20 bps year-over-year, those seeking trophy assets. Thus, the Retail 3.55% 3.50% Retail 3.40% 3.20% country’s largest single transaction of relatively firm, falling just five bps to medical-care pension funds acquired the respectively). Only industrial prime yields the first half was signed in Frankfurt as 3.50% in June 2018. Springer district from Momeni for €400 continued to decline steadily, falling 10 a civic centre was sold to Aroundtown million – the investment market had bps since the start of 2018 and 50 bps SA by WealthCap for €500 million. Frankfurt is poised to benefit from an excellent start to 2018. Investment year-over-year to 4.45%. In addition, two office high-rise Brexit-related fallout, offering a Investment Activity 1H 1H volume for all sectors in commercial Investment Activity 1H 1H 2017 2018 Hamburg will remain a sought-after 2017 2018 acquisitions (Gallileo for €356 million relatively low cost of living and excellent real estate amounted to €2.3 billion in transportation and data infrastructure. investment location in the second and TSK1 for €300 million) were among 100% 98% the first half of 2018, an increase of 69% 85% 84% (The city is competing with Paris and half of the year with investors’ focus the country’s largest deals completed in 1H 2018 compared with the same period one year 1H 2018 Dublin to be an alternative for finance remaining on the office segment. In the first six months. €2.7 0% 2% earlier. The established sectors – office, €1.6 4% 6% firms relocating facilities from the U.K.) BILLION retail and industrial – amounted to 71% retail, the emphasis – as in other regions BILLION The market posted a strong full-year Furthermore, important institutions, (€1.6 billion) of total investment. – is increasingly on big-box stores, 0% 11% 10% result of €6.6 billion in 2017 for all such as the ECB and Deutsche Börse, 0% supermarkets and local supply centres. commercial segments. With €5.9 billion are already located in the city, and the In particular, office investments drew The consequences of shifting consumer worth of office, retail and industrial sales banking-and-finance sector has been OFFICE INDUSTRIAL RETAIL the focus of investors. The office trends in the high-street segment are OFFICE INDUSTRIAL RETAIL completed, Frankfurt ranked second well-established for decades locally. letting market is quite diversified with becoming more and more visible in the only to Berlin. That high activity level These factors will continue to support vacancy rates the lowest they have form of shuttered storefronts and rising was maintained through the first half of Frankfurt’s appeal to investors. Investment Volume been since 2000; consequently, rents vacancy – which are also apparent in Investment Volume 4 € 2018. By the end of June 2018, Frankfurt 7 € are facing upward pressure. Investors Hamburg’s city centre. However, good was second in the country (behind want to benefit from this performance. retail real estate will continue to find 6 € BILLIONS BILLIONS Accordingly, office investments buyers and achieve below-average yields. Munich) with an overall commercial real € € 3 € estate investment volume of €3.3 billion 5 € accounted for the lion's share of

(up 59% year-over-year). The office, 4 € investment with €1.4 billion in trades (up 2 € retail and industrial sectors generated 71% year-over-year) in first-half 2018. 3 € 83% (€2.7 billion) – an increase of 43% year-over-year. While office contributed 2 € The investor profile in the first half of 1 € 2018 was primarily domestic with 78% the largest share, retail property sales 1 € of purchasers based in Germany – well remained limited. Industrial real estate, 0 € 0 € above the national average of 57% and on the other hand, was in demand – 20132015 2014 20162015 20162017 2017 1H1H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018 even surpassing Duesseldorf. with first-half sales of €45 million. OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Civic Center Office 500,000,000 € WealthCap Aroundtown 1 Springer Quartier Office 400,000,000 € Momeni / Black Horse Pension funds (joint venture) 5,671 € per sq. m 6,558 € per sq. m

2 Gallileo Office 356,000,000 € Triuva Capitaland 2 Olympus Office 250,000,000 € DIH Deutsche Immobilien Holding Ärzteversorgung Westfalen-Lippe / 8,786 € per sq. m 5,320 € per sq. m Hines

3 TSK1 Office 300,000,000 € Officefirst Credit Suisse 3 Sumatrakontor Office 180,000,000 € Officefirst Real IS AG 4,583 € per sq. m 5,866 € per sq. m

4 Altes Polizeiprasidium Frankfurt Land 213,000,000 € State of Hesse Gerchgroup 4 Deichtorcenter Office 90,000,000 € Standard Life Westbrook Partners 13,772 € per sq. m 4,813 € per sq. m

5 Bockenheimer Warte (BBW) Office 140,000,000 € Aurec Real Estate Europe / Aerium Group 5 Office 3001 Office 56,000,000 € Orion Capital Managers TLG Immobilien 4,018 € per sq. m Menora Mivtachim 2,402 € per sq. m

76 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 77 Munich Investment Market

Office, retail and industrial investment up 85% Select Prime Yields 1H 1H Select Prime Yields 1H 1H 2017 2018 2017 2018 Munich, the capital of Bavaria and the In second place were hotel properties Office 3.25% 3.15% Office third-largest city in Germany, once again with €430 million in trades, while retail Romania proved its importance as an investment- assets ranked third with €267 million. Industrial 4.90% 4.40% Industrial capital destination in the first half of The retail segment, like the office 2018. With transaction volume of €3.8 segment, far exceeded the previous Retail 3.15% 2.90% 80 Bucharest Retail billion for all types of assets (including year's result. Industrial volume, on the hotel, mixed-use, development and other hand, declined 44%. Industrial other properties), Munich led Germany’s product, however, remains highly other major cities by a wide margin. attractive to investors – particularly First-half 2018 investment in the office, logistics assets. Investment Activity 1H 1H Investment Activity 1H 1H 2017 2018 2017 2018 retail and industrial sectors amounted to As an economically innovative and €2.9 billion, representing growth of 85% 75% 86% liveable city, Munich will continue to year-over-year. 1H 2018 1H 2018 be a popular investment location. As €2.9 17% 5% While some big deals took place in a result, yields are still at historic lows BILLION Berlin and Frankfurt in late 2017, some and not all potential purchasers are 8% contract negotiations in Munich took able to execute on acquisitions. The 9% a little longer – with the result being office prime yield fell 10 bps year-over- that 10 transactions greater than €100 year to 3.15% at mid-year 2018. Only OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL million were recorded in the first six Berlin's office sector posted a lower months of 2018. Eight of these large rate. Munich’s retail and industrial prime deals took place in the office segment. yields continued to lead the country, at Investment Volume Investment Volume

They included the sale of the centrally 2.90% and 4.40%, respectively. 6 € located Correo Quartier for €275 million 5 €

Munich's real estate market is forecasted BILLIONS BILLIONS

by Deutsche Postbank to Credit Suisse € € to remain a focus of international and as well as a suburban property occupied 4 € by Aviva that was sold by KGAL for more domestic investors through 2018 with than €245 million to Korea Investment yields staying low. 3 €

Corporation. The office sector posted a 2 € total of €2.5 billion in transactions (up 112% year-over-year) during first-half 1 € 2018. 0 € 20132015 2014 20162015 20162017 2017 1H1H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018

OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Correo Quartier Office 275,000,000 € Deutsche Postbank Credit Suisse 6,111 € per sq. m

2 Aviva Office 245,000,000 € KGAL Group Kiwoom Asset Management 4,083 € per sq. m

3 SZ Tower Office 244,000,000 € AXA IM / Norges Bank Art-Invest 3,921 € per sq. m

4 East Side Offices Office 235,000,000 € Officefirst InfraRed Capital Partners 4,094 € per sq. m

5 Atlas Office 190,000,000 € Art-Invest Allianz RE Germany 7,755 € per sq. m

78 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 79 Munich Investment Market

Office, retail and industrial investment up 85% Select Prime Yields 1H 1H Select Prime Yields 1H 1H 2017 2018 2017 2018 Munich, the capital of Bavaria and the In second place were hotel properties Office 3.25% 3.15% Office third-largest city in Germany, once again with €430 million in trades, while retail Romania proved its importance as an investment- assets ranked third with €267 million. Industrial 4.90% 4.40% Industrial capital destination in the first half of The retail segment, like the office 2018. With transaction volume of €3.8 segment, far exceeded the previous Retail 3.15% 2.90% 80 Bucharest Retail billion for all types of assets (including year's result. Industrial volume, on the hotel, mixed-use, development and other hand, declined 44%. Industrial other properties), Munich led Germany’s product, however, remains highly other major cities by a wide margin. attractive to investors – particularly First-half 2018 investment in the office, logistics assets. Investment Activity 1H 1H Investment Activity 1H 1H 2017 2018 2017 2018 retail and industrial sectors amounted to As an economically innovative and €2.9 billion, representing growth of 85% 75% 86% liveable city, Munich will continue to year-over-year. 1H 2018 1H 2018 be a popular investment location. As €2.9 17% 5% While some big deals took place in a result, yields are still at historic lows BILLION Berlin and Frankfurt in late 2017, some and not all potential purchasers are 8% contract negotiations in Munich took able to execute on acquisitions. The 9% a little longer – with the result being office prime yield fell 10 bps year-over- that 10 transactions greater than €100 year to 3.15% at mid-year 2018. Only OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL million were recorded in the first six Berlin's office sector posted a lower months of 2018. Eight of these large rate. Munich’s retail and industrial prime deals took place in the office segment. yields continued to lead the country, at Investment Volume Investment Volume

They included the sale of the centrally 2.90% and 4.40%, respectively. 6 € located Correo Quartier for €275 million 5 €

Munich's real estate market is forecasted BILLIONS BILLIONS

by Deutsche Postbank to Credit Suisse € € to remain a focus of international and as well as a suburban property occupied 4 € by Aviva that was sold by KGAL for more domestic investors through 2018 with than €245 million to Korea Investment yields staying low. 3 €

Corporation. The office sector posted a 2 € total of €2.5 billion in transactions (up 112% year-over-year) during first-half 1 € 2018. 0 € 20132015 2014 20162015 20162017 2017 1H1H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018

OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Correo Quartier Office 275,000,000 € Deutsche Postbank Credit Suisse 6,111 € per sq. m

2 Aviva Office 245,000,000 € KGAL Group Kiwoom Asset Management 4,083 € per sq. m

3 SZ Tower Office 244,000,000 € AXA IM / Norges Bank Art-Invest 3,921 € per sq. m

4 East Side Offices Office 235,000,000 € Officefirst InfraRed Capital Partners 4,094 € per sq. m

5 Atlas Office 190,000,000 € Art-Invest Allianz RE Germany 7,755 € per sq. m

78 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 79 Bucharest Investment Market

Significant office deals in pipeline Select Prime Yields 1H 1H Select Prime Yields 1H 1H 2017 2018 2017 2018 The Romanian investment market shows all commercial real estate markets. Office 7.5% 7.3% Office positive fundamentals and improving Economic fundamentals remain sound liquidity, with the capital city, Bucharest, and national GDP growth is forecasted Industrial 8.8% 8.5% Industrial in top position. Across the country’s to be 4.1% in 2018. Despite financing being slightly more expensive in local other regional cities, increasing investor Retail 7.3% 7.0% Retail appetite for all types of commercial currency, real estate developers continue properties generated deals totalling to register good profits and to start or €520 million in 2017. Bucharest’s announce more commercial projects. investment market was very quiet in the first quarter of 2018 but picked up Despite recent yield compression, Investment Activity 1H 1H Investment Activity 1H 1H 2017 2018 2017 2018 speed in the second quarter, resulting in Romanian assets still offer very favourable returns compared with other a first-half total of €309 million for office, 58% 69% countries in the region. Romania’s overall industrial and retail assets – more than 1H 2018 1H 2018 average yield decreased 20 bps year- triple the total from the same period in €309 39% 0% 2017. over-year to 7.6% at mid-year 2018. Yields MILLION averaged 7% for prime retail properties, 2% Office remained the most active sector. 7.3% for prime office properties and 31% The purchase of Oregon Park, for an 8.5% for prime industrial properties. estimated price of €150 million, by Lion's Along with international funds, local OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL Head Investments was the market’s players are drawn to these good returns, largest deal in the first half of 2018 and not just for secondary-quality assets, the fund’s first acquisition in Romania. but also for expensive prime assets – a Investment Volume Investment Volume

In second place was the €95-million factor that will likely lead to further yield 600 € acquisition of Militari Retail Park by compression.

500 € BILLIONS BILLIONS MILLIONS

Prime Kapital and MAS Real Estate from € € €

Atrium European Real Estate. Additional 400 € significant deals – primarily involving office assets – are in the pipeline and 300 € expected to close during the second half 200 € of the year. 100 € The rapidly developing Romanian 0 € economy (with GDP growth of 6.9% 201320132015 20142014 201620152015 201620162017 20172017 1H1H 20181H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018 in 2017) is stimulating activity in OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Oregon Park Office 150,000,000 € (est.) Portland Trust Lion's Head Investments 2,100 € per sq. m (est.)

2 Militari Retail Park Retail 95,000,000 € Atrium European Real Estate MAS Real Estate 1,678 € per sq. m

3 Campus 6.1 Office 53,000,000 € Skanska CA Immobilien Anlagen 2,409 € per sq. m Aktiengesellschaft

4 Green Court Office 38,000,000 € Skanska Globalworth 2,331 € per sq. m

5 North Gate Office 16,800,000 € Westdeutsche ImmobilienBank One United Properties 813 € per sq. m

80 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 81 Bucharest Investment Market

Significant office deals in pipeline Select Prime Yields 1H 1H Select Prime Yields 1H 1H 2017 2018 2017 2018 The Romanian investment market shows all commercial real estate markets. Office 7.5% 7.3% Office positive fundamentals and improving Economic fundamentals remain sound liquidity, with the capital city, Bucharest, and national GDP growth is forecasted Industrial 8.8% 8.5% Industrial in top position. Across the country’s to be 4.1% in 2018. Despite financing being slightly more expensive in local other regional cities, increasing investor Retail 7.3% 7.0% Retail appetite for all types of commercial currency, real estate developers continue properties generated deals totalling to register good profits and to start or €520 million in 2017. Bucharest’s announce more commercial projects. investment market was very quiet in the first quarter of 2018 but picked up Despite recent yield compression, Investment Activity 1H 1H Investment Activity 1H 1H 2017 2018 2017 2018 speed in the second quarter, resulting in Romanian assets still offer very favourable returns compared with other a first-half total of €309 million for office, 58% 69% countries in the region. Romania’s overall industrial and retail assets – more than 1H 2018 1H 2018 average yield decreased 20 bps year- triple the total from the same period in €309 39% 0% 2017. over-year to 7.6% at mid-year 2018. Yields MILLION averaged 7% for prime retail properties, 2% Office remained the most active sector. 7.3% for prime office properties and 31% The purchase of Oregon Park, for an 8.5% for prime industrial properties. estimated price of €150 million, by Lion's Along with international funds, local OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL Head Investments was the market’s players are drawn to these good returns, largest deal in the first half of 2018 and not just for secondary-quality assets, the fund’s first acquisition in Romania. but also for expensive prime assets – a Investment Volume Investment Volume

In second place was the €95-million factor that will likely lead to further yield 600 € acquisition of Militari Retail Park by compression.

500 € BILLIONS BILLIONS MILLIONS

Prime Kapital and MAS Real Estate from € € €

Atrium European Real Estate. Additional 400 € significant deals – primarily involving office assets – are in the pipeline and 300 € expected to close during the second half 200 € of the year. 100 € The rapidly developing Romanian 0 € economy (with GDP growth of 6.9% 201320132015 20142014 201620152015 201620162017 20172017 1H1H 20181H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018 in 2017) is stimulating activity in OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

Property Name / Address Property Type Total Price / Price Per Vendor Purchaser

1 Oregon Park Office 150,000,000 € (est.) Portland Trust Lion's Head Investments 2,100 € per sq. m (est.)

2 Militari Retail Park Retail 95,000,000 € Atrium European Real Estate MAS Real Estate 1,678 € per sq. m

3 Campus 6.1 Office 53,000,000 € Skanska CA Immobilien Anlagen 2,409 € per sq. m Aktiengesellschaft

4 Green Court Office 38,000,000 € Skanska Globalworth 2,331 € per sq. m

5 North Gate Office 16,800,000 € Westdeutsche ImmobilienBank One United Properties 813 € per sq. m

80 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 81 Select Prime Yields 1H 1H Select Prime Yields 1H 1H 2017 2018 2017 2018 Office More from Office Industrial Industrial Retail Avison Young Retail

Investment Activity 1H 1H Investment Activity 1H 1H 2017 2018 84 Company Overview 2017 2018

86 Publications and Social Media

1H 2018 1H 2018 87 Contact Us

OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Investment Volume Investment Volume BILLIONS BILLIONS € €

20132015 2014 20162015 20162017 2017 1H1H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018

OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

82 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 83 Select Prime Yields 1H 1H Select Prime Yields 1H 1H 2017 2018 2017 2018 Office More from Office Industrial Industrial Retail Avison Young Retail

Investment Activity 1H 1H Investment Activity 1H 1H 2017 2018 84 Company Overview 2017 2018

86 Publications and Social Media

1H 2018 1H 2018 87 Contact Us

OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Investment Volume Investment Volume BILLIONS BILLIONS € €

20132015 2014 20162015 20162017 2017 1H1H 2018 2018 20132015 2014 20162015 20162017 2017 1H 1H2018 2018

OFFICE INDUSTRIAL RETAIL OFFICE INDUSTRIAL RETAIL

Select Investment Sales by Price - First Half 2018 Select Investment Sales by Price - First Half 2018

82 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 83 MANCHESTER TORONTO (2) COVENTRY EDMONTON PITTSBURGH TORONTO NORTH LETHBRIDGE TORONTO WEST LONDON (2) REGINA CLEVELAND WATERLOO REGION CALGARY THAMES VALLEY WINNIPEG OTTAWA MONCTON MONTREAL DETROIT HALIFAX BOSTON HAMBURG VANCOUVER COLUMBUS About Avison Young HARTFORD BERLIN SACRAMENTO MINNEAPOLIS FAIRFIELD/WESTCHESTER DUESSELDORF CHICAGO (2) LONG ISLAND NEW YORK CITY DENVER ST. LOUIS FRANKFURT RENO Headquartered in Toronto, Canada, Avison Young is a PHILADELPHIA (2) MUNICH NEW JERSEY(2) collaborative, global firm owned and operated by its principals. LAS VEGAS INDIANAPOLIS PHOENIX NASHVILLE WASHINGTON, DC TYSONS BUCHAREST Founded in 1978, the company comprises 2,600 real estate DALLAS MEMPHIS SAN FRANCISCO SUBURBAN MARYLAND HOUSTON KNOXVILLE professionals in 84 offices, providing value-added, client- OAKLAND RALEIGH-DURHAM (2) SAN MATEO AUSTIN centric investment sales, leasing, advisory, management, SAN JOSE/SILICON VALLEY SAN ANTONIO TAMPA CHARLOTTE financing and mortgage placement services to owners and GREENVILLE INLAND EMPIRE JACKSONVILLE CHARLESTON occupiers of office, retail, industrial, multi-family and hospitality ORLANDO LOS ANGELES (4) WEST PALM BEACH ATLANTA properties. ORANGE COUNTY MEXICO CITY BOCA RATON SAN DIEGO FORT LAUDERDALE MIAMI We're different We are an integrated full-service commercial real estate service provider with a unique model, culture and approach. The Avison Young difference translates into intelligent solutions that deliver a better client experience and better results. YEAR REAL ESTATE AVISON YOUNG BROKERAGE PROPERTY UNDER FOUNDED PROFESSIONALS OFFICES PROFESSIONALS MANAGEMENT Our approach is based on partnership, with our clients and across our company. The firm’s equity is in the hands of a + broad base of principals, a unique ownership structure that 1978 2,600 84 1,100 110 msf creates the incentive for internal collaboration and aligns our solutions, first and foremost, with client objectives. Our principal-led structure places the priority on relationships, not just transactions; on long-term performance, not just the Transaction Services Consulting & Advisory Investment Management Management Services Enterprise Solutions current quarter. –– Tenant representation, lease Services –– Acquisitions –– Project management –– Integrated services acquisition and disposition –– Portfolio review and analysis –– Asset management –– Property and operations coordination Fastest-growing for a reason –– Investment acquisition and –– Valuation and appraisal –– Portfolio strategy review –– Transaction management Avison Young is the world's fastest-growing commercial real disposition for owners and –– Benchmarking –– Capital repositioning –– Property/facility –– Optimization strategies estate services firm, and we continue to expand globally. occupiers –– Transaction management management –– Portfolio lease –– Asset rationalization Debt Capital Services –– Financial reporting administration The firm’s rapid growth is driven by our strategy to build our –– Landlord representation— –– Mergers and acquisitions –– Permanent and –– Lease administration –– Project coordination and geographic reach and expertise to improve the value we can all property types—office, –– Workplace solutions construction –– Operations consulting reporting offer clients. And this approach, of course, is being rewarded industrial, retail, build-to- –– Acquisitions and dispositions –– Structured finance –– Portfolio management by the growing number of clients who are coming to us for suit, land and multi-family –– Property tax services –– Portfolio mark to market help. –– Mezzanine & bridge

84 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 85 MANCHESTER TORONTO (2) COVENTRY EDMONTON PITTSBURGH TORONTO NORTH LETHBRIDGE TORONTO WEST LONDON (2) REGINA CLEVELAND WATERLOO REGION CALGARY THAMES VALLEY WINNIPEG OTTAWA MONCTON MONTREAL DETROIT HALIFAX BOSTON HAMBURG VANCOUVER COLUMBUS About Avison Young HARTFORD BERLIN SACRAMENTO MINNEAPOLIS FAIRFIELD/WESTCHESTER DUESSELDORF CHICAGO (2) LONG ISLAND NEW YORK CITY DENVER ST. LOUIS FRANKFURT RENO Headquartered in Toronto, Canada, Avison Young is a PHILADELPHIA (2) MUNICH NEW JERSEY(2) collaborative, global firm owned and operated by its principals. LAS VEGAS INDIANAPOLIS PHOENIX NASHVILLE WASHINGTON, DC TYSONS BUCHAREST Founded in 1978, the company comprises 2,600 real estate DALLAS MEMPHIS SAN FRANCISCO SUBURBAN MARYLAND HOUSTON KNOXVILLE professionals in 84 offices, providing value-added, client- OAKLAND RALEIGH-DURHAM (2) SAN MATEO AUSTIN centric investment sales, leasing, advisory, management, SAN JOSE/SILICON VALLEY SAN ANTONIO TAMPA CHARLOTTE financing and mortgage placement services to owners and GREENVILLE INLAND EMPIRE JACKSONVILLE CHARLESTON occupiers of office, retail, industrial, multi-family and hospitality ORLANDO LOS ANGELES (4) WEST PALM BEACH ATLANTA properties. ORANGE COUNTY MEXICO CITY BOCA RATON SAN DIEGO FORT LAUDERDALE MIAMI We're different We are an integrated full-service commercial real estate service provider with a unique model, culture and approach. The Avison Young difference translates into intelligent solutions that deliver a better client experience and better results. YEAR REAL ESTATE AVISON YOUNG BROKERAGE PROPERTY UNDER FOUNDED PROFESSIONALS OFFICES PROFESSIONALS MANAGEMENT Our approach is based on partnership, with our clients and across our company. The firm’s equity is in the hands of a + broad base of principals, a unique ownership structure that 1978 2,600 84 1,100 110 msf creates the incentive for internal collaboration and aligns our solutions, first and foremost, with client objectives. Our principal-led structure places the priority on relationships, not just transactions; on long-term performance, not just the Transaction Services Consulting & Advisory Investment Management Management Services Enterprise Solutions current quarter. –– Tenant representation, lease Services –– Acquisitions –– Project management –– Integrated services acquisition and disposition –– Portfolio review and analysis –– Asset management –– Property and operations coordination Fastest-growing for a reason –– Investment acquisition and –– Valuation and appraisal –– Portfolio strategy review –– Transaction management Avison Young is the world's fastest-growing commercial real disposition for owners and –– Benchmarking –– Capital repositioning –– Property/facility –– Optimization strategies estate services firm, and we continue to expand globally. occupiers –– Transaction management management –– Portfolio lease –– Asset rationalization Debt Capital Services –– Financial reporting administration The firm’s rapid growth is driven by our strategy to build our –– Landlord representation— –– Mergers and acquisitions –– Permanent and –– Lease administration –– Project coordination and geographic reach and expertise to improve the value we can all property types—office, –– Workplace solutions construction –– Operations consulting reporting offer clients. And this approach, of course, is being rewarded industrial, retail, build-to- –– Acquisitions and dispositions –– Structured finance –– Portfolio management by the growing number of clients who are coming to us for suit, land and multi-family –– Property tax services –– Portfolio mark to market help. –– Mezzanine & bridge

84 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 85 Contact Us

Canada Research United States Research Mexico Research Bill Argeropoulos, Principal Margaret Donkerbrook, Principal Guadalupe Cos Practice Leader, Research (Canada) Practice Leader, Research (U.S.) Head of Marketing and Research, Mexico 416.673.4029 202.644.8677 +52 (0) 55 4742 3920 Avison Young Research [email protected] [email protected] [email protected]

Turning information into intelligence United Kingdom Research Germany Research Corporate Communications Iain Rackley, Principal Inga Schwarz Sherry Quan, Principal Consulting and Advisory Services Head of Research, Germany Global Director of Communications & Media Relations Avison Young’s multi-disciplinary group of dedicated +44 (0) 20 7041 9997 +49 (0) 40 360 360 41 604.647.5098 research professionals works collectively to deliver [email protected] [email protected] [email protected] market analysis and insights that drive value in real estate Avison Young Office Market Report decisions. We translate data into market intelligence Mid-year 2018 North America and to help our clients strategically solve their real estate Europe Office Market Report concerns and concentrate on what their businesses do best. Canada Boca Raton Inland Empire Orlando West Palm Beach T 561.721.7000 T 951.267.2770 T 407.219.3500 T 561.721.7000 Toronto (HQ) Avison Young regularly produces an array of local, regional Avison Young Industrial Market T 416.955.0000 Boston Jacksonville Philadelphia (Suburban) Mexico and global market research, including quarterly and Report T 617.250.7600 T 904.512.0540 T 610.276.1080 Calgary Mexico City Spring 2018 North America and Chapel Hill Knoxville Philadelphia (Center City) topical reports, white papers and annual forecasts. Our T 403.262.3082 T +52 (0) 55 4742 3900 Europe Industrial Market Report T 919.968.4017 T 865.450.8883 T 215.383.2690 research is quoted extensively in local, national, business Edmonton Charleston Las Vegas Phoenix T 780.428.7850 United Kingdom and global media outlets. T 843.725.7200 T 702.472.7979 T 480.994.8155 Halifax Coventry Charlotte Long Island Pittsburgh T 902.454.6185 T +44 (0) 24 7663 6888 Through Avison Young’s professionals, our research team T 704.531.5550 T 516.962.5400 T 412.944.2130 Avison Young 2018 Forecast Lethbridge London (Mayfair) engages with a wide variety of corporate, investor and Chicago (Downtown) Los Angeles (Downtown) Raleigh-Durham T 403.330.3338 T +44 (0) 20 7495 4321 institutional clients to conduct customized research, North America and Europe Annual T 312.957.7600 T 213.935.7430 T 919.785.3434 Review and Forecast Moncton London (West End) Chicago (Suburban) Los Angeles (Santa Monica) Reno due diligence and market assessments, as well as T 506.388.1202 T +44 (0) 20 7101 0200 T 847.849.1900 T 310.899.1800 T 775.332.2800 demographic and location analysis. Montreal Manchester Cleveland Los Angeles (North) Sacramento T +44 (0) 161 228 1001 T 514.940.5330 T 216.609.0303 T 323.851.6666 T 916.563.7555 Thames Valley Leveraging in-depth knowledge from our broad services Ottawa 2017 Global Citizenship Report Columbus, OH Los Angeles (West) San Antonio T +44 (0) 1494 540 000 platform with information from internal proprietary and T 613.567.2680 T 614.840.0700 T 424.265.9200 T 210.714.8080 Avison Young releases its 2017 Global independent third-party data-tracking systems, our clients’ Regina Citizenship Report Dallas Memphis San Diego Germany T 306.559.9000 real estate decisions are fully supported by best-in-class, T 214.559.3900 T 901.231.1400 T 858.201.7070 Berlin interpreted data – true market intelligence. Toronto (North) Denver Miami San Francisco T +49 (0) 30 408 174 166 T 905.474.1155 T 720.508.8100 T 305.4 46.0011 T 415.322.5050 Duesseldorf Toronto (West) Detroit Minneapolis San Jose/Silicon Valley T +49 (0) 211 220 70 0 T 905.712.2100 T 313.209.4120 T 612.913.5640 T 408.377.4300 Frankfurt Vancouver Fairfield/Westchester Nashville San Mateo T +49 (0) 69 962 443 0 T 604.687.7331 T 203.614.1260 T 615.727.7400 T 650.425.6420 Hamburg Follow Us Waterloo Region Fort Lauderdale New Jersey (Morristown) St. Louis T +49 (0) 360 360 10 T 226.366.9090 T 954.903.1800 T 973.898.6360 T 314.862.5000 Munich Winnipeg Greenville New Jersey (Metropark) Suburban Maryland T +49 (0) 89 150 02 50 T 204.560.1500 T 864.334.4145 T 732.983.4800 T 301.948.9870 Romania Hartford New York Tampa United States T 860.327.8330 T 212.729.7140 T 813.288.1800 Bucharest T +40 374 084 000 Atlanta Oakland Tysons Avison Young news, Avison Young Connect with Get market insight Watch videos from See photos from Houston T 404.865.3663 T 510.254.4255 T 703.288.2700 press releases and listings and deal Avison Young groups from Avison Young's Avison Young for our favourite places T 713.993.7700 market reports announcements and professionals CRE experts industry updates and spaces Austin Indianapolis Orange County (Irvine) Washington, DC T 512.474.2411 T 317.210.8801 T 949.757.1190 T 202.644.8700

86 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 87 Contact Us

Canada Research United States Research Mexico Research Bill Argeropoulos, Principal Margaret Donkerbrook, Principal Guadalupe Cos Practice Leader, Research (Canada) Practice Leader, Research (U.S.) Head of Marketing and Research, Mexico 416.673.4029 202.644.8677 +52 (0) 55 4742 3920 Avison Young Research [email protected] [email protected] [email protected]

Turning information into intelligence United Kingdom Research Germany Research Corporate Communications Iain Rackley, Principal Inga Schwarz Sherry Quan, Principal Consulting and Advisory Services Head of Research, Germany Global Director of Communications & Media Relations Avison Young’s multi-disciplinary group of dedicated +44 (0) 20 7041 9997 +49 (0) 40 360 360 41 604.647.5098 research professionals works collectively to deliver [email protected] [email protected] [email protected] market analysis and insights that drive value in real estate Avison Young Office Market Report decisions. We translate data into market intelligence Mid-year 2018 North America and to help our clients strategically solve their real estate Europe Office Market Report concerns and concentrate on what their businesses do best. Canada Boca Raton Inland Empire Orlando West Palm Beach T 561.721.7000 T 951.267.2770 T 407.219.3500 T 561.721.7000 Toronto (HQ) Avison Young regularly produces an array of local, regional Avison Young Industrial Market T 416.955.0000 Boston Jacksonville Philadelphia (Suburban) Mexico and global market research, including quarterly and Report T 617.250.7600 T 904.512.0540 T 610.276.1080 Calgary Mexico City Spring 2018 North America and Chapel Hill Knoxville Philadelphia (Center City) topical reports, white papers and annual forecasts. Our T 403.262.3082 T +52 (0) 55 4742 3900 Europe Industrial Market Report T 919.968.4017 T 865.450.8883 T 215.383.2690 research is quoted extensively in local, national, business Edmonton Charleston Las Vegas Phoenix T 780.428.7850 United Kingdom and global media outlets. T 843.725.7200 T 702.472.7979 T 480.994.8155 Halifax Coventry Charlotte Long Island Pittsburgh T 902.454.6185 T +44 (0) 24 7663 6888 Through Avison Young’s professionals, our research team T 704.531.5550 T 516.962.5400 T 412.944.2130 Avison Young 2018 Forecast Lethbridge London (Mayfair) engages with a wide variety of corporate, investor and Chicago (Downtown) Los Angeles (Downtown) Raleigh-Durham T 403.330.3338 T +44 (0) 20 7495 4321 institutional clients to conduct customized research, North America and Europe Annual T 312.957.7600 T 213.935.7430 T 919.785.3434 Review and Forecast Moncton London (West End) Chicago (Suburban) Los Angeles (Santa Monica) Reno due diligence and market assessments, as well as T 506.388.1202 T +44 (0) 20 7101 0200 T 847.849.1900 T 310.899.1800 T 775.332.2800 demographic and location analysis. Montreal Manchester Cleveland Los Angeles (North) Sacramento T +44 (0) 161 228 1001 T 514.940.5330 T 216.609.0303 T 323.851.6666 T 916.563.7555 Thames Valley Leveraging in-depth knowledge from our broad services Ottawa 2017 Global Citizenship Report Columbus, OH Los Angeles (West) San Antonio T +44 (0) 1494 540 000 platform with information from internal proprietary and T 613.567.2680 T 614.840.0700 T 424.265.9200 T 210.714.8080 Avison Young releases its 2017 Global independent third-party data-tracking systems, our clients’ Regina Citizenship Report Dallas Memphis San Diego Germany T 306.559.9000 real estate decisions are fully supported by best-in-class, T 214.559.3900 T 901.231.1400 T 858.201.7070 Berlin interpreted data – true market intelligence. Toronto (North) Denver Miami San Francisco T +49 (0) 30 408 174 166 T 905.474.1155 T 720.508.8100 T 305.4 46.0011 T 415.322.5050 Duesseldorf Toronto (West) Detroit Minneapolis San Jose/Silicon Valley T +49 (0) 211 220 70 0 T 905.712.2100 T 313.209.4120 T 612.913.5640 T 408.377.4300 Frankfurt Vancouver Fairfield/Westchester Nashville San Mateo T +49 (0) 69 962 443 0 T 604.687.7331 T 203.614.1260 T 615.727.7400 T 650.425.6420 Hamburg Follow Us Waterloo Region Fort Lauderdale New Jersey (Morristown) St. Louis T +49 (0) 360 360 10 T 226.366.9090 T 954.903.1800 T 973.898.6360 T 314.862.5000 Munich Winnipeg Greenville New Jersey (Metropark) Suburban Maryland T +49 (0) 89 150 02 50 T 204.560.1500 T 864.334.4145 T 732.983.4800 T 301.948.9870 Romania Hartford New York Tampa United States T 860.327.8330 T 212.729.7140 T 813.288.1800 Bucharest T +40 374 084 000 Atlanta Oakland Tysons Avison Young news, Avison Young Connect with Get market insight Watch videos from See photos from Houston T 404.865.3663 T 510.254.4255 T 703.288.2700 press releases and listings and deal Avison Young groups from Avison Young's Avison Young for our favourite places T 713.993.7700 market reports announcements and professionals CRE experts industry updates and spaces Austin Indianapolis Orange County (Irvine) Washington, DC T 512.474.2411 T 317.210.8801 T 949.757.1190 T 202.644.8700

86 Avison Young Fall 2018 Commercial Real Estate Investment Review avisonyoung.com 87 avisonyoung.com

© 2018 Avison Young (Canada) Inc. All rights reserved.