M A R K E T B E AT , AB Office Mid-Year 2020

ECONOMY: Dueling Headwinds From COVID & Energy Sectors Weigh on the Calgary Office Sector YoY 12-Mo. Throughout the first half of 2020, Calgary’s office market has battled headwinds from falling oil and gas prices that registered below Chg Forecast zero, and then from the onset of the COVID-19 pandemic in the spring. As a result, year-over-year (YOY) employment dropped by 15.3%. While many employment roles in the industrial and retail sectors were deemed essential services, office users saw a 24.9% 142,200 jobs loss since June 2019; that’s following a 3,000 year-over-year job gain that was registered in January 2020. Vacancy Rate The COVID-19 pandemic struck Canada in March 2020, late in the quarter but with enough time to have a significant impact on first -1.5MSF quarter market fundamentals. In the second quarter of 2020, the Canadian economy felt its effects more fully, as government- YTD Net Absorption,SF mandated shutdowns along with shelter-in-place ordinances pushed the country deeper into recession. The situation remains very fluid, access the most recent information specific to COVID here. $14.63 Net Asking Rent, PSF SUPPLY: Vacancy Rates Rise as Tenants Vacate On the heels of massive job losses throughout the COVID-19 pandemic and the downturn of the energy sector, overall availability (Overall, All Property Classes) has risen, closing the second quarter of 2020 at 24.9%. The downtown office sector continued to see increasing vacancy from both sublet and headlease availabilities returning to the market as companies opted to downsize their footprints or give back their office space completely, with the average size registering just under 6,000 square feet (sf). As a result, downtown availability ticked up 90 ECONOMIC INDICATORS basis points (bps) in the second quarter of 2020 to 26.0%. Q2 2020 While developers continue to hold off commencing new speculative office construction, vacancy is expected to continue to rise over YoY 12-Mo. Chg Forecast the next 6 months. Murphy Oil announced in early May plans to close their Calgary office, opting to relocate the operations to 759K Houston, Texas in the third quarter of 2020, which has brought approximately 50,000 sf to the sublet market. Calgary, AB PRICING: Asking Rents Hold Steady As Demand Softens Employment The first half of 2020 registered 1.4 million square feet of new leasing activity, nearly all of which was in the second quarter. While Class A product continued to garner tenants’ attention – capturing a total of 379,039 sf in the second quarter of 2020 – the market’s 13.4% top-tier Class AAA product saw a 24.9% decline in new leasing activity year-over-year. Despite softened demand, overall asking Calgary, AB rents closed the second quarter of 2020 at $14.63 per square foot (psf) – just a slight dip year-over-year compared to the $15.03 psf Unemployment Rate reported in the second quarter of 2019. 13.7% DIRECT VS. SUBLEASE SPACE AVAILABILITY COMPARISON OVERALL AVAILABILITY RATE & NET ASKING RENT Canadian $24 28% Unemployment Rate 20,000,000

15,000,000 $18 21% Source: Statistics Canada 10,000,000 $12 14%

5,000,000 $6 7% - 2016 2017 2018 2019 2020 $0 0% 2016 2017 2018 2019 2020 Direct Sublease Net Asking Rent, $ PSF Availability Rate M A R K E T B E AT CALGARY, AB Office Mid-Year 2020 MARKET STATISTICS

SUBLET OVERALL OVERALL CURRENT QTR YTD NEW OVERALL AVG. OVERALL AVG INVENTORY YTD OVERALL YTD LEASING SUBMARKET VACANT AVAILABLE AVAILABILITY OVERALL NET SUPPLY ASKING RENT ASKING RENT (SF) ABSORPTION (SF) ACTIVITY (SF) (SF) (SF) RATE ABSORPTION (SF) (ALL CLASSES)* (CLASS A)* Central Core 20,802,596 1,326,514 4,440,456 23.4% -3,476 -492,701 406,555 0 $14.59 $17,53 East Core 14,298,020 941,903 3,576,189 23.6% -191,734 25,340 335,862 0 $18.80 $19.75 West Core 6,748,729 297,288 2,497,061 39.9% -183,285 -355,878 73,554 0 $9.40 $9.57 DOWNTOWN SUBTOTAL 43,794,524 2,565,705 10,513,706 26.0% 4,973 -823,239 815,971 0 $14.56 $18.76 Beltline 6,594,362 1,226,654 1,554,369 26.8% -696,086 -568,398 258,699 0 $12.65 $13.77 TOTAL CENTRAL AREA 50,388,886 2,893,420 12,068,075 26.1% -691,113 -1,391,637 1,074,670 0 $14.44 $18.48 Northwest 2,369,505 225,131 513,038 22.7% -107,204 -56,921 27,019 0 $14.95 $16.65 Northeast 5,210,612 197,361 1,187,186 21.4% -12,309 -98,922 93,643 0 $12.59 $17.38 NORTH AREA SUBTOTAL 8,767,303 422,492 1,700,224 21.7% -119,513 -155,843 120,662 0 $13.44 $17.59 Southeast 7,173,418 350,581 1,368,577 22.7% 117,974 131,754 170,480 0 $13.00 $14.74 Southwest 3,505,347 35,798 637,021 19.6% -40,778 -31,195 39,471 0 $12.08 $13.64 SOUTH AREA SUBTOTAL 10,678,765 386,379 2,005,598 21.7% 77,196 100,559 209,951 0 $12.49 $14.16 TOTAL SUBURBAN AREA 19,446,068 808,871 3,705,822 21.7% -12,967 -55,284 330,613 0 $12.77 $15.06 CALGARY TOTALS 69,834,954 3,702,291 15,773,807 24.9% -733,430 -1,446,921 1,405,283 0 $14.63 $18.00 *Rental rates reflect net asking

KEY LEASE TRANSACTIONS

PROPERTY SUBMARKET TENANT RSF TYPE

1100 First Street SW Beltline TransAlta 123,878 Relocation

500 Centre Street SE () East Core Teck Resources 72,076 Sublease

227 11th Avenue SW Beltline Central & Celero 51,333 Relocation SUMMER NEWMAN (The District – Building A) Research Manager 111 5 Avenue SW (Suncor Energy Central Core Suncor Energy 42,066 Expansion +1 403 261 1132/[email protected] Centre – East Tower) cushmanwakefield.com

A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION KEY SALES TRANSACTIONS Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real PROPERTY SUBMARKET SELLER / BUYER SF PRICE/$ PSF estate occupiers and owners. Cushman & Wakefield is 1331 SE among the largest real estate services firms with Beltline Artis REIT / Crespoint Real Estate Investments 161,672 $35,185,000 / $218 (Stampede Station) approximately 53,000 employees in 400 offices and 60 countries. In 2019, the firm had revenue of $8.8 billion across 7015 MacLeod Trail SE (Centre 70) Southwest RealCanna REIT / Private Investor 132,743 $27,600,000 / $208 core services of property, facilities and project management, 110 12 Avenue SW (TransAlta Place) Beltline Artis REIT / Crespoint Real Estate Investments 336,041 $50,000,000 / $149 leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow 800 5 Avenue SW (Trimac House) West Core Artis REIT / Private Investor 238,640 $26,000,000 / $109 @CushWake on Twitter.

©2020 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.