METRO OFFICE REPORT Q1 2018 Quarterly Vacancy Rates Vancouver Downtown Q1 2018 VANCOUVER OFFICE Q4 2017: 6.7% MARKET REPORT Q1 2018: 5.0% -25.4%

We are excited to provide you with our first Metro Vancouver Office Report for 2018. Included in this report is a summary of major upcoming office developments, and a review of taxes and operating costs for buildings in . Suburban Q4 2017: 11.7% Q1 has certainly been interesting politically. While our neighbours to the south introduced Q1 2018: 10.4% more favourable tax policies for business, our Federal and Provincial Governments have elected to move in the opposite direction. On February 27th, the Federal Government announced plans to move from a balanced budget to a $18.1 billion deficit, eclipsing -11.1% campaign promises to run at a $10 billion deficit. While a revised tax policy has been introduced to pay for it, most critics noted the lack of a timeline to return to a balanced budget, reflecting poorly on the Liberals promise to re-balance by 2019. An analysis of Vancouver Periphery the new tax policy may be found at: Q4 2017: 6.3% Q1 2018: 6.1% www.pwc.com/ca/en/services/tax/budgets/2018/federal-budget-analysis.html

Key Takeaways: -3.2% Reduces the small business tax deduction limit to zero for passive income over $150,000 Limits or restricts access to refundable tax on payment of dividends paid Yearly Vacancy Rates Vancouver Downtown On a positive note, the small business tax rate dropped from 10.5% to 10% in 2018, Q1 2017: 6.6% and will further drop to 9% in 2019. Q1 2018: 5.0% As commercial real estate professionals working with businesses of all sizes throughout the province, there are a number of concerning items in the provincial budget. Of -24.2% particular note is the ill-conceived speculator tax, a higher Foreign Buyers Tax, the increase of Property Purchase Tax, and the Payroll Tax. Furthermore, blatant wealth taxes such as the arbitrary tax on luxury cars and the additional tax on houses assessed Suburban at more than three million dollars have fueled the fear that is risky for Q1 2017: 11.9% investment and expansion. Q1 2018: 10.4% As to the impact on real estate specifically, the Urban Development Institute’s letter is worth a recap: -12.6% udi.bc.ca/udi-pacific-letter-on-bcbudget2018/udi-letter-march-5-2018-budget-2018

Key Provincial Budget Takeaways: Vancouver Periphery Q1 2017: 9.1% Real Estate Q1-% 2018: 6.1% Property Transfer Tax increased from 3% to 5% on residential properties valued over $3,000,000 -33%

% % Number Number Total Vacancy change Spaces Spaces Change Spaces Spaces Total of Absorption Vacancy of Number Rate from Added Added Q1 from Leased Leased Area Spaces for the Rate Q4 Spaces of Spaces Q1 previous Q4 2017 2018 Previous Q4 2017 Q1 2018 Leased Removed Quarter Q1 2018 Removed Quarter Quarter Q4 2017

Downtown 6.70% 5.00% -25.37% 109 140 22.14% 124 185 700,930 20 31 216 338,103

Suburban 11.70% 10.40% -11.11% 77 137 43.80% 79 105 367,093 20 22 127 75,181

Vancouver 6.30% 6.10% -3.17% 14 36 61.11% 34 34 150,661 4 1 35 41,030 Periphery

Total 454,314 Statistics provided by Altus Insite 2 NAI Commercial | Office Report | Q1 2018 Expansion of the area and of the tax for foreign buyers to 20% Downtown Snapshot Downtown market vacancy tightened further in Q1, Speculation Tax of 2% of assessed value for vacant decreasing from 6.7% to 5%. This is the 6th consecutive homes. Supposedly implemented to target non-tax paying quarter showing dropping vacancy rates. British Columbians. There has been much backlash as it clearly affects second homes or vacation properties, and Area the accompanying credit for BC taxpayers is negligible. Class Availability Availability Inventory Available Rate Q4 (%) Rate Q1 (%) Size (SF) (SF) Proposed School Tax of 0.2 % on residential properties All office 6.7 5.0 of assessed value between $3,000,000 and $4,000,000 classes and 0.4% for the value in excess of $4,000,000 for 2019. A 5.8 4.9 15,202,704 744,091 This translates to an additional $10,000 tax for a home assessed at $6,000,000. This does not take into account B 7.4 4.1 6,915,762 280,771 ability to pay or taxes paid and is a blatant political wealth C 11.5 7.3 3,371,124 245,603 tax.

If you care to weigh in on the speculation or provincial surtax, Transactions saw a spike in activity with 185 spaces totalling please access the following links: 700,930 SF leased and 140 spaces totalling 453,520 SF added. The average size of space added was 3,239 SF and www.change.org/p/british-columbia-government-stop- the average size of space removed was 4,319 SF. There bc-s-speculation-tax was further absorption of 338,103 SF in the quarter. www.change.org/p/b-c-voters-and-members-of- legislative-assembly-say-no-to-new-provincial-surtax- on-property-拒绝省政府新施的物业附加税 Significant Transactions American big data software company Splunk leased General 27,000 SF at 555 Robson St The top provincial tax rate increased by 14.3% from Glance Technologies committed to 12,000 SF at 200 14.7% to 16.8% Granville St Motor Fuel Tax increased to 5.5 cents per litre as of April 1st Pacific Reach leased 9,000 SF at 701 West Georgia St To fund the elimination of personal MSP premiums, Atimi Software will relocate to 800 West Pender St for employers with a payroll between $500,000 and 7,400 SF $1,500,000 will pay a tax between 0% and 1.95%. For payrolls over $1,500,000 the tax is 1.95%. Regus/Spaces leased 65,000 SF at 939 Granville Street A Luxury Passenger Vehicles Surtax of 15% for vehicles Westside School expanded and took 30,000 SF at 110 more than $125,000 and up to 20% for vehicle more Cambie St than $150,000 (applies to both new and used vehicles). The office leasing market continues to be active through the Suburban Snapshot first quarter with different groups competing for space. The suburban vacancy rate dropped from 11.75% last Now, onto the Q1 Metro Vancoucer Office Report. quarter to 10.4% this quarter. However, last quarter 77 spaces were added in comparison to the 157 spaces totalling 663,758 SF added this quarter. While 105 spaces Q1 2018 Absorption totalling 367,093 SF were leased, the most interesting 800,000 was the 22 non-leased spaces removed from the market Added Leased Removed Absorption totaling 371,846 SF. An example of this was 3383 Gilmore 700,000 Way, which alone had 146,567 SF available for sublease 600,000 removed. Despite a record number of listings being added this quarter, absorption was positive due to 738,939 SF 500,000 being taken off the market. 400,000 # of Inventory Size Total Availability Rate 300,000 Class Buildings (SF) (%)

200,000 All office 347 23,131,420 10.5 classes 100,000 A 178 15,219,458 12.0 0 B 124 6,153,201 9.1 Downtown Suburban Periphery C 45 1,758,261 3.2

3 # of Inventory Total Availability Rate Class Buildings Size (SF) (%) 2017 Year End Report Burnaby 120 10,002,586 9.0 As promised in our 2017 year-end report, we are happy Langley 24 1,172,378 9.1 to provide a summary of the 2018 Downtown taxes and New Westminster 20 1,327,488 11.9 operating costs reported by Altus Insite. If you require this North Shore 39 1,844,205 7.4 type of information for other markets, please e-mail us and Richmond 77 4,654,452 10.7 we will provide the report. Surrey 54 3,439,965 16.8 The Class A average was $21.03. The highest recorded Tri-Cities 13 690,346 8.6 additional rent was $24.43 at The Guinness Tower, 1055 West Hastings Street. The lowest Class A additional rent was $16 at both 638 Smithe Street and - West Significant Transactions Tower, 89 West Georgia St.  Douglas College leased 66,000 SF at 11 Eight St The Class B average was $18.63. The highest recorded  Arista Networks committed to 60,000 SF at 9100 additional rent was $24.42 at the , 355 Glenlyon Pkwy Burrard St. The lowest Class B additional rent was $11.44 at 318 Homer St.  Evonik Canada expanded by 36,000 SF at 3731 North Fraser Way The Class C average was $15.24. The highest recorded additional rent was $21.55 was at Sun Tower, 128 West  Allteck Line Contractors leased 18,000 SF at 4333 Still Pender St. The lowest Class C additional rent was $8.00 at Creek Dr Millar & Coe, 417 West Hastings St.  Cowi completed a lease for 2 floors with Onni at 1308 The full report, including rents for each surveyed building, is Lonsdale Ave attached as an appendix to this report. Finally, we have a special insert highlighting the major new Vancouver Periphery and proposed office developments. Snapshot The Vancouver Periphery market followed a similar trend NAI Commercial Office Team with another drop in the vacancy rate from 6.3% to 6.1%. 36 NAI Commercial appreciates those landlords who have spaces totaling 113,081 SF were added, 34 spaces totalling asked us to review and assist with their leasing program. 150,661 SF were leased, and only 1 space measuring 3,450 For tenants who have engaged us to help with their office SF was removed from the market, for a total absorption of renewals and relocations, we remind you that we remain an 41,030 SF. interested party and are available to answer questions and concerns, even after your lease is signed. # of Inventory Size Total Availability Rate Class Buildings (SF) (%) Vancouver Office: Irene Yung All office 141 8,208,641 6.1 Conor Finucane classes Rob DesBrisay Jesse Godin Managing Partner A 63 5,092,877 6.3 Cole Maedel 604.691.6602 B 47 2,129,664 4.4 Edward Sim [email protected] C 31 986,100 8.6

Langley Office: Don MacDonald Significant Transactions Angie MacDonald  Spaces leased 45,000 SF on 565 Great Northern Way Gary Niesner where Blackbird Interactive leased 29,000 SF, Finning Brian Larrivée International committed to 30,000 SF and Samsung Ted Weibelzahl took 20,000 SF  Ken Kiers  Jumpstart Games committed to 29,000 SF at 5550 We continue to appreciate the reminders and suggestions Fraser St of agents to join our team. We have openings in both our  The City of Vancouver leased 28,000 SF at 555 West Vancouver and Langley office and we welcome the referrals 8th Ave of agents and teams looking to enhance their career in commercial real estate that may be a good fit for our firm.

4 NAI Commercial | Office Report | Q1 2018 TO THE NORTH SHORE, WHISTLER & HORSESHOE BAY FERRY TERMINALS

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LAGOON DR BAYSHORE DR Coal Harbour PARK LANE

DENMAN ST BIDWELL ST 1 W PENDER ST BARCLAY ST CARDERO ST CHILCO ST W GEORGIA ST GILFORD ST

NICOLA ST MELVILLE ST 10 W CORDOVA ST BIDWELL ST ALBERNI ST 12 CARDERO ST NELSON ST PENDRELL ST W HASTINGS ST HARO ST ROBSON ST 7 9 E COMMISSIONER ST COMOX ST 6 JERVIS ST W PENDER ST 5 WATER ST HORNBY ST ALEXANDER ST BUTE ST BURRARD ST POWELL ST BARCLAY ST

NICOLA ST HOWE ST E CORDOVA ST GRANVILLE ST DUNSMUIR ST

BROUGHTON ST

E HASTINGS ST BURNABY ST 8 ABBOTT ST DAVIE ST HAWKS AVE SEYMOUR ST 3 THURLOW ST W GEORGIA ST CARRALL ST 11 E PENDER ST HEATLEY AVE ROBSON ST 4 HARWOOD ST PACIFIC ST NELSON ST KEEFER ST BURRARD ST SMITHE ST GORE ST

BEACH AVE COLUMBIA ST

EXPO BLVD

HELMCKEN ST MAIN ST HAMILTON ST

2 RICHARDS ST HORNBY ST

EXPO BLVDBC Prior St OGDEN AVE Place HOWE ST CAMBIE ST

BEATTY ST QUEBEC ST

SEYMOUR ST HOMER ST PACIFIC BLVD STATION ST

DRAKE ST HAMILTONMAINLAND ST ST Yaletown-Roundhouse Station Canada Line

PACIFIC BLVD

DURANLEAU ST TERMINAL AVE CHESTNUT ST

CORNWALL AVE GRANVILLE BRIDGE MARINASIDE CR JOHNSTON ST

YORK AVE W 1ST AVE INDUSTRIAL AVE MAIN ST ARBUTUS ST W 1ST AVE CARTWRIGHT ST W 2ND AVE W 2ND AVE BURRARD ST FIR ST

BALSAM ST VINE ST YEW ST MAPLE ST W 3RD AVE

W 4TH AVE CAMBIE ST MANITOBA ST ONTARIO ST QUEBEC ST E 2ND AVE W 5TH AVE Olympic Village Station Canada Line COLUMBIA ST

W 6TH AVE CYPRESS ST PINE ST W 6TH AVE W 6TH AVE W 7TH AVE

W BROADWAY W BROADWAY E BROADWAY YUKON ST ALBERTA ST W 10TH AVE KINGSWAY GRANVILLE ST HEMLOCK ST BroadwayCambie Street- City Hall FIR ST BroadwayStation Canada Extention Line OAK ST W 12TH AVE W 12TH AVE W 12TH AVE CAMBIE ST 5 1 2 3 Address 1575 W Georgia St Address Burrard Place, 1280 Address 401 W Georgia St / 402 Burrard St / 1281 Hornby Dunsmuir St Developer Bosa Properties St Developer Oxford Properties Group Storeys/Office Area 26/45,000 SF Developer Reliance Properties Storeys/Office Area 9/147,000 SF Status Under Construction Storeys/Office Area 13/150,000 SF Status Pre-Construction Status Under Construction Estimated Completion Q4 2019 Estimated Completion Q1 2020 Estimated Completion Q1 2020

Summary Located at the Summary Located near the Summary Located across from the western perihphery of Burrard Street bridge Cathedral Of Our Lady Downtown, at Cardero at the entrance to Of The Holy Rosary. Street. Contains 3 floors downtown. Touting This building has been of dedicated office LEED Gold certification, entirely leased by space. LEED Gold this tech company Amazon. Listed as 401 certification and striking inspired development W Georgia St on the architectural elements is the last commercial application permit. are sure to impress. development by Bing Thom. Part of a mixed- use development that includes residential, and a 3 floor vehicle dealsership located in the office tower.

4 5 6 Address 400 W Georgia St Address The Maker Exchange, 488 Address 601 W Hastings St Railway St Developer Westbank Developer PCI Developments Developer Rendition Developments Storeys/Office Area 24/367,000 SF Storeys/Office Area 25/224,000 SF Storeys/Office Area 7/152,000 SF Status Pre-Construction - Status Pre-Construction - Development Permit Status Pre-Construction Development Permit issued February 20, - Application is issued September 16, 2018 “conditional,” requires 2014 decision by City’s Estimated Completion Q2 2020 Director of Planning Estimated Completion Q4 2020 Summary Located across from Estimated Completion Q3 2020 - Construction Summary Located across aiming to begin in from the Vancouver the VPL Central Branch. August With LEED Platnium Lookout. Targeting ceritication, this Summary Located in central LEED Gold certification, landmark architectural Railtown. Marketed this mixed use space and engineering as a modern business aims to bring life to an achievement will provide space aimed at tech underutilized corner of striking office space and “creative economy” the city. Although the intentionally designed workers. application has been for the tech industry. approved since 2014, construction has yet to begin.

6 NAI Commercial | Office Report | Q1 2018 7 8 9 Address 625 W Hastings St Address Vancouver Centre II, Address 320 Granville St 753 Seymour St / 650 W Developer Uptown Property Group Georgia St Developer Bosa Properties Storeys/Office Area 28/120,000 SF Developer GWLRA Developments Storeys/Office Area 30/355,000 SF Status Pre-Construction - Storeys/Office Area 33/368,000 SF Status Pre-Construction - Developer is currently Development Permit going through the permit Status Under Construction issued July 15, 2014 application process Estimated Completion Q2 2021 Estimated Completion Q2 2021 Estimated Completion Q1 2021 Summary Located in the new Summary Located at the base Summary Located adjacent to the of Granville Street by RBC Building. This LEED core of the city’s Central Business District, Waterfront Centre. Gold certified strucutre 50% of this office will double as a lateral this amenity rich, thoughtfully designed space was sold out load resisting upgrade to for record breaking the adjacent building. and LEED® Platinum planned office building prices in under a week, is poised to become an perhaps signifying future iconic development. pricing for similar quality developments.

10 11 12 Address 1090 W Pender St Address 349 W Georgia St Address 1133 Melville St Developer Bentall Kennedy Developer Quadreal Developer Oxford Properties Group Storeys/Office Area 31/564,000 SF Storeys/Office Area 17/512,000 SF Storeys/Office Area 36/458,000 SF Status Pre-Construction - Status Pre-Construction - Status Pre-Construction - Development application Application is “being Application was referred approved with conditions considered” under CBD to Public Hearing on February 2018 rezoning policy March 13, 2018 Estimated Completion Q4 2020 Estimated Completion 2023 Estimated Completion Q2 2022

Summary Located in the central Summary Located at the former Summary Located behind the CBD at W Pender and Post Office site. Similar Trump tower off Thurlow Thurlow. The central design considerations Street. This AAA office location and size ensure the new Exchange building has undergone this will be a significant building, where the multiple revisions, aspect of the next developer aims to retain including refocusing on development cycle the façade of the originial attaining LEED Platinum, expected around 2022. structure. to the existing design. Architecturally significant, this will surely be a landmark in the next wave of development.

7 DOWNTOWN OFFICE BUILDINGS ADDITIONAL RENT 2018

Total 1066 W Hastings St A 22.98 1130 W Pender St B 18.87 Office Additional Address Class Rent 1177 W Hastings St A 21.11 1140 W Pender St B 17.37 ($/SF) 1095 W Pender St A 22.77 Average 18.63 400 Burrard St A 23.84 1285 W Pender St A 20.06 High 24.42 505 Burrard St A 23.01 Average 21.03 Low 11.44 510 Burrard St A 21.32 High 24.43 550 Burrard St A 20.82 595 Burrard St A 22.11 Low 16 666 Burrard St A 23.77 Total Total 1290 Burrard St A nd Office Additional Address Office Additional Address Class Rent Class Rent 999 Canada St A 19.28 ($/SF) ($/SF) 888 Dunsmuir St A 19.8 1166 Alberni St B 20.99 560 Beatty St C 13.61 1055 Dunsmuir St A 20.44 355 Burrard St B 24.42 788 Beatty St C 9.96 200 Granville St A 23.8 1200 Burrard St B 17.95 1001-1085 Cambie St C 21.37 425 Carrall St C 13.64 543 Granville St A 16.89 885 Cambie St B nd 1033 Davie St C 17.35 609 Granville St A 21.71 409 Granville St B 17.64 885 Dunsmuir St C 17.07 1085 Homer St A 19.83 1040 Hamilton St B nd 470 Granville St C 14.95 475 Howe St A nd 1168 Hamilton St B 16.5 580 Granville St C nd 840 Howe St A 20.9 318 Homer St B 11.44 736 Granville St C 17.35 900 Howe St A 18.68 1090 Homer St B 21.05 990 Homer St C 18.5 605 Robson St A 17.39 580 Hornby St B 18.7 1148 Homer St C 16.57 333 Seymour St A 21.17 777 Hornby St B 22.1 1045 Howe St C 18.12 510 Seymour St A 19.5 595 Howe St B 17.57 1190 Melville St C 12.58 753 Seymour St A nd 625 Howe St B 18.91 1155 Robson St C 17.91 638 Smithe St A 16 181 Keefer St B nd 525 Seymour St C 14.07 89 W Georgia St A 16 1122 Mainland St B 16.5 576 Seymour St C 13 401 W Georgia St A 22.74 1111 Melville St B 17.75 698 Seymour St C 12.75 510 W Georgia St A 20.32 808 Nelson St B 19.05 68 Water St C 9.75 650 W Georgia St A 22.54 969 Robson St B 22.62 131 Water St C 12 700 W Georgia St A 22.36 321 Water St B 15 1281 W Georgia St C 17.39 701 W Georgia St A 23.11 375 Water St B 17.91 417 W Hastings St C 8 885 W Georgia St A 23 601 W Cordova St B 18.75 510 W Hastings St C nd 1040 W Georgia St A 23.81 475 W Georgia St B 19.76 602 W Hastings St C 13.99 128 W Pender St C 21.55 1055 W Georgia St A 23.54 1030 W Georgia St B nd 402 W Pender St C 12.18 1075 W Georgia St A 20.97 1090 W Georgia St B 20.76 890 W Pender St C 17.27 1111 W Georgia St A 21.52 815 W Hastings St B 17.47 905 W Pender St C 17.97 1185 W Georgia St A 17.25 1111 W Hastings St B 18.49 1112 W Pender St C 17.66 1188 W Georgia St A 19.72 700 W Pender St B 20.51 1155 W Pender St C 15.01 1500 W Georgia St A 21.52 789 W Pender St B 19.62 Average 15.24 1575 W Georgia St A 20 889 W Pender St B 17.4 High 21.55 1055 W Hastings St A 24.43 1050 W Pender St B 16.61 Low 8

1075 W Georgia St, Suite 1300 Vancouver, BC V6E 3C9 +1 604 683 7535 naicommercial.ca © 2018 NAI Commercial (BC) Ltd. All Rights Reserved. No warranty or representation, express or implied, is made as to the accuracy of the information contained herein, and the same is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice, and of any special listing conditions imposed by our principals no warranties or epresentationsr are made as to the condition of the property or any hazards contained therein are any to be implied.