Avison Young's Fall 2013 Canada, U.S. Commercial Real Estate Investment Review

Partnership. Performance.
FALL 2013
Avison Young Commercial Real Estate
Investment Review
Canada & U.S.
Canada & U.S. Market Overview 3
Avison Young Research 4
Canada & U.S. Market Highlights 5
Canada
Calgary 10
Edmonton 11
Montreal 12
Ottawa 13
Toronto 14
Vancouver 15
United States
Atlanta 16
Boston 17
Chicago 18
Dallas 19
Denver 20
Houston 21
Las Vegas 22
Los Angeles 23
New Jersey 24
New York 25
Orange County 26
Pittsburgh 27
Raleigh-Durham 28
San Diego County 29
San Francisco 30
San Mateo 31
South Florida 32
Washington, DC 33
About Avison Young 34
Our Contacts 35
Avison Young Commercial Real Estate
Investment Review
Canada & U.S.
Fall 2013
avisonyoung.com
Canada Overview
H
ealthy market fundamentals continue to drive investment activity in
Canada. Slightly more than $14.4 billion (CAD) worth of commercial
real estate assets (office, industrial, retail, multi-residential and land,
greater than $1 million) traded in the first half of 2013 up $1 billion or
8% compared with the first half of 2012.
Led by industrial transactions, Torontos $6.5 billion was the highest
investment dollar volume in Canada up 15% compared with the first
half of 2012 and capturing 45% of the national total. Toronto led in every
category except land. Active land sales helped Calgary ($2.2 billion / +4%
/ 15% share) displace Vancouver ($2 billion / -20% / 14%) from one year
ago for second position. Land sales also boosted Edmonton ($1.6 billion
/ +28% / 11%) past Montreal ($1.6 billion / +46% / 11%), which saw a
significant uptick in multi-residential sales. Despite a surge in industrial
trades, Ottawa ($618 million / -29% / 4%) remained below the $1 billion
mark.
Nationally, industrial sales outpaced office with 24% of total first-
half investment dollar volume. In all, $3.5 billion worth of industrial
product sold the greatest year-over-year increase at 92%. Industrial
sales increased in every market. While Ottawa saw the most notable
improvement (+351%), Toronto recorded the largest industrial dollar
volume $1.9 billion (53% of the national total). First-half office sales of
$3.2 billion (22% share) were down 37% from an impressive $5.1 billion
in the first half of 2012, falling everywhere except Montreal (+77%) and
most sharply in Vancouver (-70%). Toronto was the most active office
market, as sales reached $1.8 billion.
Land was in demand (especially in Western Canada) with first-half sales
of $3.1 billion (22% share) up $925 million (42%) over 2012. Calgary was
the hottest land market as sales jumped 249% to $902 million, 30% of
the Canadian total. Retail transactions increased a modest 3% over 2012
to $2.3 billion (16% share). The eastern markets (Toronto, Ottawa and
Montreal) were busiest, combining for $1.6 billion worth of retail trades
two-thirds of the national total. Toronto garnered $1.3 billion (55% of
national total) matching the sales volume for all of 2012.
Rounding out the five sectors was multi-residential. Low vacancy rates,
steady incomes and favourable mortgage rates lifted sales of multi-
residential property 12% compared with 2012 to $2.2 billion (16% share).
While Edmonton and Montreal witnessed annual sales growth of 184%
and 124%, respectively, Toronto led all markets in total dollar volume
with $986 million (44% of national total).
Though capitalization rates (cap rates) are lower on average than one
year ago, further interest rate hikes may moderate or even signal the end
of cap-rate compression for some property types. Cap rates are lowest for
multi-residential investments and Vancouver yields the lowest cap rates
in every asset category except retail (tied with Toronto).
Even if the interest rate-sensitive REITs take a pause from their frenzied
buying, the void will more than likely be filled by pension funds and
private equity players, who in some instances have lost out to REITs for
top-tier assets. For 2013, investment volume is poised to match or exceed
2012s record of $28 billion.
U.S. Overview
I
n Avison Youngs U.S. markets, commercial sales rose during the first
half of 2013 compared with the first half of 2012 primarily on the
strength of multi-residential asset dispositions. Sales volumes for office,
industrial, retail and multi-residential properties reached $77.5 billion
(USD) by mid-year 2013, compared with $60.3 billion for the same period
in 2012, a 28% increase. Three stand-out markets comprised 47% of all
sales volume in the U.S.: New York ($14.6 billion / +59% / 19% share), Los
Angeles ($11.3 billion / +54% / 15% share), and Washington, DC ($10.8
billion / +107% / 14% share). Other markets that registered notable year-
over-year changes in volume included Las Vegas (+73%), Orange County
(+66%), Atlanta (+63%) and San Mateo (+56%).
Multi-residential and office sales comprised 79% of all sales volume
by mid-year 2013. Multi-residential sales showed the most marked
improvement, jumping to $31.9 billion in the first six months of 2013
(+88%) from $16.9 billion for the same period in 2012. All Avison Young
markets, with the exception of four (Boston, -22%; San Francisco, -21%;
San Diego County, -3%; Raleigh-Durham, no change), recorded gains
in multi-residential sales volume. The leaders were San Mateo, which
increased from $56 million to $611 million in volume (+990%) and
Washington, DC, increasing from $1.7 billion to $7.6 billion (+355%).
Overall office sales volume rose during the past year, reflecting strengthening
market fundamentals in many U.S. cities, climbing to $29 billion in the first
six months of 2013 (+37%) from $21.2 billion in the first half of 2012. Not
surprisingly, New York ($9 billion / +76%), Los Angeles ($3.4 billion / +96%)
and Washington, DC ($2.2 billion / -7%) led asset sales in this category as well.
Atlanta, with overall office sales of $1.8 billion (+515%), and Orange County,
with office sales volume of $1.6 billion (+208%), demonstrated the greatest
year-over-year increases.
First-half 2013 sales of retail properties declined by 35% to $9.4 billion from
$14.4 billion in the first half of 2012. Only five Avison Young markets in the
U.S. reported any uptick in volume (Raleigh-Durham, +191%; Las Vegas,
+100%; Atlanta, +92%; Pittsburgh, +75%; New York, +3%). Lastly, industrial
sales volume in the first half of 2013 declined slightly compared with first-
half 2012, slipping 7% to $7.2 billion from $7.7 billion. While Los Angeles
had the greatest volume with $1.2 billion in sales, New Jersey reported the
greatest positive change with $909 million (+138%).
Cap rates in the U.S. moved lower in the first half of 2013 for all asset
classes (except multi-residential) and averaged 6.8% compared with 7%
one year earlier. Multi-residential cap rates are the lowest (although they
are experiencing upward pressure) on average for all of Avison Youngs
U.S. markets. Of note, cap rates for office product fell significantly in Dallas
(-160 bps), New Jersey (-140 bps), Orange County (-140 bps) and San Diego
County (-110 bps).
Look for further improvement in the second half of 2013, with overall sales
volume likely to exceed 2012 levels. Office sales should be led by gateway
and energy-driven markets with improving fundamentals, and multi-
residential sales may begin to cool due to the increased development
occurring in some markets.
Investment capital fows into Canada and U.S. markets, defying initial interest-rate hike
Canada has exceeded pre-credit crisis investment dollar volumes and pricing for most asset categories, while improving property market
fundamentals continue to fuel investment activity in the U.S. There is no evidence that the recent rise in interest rates slowed activity on either
side of the border in the first half of 2013. However, it will be interesting to see what the effect will be of the biggest buyer group interest rate-
sensitive real estate investment trusts (REITs) - taking a break from their insatiable buying spree.
Canada & U.S. Commercial Real Estate
Investment Market Overview
3 Fall 2013 Canada, U.S. Commercial Real Estate Investment Review
Fall 2013 Canada, U.S. Commercial Real Estate Investment Review 4
Avison Young Commercial Real Estate Newsletter (Canada, U.S.)
AVISON YOUNG
F
ollowing several years of less
than 7% vacancy, Northern
Virginias 22-msf Rosslyn-Ballston
(R-B) Corridor saw vacancy begin
to climb in 2011 and reach 15%
by the first quarter of 2013.
Many factors contributed to this
dramaticchangeandwill likelytest
themarket for years tocome.
The consolidation related to the
Base Closure and Realignment
legislation of 2005 (BRAC)
wherein defense agencies vacate
leased space in the private-sector
market andmove to government-
owned facilities was to have
been completed in 2011. The
programwill nowcarry on at least
through 2015 with some 2 msf of
additional move-outs planned in
this submarket. 4040 NorthFairfax
Drive is a prime example. A back-office function for the Department of Defense vacated the
entire184,000-sf buildingat theendof 2012andmovedtoaneighboringsubmarket.
Newdevelopmentactivityiscurrently outpacingabsorption.TheR-BCorridors10-yearaverage
annual absorptionis 273,000 sf andby the endof 2013, 538,000 sf of speculative construction
(nearly two years supply) is slated to be delivered in a single building at 1812 North Moore
Street, beingdevelopedbyMondayProperties.
Thatbeingsaid, ownersofnewbuildingscanexpecttoattractafairshareoftenants. Asignificant
dichotomy exists between the performance of newer properties and older ones beyond the
general flight-to-quality trend also at play. The 22 newest buildings in the R-B Corridor, which
weredeliveredbetween2002and2012, averaged424,000sf of absorptionannuallyduringthat
periodandboastedan8.6%vacancyrateat year-end2012, comparedwith14.9%for buildings
completed prior to 2002. Able landlords are renovating or repositioning older assets to help
themstandout or convertingthemtoother uses suchas multi-residential projects.
Additional market challengesincludeMetrorailsSilver LineextensionintoTysonsCorner which,
when completed, will create more affordable leasing opportunities for occupiers seeking
Metrorail-servedlocations. Thereis alsoapullback, beyondBRAC, fromfederal tenants duetoa
mandate toincrease space-use efficiencies andpendingfurther tightening, fromgovernment
contractors as well, as a result of sequestrations spendingcuts. Similarly, space utilizationrates
are fallingamongprivate-sector tenants as work culture changes brought about by a younger
workforceandtechnologyareleadingtomoredenselypacked, open-workspacefloor plans.
Despite the R-B Corridors many desirable qualities, it is expectedthat these market influences
will lead to a prolonged underlying vacancy, especially in class B buildings. The R-B Corridor is
likelytoexperienceintensecompetitionfor viabletenants for theforeseeablefuture.
Washington, DC
Recent Lease Transactions
VA Data, Inc., Ashburn (industrial) 200,000 sf
TNS, Inc., Reston (ofce) 120,000 sf
Northern Virginia Community College, Fairfax
(ofce) 84,900 sf
Pacifc Architects and Engineers, Courthouse
(ofce) 71,100 sf
Level 3 Communications, Tysons Corner
(ofce renewal) 64,100 sf
ArlingtonPublic Schools, Arlington(ofce) 62,300 sf
Alion Science & Technology, Alexandria
(ofce renewal) 57,300 sf
Recent Exclusive Lease Listings
Trinity Centre 1-4, Trinity Parkway, Centreville
(ofce) 488,200 sf
5911 &5971 Kingstowne Village Parkway, Alexandria
(ofce) 304,000 sf
3150 Fairview Park Drive, Merrifeld
(ofce) 252,600 sf
10740 Parkridge Boulevard, Reston
(ofce) 215,700 sf
8609 Westwood Center Drive, Tysons Corner
(ofce) 159,300 sf
11790 Sunrise Valley Drive, Reston(ofce) 139,500 sf
Recent Properties Sold
1900-1902 Campus Commons Drive, Reston
(ofce) 239,600 sf
10740 Parkridge Boulevard, Reston
(ofce) 215,700 sf
8609 Westwood Center Drive, Tysons Corner
(ofce) 159,300 sf
10800-10802 Parkridge Boulevard, Reston
(ofce) 121,700 sf
9990 Fairfax Boulevard, Fairfax (ofce) 93,000 sf
607 Herndon Parkway, Herndon (ofce) 78,300 sf
Avison Young acted on behalf of the buyer in
the purchase of 10740 Parkridge Boulevard
in May 2012 and has since represented the
new landlord in three lease transactions
totaling 170,000 sf.
In late 2012, 4040 North Fairfax Drive felt the efects
of BRAC when the entire building was vacated.
Renovations are planned in an efort to better attract
tenants to backfll the space.
Rosslyn-Ballston Corridor facing a new reality
32
Avison Young
Commerical Real Estate Newsletter
Canada, U.S.
(Spring/Summer 2013)
AVISON YOUNG
31
T
he unendingwave of multi-
residential development
that took place in South
Florida during recent years
brought with it some concern
as towhether the market could
handle such robust activity.
As the South Florida Business
Journal reported recently,
development activity has been
strong and experts believe the
market is ready for it.
One of those experts, Alliance
Residential chief operating
officer Brad Cribbins, pointed
out one trend fueling the
market demand: Much of what is getting built is midrise downtown/urban buildings.
Whats drawing people to that particular building type is mobility. He adds that the
25- to 35-year-old group is redefining howlong they want to be tied down to a home.
Further supporting the claim that demand in the multi-residential market remains
healthy is CVR Realtys report that South Florida is on pace to surpass the 100 proposed
condominium developments threshold in 2013 with as many as 15 condominium
projects already under construction. Most of these projects are midrise developments
near thriving urban areas. Adding these condo totals to the broad scope of South
Floridas multi-residential development boosts the local market to the top of most
metros nationwide.
Additionally, accordingtoMulti-HousingNews, at year-end2012, theSouthFloridamarket
had vastly outsold its share of multi-residential development sites compared with the
rest of the country, with more than $315 million in sales (compared with second-place
Los Angeles at more than $108 million).
The South Florida sites seeing the most activity seemto be infill locations in the primary
submarkets. Once the new supply hits the market, it does not take long to sell. As
anticipated, class A inventory is still expected to be the product to beat. Reports show
that brandnewproduct sells veryquickly, withthemajorityof thehighlycovetedprojects
still attracting all-cash buyers as the top bidders.
Most of the regions experts believe the market should maintain a steady growth rate as
construction loans have become easier to obtain and capital from secondary markets
is starting to become a factor. Foreign investment, especially from Latin America, also
remains as a strong component of private capital with more overseas interest growing
by the quarter. Simply stated, the sustained level of activity across the multi-residential
market seems to indicate that the sector should remain one of the hottest commercial
markets in South Florida.
View of Sunny Isles, Florida - home to many of South
Floridas marquee condominiums.
CastoInvestments Company, LLP(retail) 126,400sf
LNR Property Corporation (retail) - 28,100 sf
InBound Call Experts, LLC (ofce) 26,500 sf
TNHYIF REIV Kilo (ofce) 16,700 sf
LFC Development, LLC (ofce) 12,900 sf
Boca R & DProject (ofce) 12,600 sf
MS Eastchester, LLC (retail) 12,300 sf
Boca R & DProject 7, LLC (ofce) 10,500 sf
3998 FAUBoulevard, Boca Raton (ofce) 283,900 sf
5900N. AndrewsAvenue, Ft. Lauderdale(office) 215,000sf
100W. CypressCreekRoad, Ft. Lauderdale(office)215,000sf
8051 Congress Avenue, BocaRaton(ofce) 160,000 sf
1875 NWCorporate Boulevard, Boca Raton
(ofce) 123,800 sf
900 Broken Sound, Boca Raton (ofce) 120,700 sf
1100, 2200 & 2100 Park Central Boulevard,
Pompano Beach (ofce) 112,500 sf
1300 Sawgrass Corporate Parkway, Sunrise
(ofce) 106,600 sf
3201N. UniversityDrive, Coral Springs(ofce) 105,900sf
150 S. Pine IslandRoad, Plantation(ofce) 102,000 sf
2307 W. Broward Boulevard, Ft. Lauderdale
(ofce) 66,900 sf
604-622 Banyan Trail, Boca Raton (ofce) 65,000 sf
141 NW20th Street, Boca Raton (ofce) 61,800 sf
Stearns Bank (ofce) 14,200 sf
Recent Sale Properties Listed
604-622 Banyan Trail, Boca Raton (ofce) 65,000 sf
6501 & 6531 Park of Commerce Boulevard,
Boca Raton (ofce) 50,900 sf
900 Broken Sound, Boca Raton (land) 17 acres
The Trade Centre South building, located
in Fort Lauderdale, continues to attract
high-end ofce tenants.
South Florida
Multi-residential development leads market
AVISON YOUNG
N
ewly founded tech-focused
companies have specific needs
in choosing a location: public
transportation, downtown access,
affordable living accommodations
and, of course, access to inexpensive
real estate be it office, lab or flexible
space. Years ago, East Cambridge
became one of the worlds largest
launch pads for startups and techs.
The area met every demand including
MIT, one of the largest generators
of startups in the nation. Today, with
East Cambridge rents leading Greater
Boston, many startups will need
alternative location options.
The relocation patterns of these young, nimble and technology-driven companies
are explained by the decisions of their global corporate counterparts, such as Google
and Microsoft. In an effort to coexist, industry behemoths effect supply and demand
constraints upon smaller, younger firms. Hoping to capitalize on the human capital that
is so critical to their core business, these global companies occupy real estate inlocations
dense with startups. As corporations absorb spaces upwards of 200,000 sf, the market
tightens. The areas become less affordable for the very tenants who created the desire to
enter the market early-stage and tech ventures.
In 1995, office space was renting in the mid $20s psf in East Cambridge. As rents have
doubled and, in some cases, tripled there has been a tremendous shift. Startups and
techs began taking space in the Seaport District in 2009. Dubbed the Innovation District
by Boston Mayor Thomas Menino, the Seaport, with its vibrant lifestyle and lower rents,
has attracted many small thriving companies. In recent years, however, $25 psf rents
have become $38 psf rents. Availability has dropped with the addition of companies
ranging from Life Is Good to Vertex Pharmaceuticals. Tenants nearing lease expirations
face proposals that are as much as 30%higher than their current lease rates, so the cycle
continues.
With tight markets in Seaport and Cambridge, startups and techs are seeking rent relief.
It is expected that companies will be attracted to the South Station and North Station
submarkets, where rents can still be found starting in the high $20s psf. Many should
consider the financial district. Although previously too expensive, the high vacancy
stemming from the Great Recession is providing opportunities for affordable class B
space. Companies such as PayPal (an eBay subsidiary) have taken advantage of the glut
of lower-floor vacancy withinthe financial districts class Ahighrises. As it turns out, early-
stage and technology-driven companies are provided with more geographic options
thanever; gone are the days whenEast Cambridge was the only choice. The real question
is: what submarket will hold the crown as Bostons innovation hub in five years time?
Caliper Life Sciences (ofce/R&D) 198,300 sf
athenahealth, Inc. (ofce) 83,000 sf
Emerson Hospital (ofce/medical) 80,800 sf
PayPal (ofce) 62,800 sf
Proto-Pac Engineering Inc. (industrial) 45,900 sf
A.I.M. Mutual InsuranceCompanies (ofce) 34,500sf
Zwicker & Associates PC (ofce) 34,400 sf
Acacia Communications (ofce) 28,200 sf
Vecna Technologies, Inc. (ofce) 26,600 sf
TeraDiode, Inc. (industrial) 24,500 sf
Sotax Corporation (ofce) 21,900 sf
Park Place International (ofce) 17,800 sf
Vantage Partners, LLC (ofce) 16,200 sf
MaidPro Franchise Corporation (ofce) 13,900 sf
Crunchtime! InformationSystems, Inc. (ofce) 13,700sf
Lexington Eye Associates (ofce/medical) 12,200 sf
Flexion Therapeutics (ofce) 11,800 sf
Smart Destinations (ofce) 10,900 sf
526 Main Street, Acton, MA (ofce) 36,000 sf
221 Baker Avenue, Concord, MA (land) 6.3 acres
Recent Sale Properties Listed
354 & 356 Mountain View Drive, Colchester, VT
(ofce) 110,400 sf
393 Fortune Boulevard, Milford, MA
(ofce/retail) 107,600 sf
60HartlandStreet, East Hartford, CT(ofce) 40,800sf
Boston
Musical chairs for startups and techs
Bostons Hubway bicycle rental network
is a valuable amenity to employees and
residents alike.
PayPals lease of 62,814 sf at 1 International
Place has changed the way companies view the
downtown market.
16
T
odays workforce spans four generations:
Mature/World War II (born pre-1946); Baby
Boomers (1946-1965), Generation X (1966-1980)
and Gen Y/Millennials (1981-2000). According to
Statistics Canada and the U.S. Bureau of Labor
Statistics, Gen Y represents approximately 35%
and 34% of the Canadian and U.S. labour forces,
respectively. Educated and tech-savvy, they
are transforming the workplace, physically and
psychologically.
For decades, office designs changed little, with
traditional private offices, cubicles and meeting
rooms. In the 1990s, personal computers, mobile
phones and the Internet brought dreams of a
paperless office and hotelling. Still, over the past
20 years, office space looked much the same.
Enter Gen Y: today, CEOs are in cubicles and there
is a new business glossary: distributed workforce
hiring regardless of geography; BYOD
bring your own device to work; and ROWE
results-only work environment. Smart phones
have become virtual desks, offering unified
communications across platforms and media.
According to CTIA The Wireless Association,
American data usage from July 2011 to June
2012 increased 104% from the previous year.
Work is now mobile and, when it comes to office
premises, less is more.
Gen Ys work characteristics (more flexibility, flat
hierarchy, mobile devices and social networking)
and businesses focus on cost reductions have
changed the office landscape toward open plans
and a collaborative work environment. Eroding
work-life boundaries means work is no longer
where you go, its what you do. Since Gen Y will
become the dominant group in the workforce,
businesses are adapting to attract top talent.
Ciscos Connected Workplace is a big draw
with new recruits, where many staff dont have
assigned workplaces a trend evident not only
in new, but also existing buildings. In the iconic
1960s-era TD Centre in Torontos financial core,
TD Bank is retrofitting 20 storeys of old offices
with an array of flexible work areas. Elsewhere,
Deloitte introduced the Deloitte Journey,
replacing assigned desks with shared work
spaces. In contrast, Yahoo! clearly values face-
to-face interaction, recalling work-from-home
employees back to the office in a bid to rebuild
the competitive advantage it once had.
The rise in the urban supply pipeline and the
technological advances being offered are making
some lease renewals problematic as tenants
eschew in-place renovations. Traditional office
configurations simply wont work. Generally,
tenants are taking less space on a per-person
basis as they relocate. A 2012 study found that
corporations are lookingto reduce office space by
17% by 2020 leaving older, obsolete buildings
ready for renovation and adaptive re-use.
As officespaceper employeecontinues to decline,
what happens to all of the underutilized space,
and, indeed, to the traditional single-purpose
office building? The future of office buildings
may end up being the Hackable Building a
term coined in global architecture firm Genslers
recent work on the evolution of the North
American building. A Hackable Building is an
existing structure that has been updated beyond
recognition to incorporate a diverse mix of uses
such as residential, office, retail, educational and
public spaces.
Advancing technology and generational
shifts continue to shape the evolution of the
workplace. When these changes have played
out, what will the office of the future look like?
Only time will tell.
Avison Young
Commercial Real Estate
Newsletter
(Canada, U.S.)
Spring/Summer 2013
Generations and technology transforming the workplace
CANADA
2 Calgary
3 Edmonton
4 Guelph
5 Lethbridge
6 Mississauga
7 Montreal
8 Ottawa
9 Quebec City
10 Regina
11 Toronto
12 Toronto North
13 Vancouver
14 Winnipeg
U. S.
15 Atlanta
16 Boston
17 Charleston
18 Chicago
19 Dallas
20 Detroit
21 Houston
22 Irvine
23 Las Vegas
24 Los Angeles
25 New Jersey
26 New York
27 Pittsburgh
28 Raleigh-Durham
29 Reno
30 San Francisco
31 South Florida
32 Washington, DC
33 About Avison Young
34 Avison Young Research
35 Our Offices
Avison Young Research
Canada & U.S. Publications
Turning Information into Intelligence
A
vison Youngs multi-disciplinary group of dedicated research professionals works collectively to deliver market
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Leveraging in-depth knowledge from our broad services platform with information from internal proprietary and
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class, interpreted data true market intelligence.
B
y November 2012, the Washington metro areas unemployment
rate was 5.3%, one of the lowest levels in the U.S. Washingtons
employment gains and other strong indicators belie the overall
sense of caution that has existed since mid-year. In 2012, anticipated
vacancies due to Base Closure and Realignment of 2005 (BRAC),
constrained federal government leasing, new construction and
private-sector tenant consolidation resulted in a softer real estate
market. At the same time, strong tenant-favorable conditions
created opportunities for occupiers, and some tenants restructured
leases well in advance of expiration dates for signifcant savings.
Thenext 12months will bea timeof transition whilethemarket waits
out the budget impasse and the federal government implements
new policies regarding space utilization, security standards and
energy efciency. The sense of uncertainty will persist in early 2013
with deal velocity gradually improvingin the second half of the year.
Ofce
The metro markets vacancy rose to 13.3% in 2012 from 12.2% at
year-end 2011, while transaction velocity fell and net absorption
turned negative. Construction increased last year as 3.5 msf
was completed, with roughly 65% preleased. Another 4 msf is
scheduled to deliver this year. Notably, some sizable developments
were started speculatively in 2012. Among them were Monday
Properties 540,000-sf 1812 North Moore Street in Rosslyn and
Macerichs 530,000-sf Tysons Tower in Tysons Corner.
With favorable conditions for tenants, renewals still dominated
leasing transaction activity, including the National Institutes of
Healths 356,000-sf lease in North Bethesda and the U.S. Small
Business Administrations 254,000-sf lease in Southwest DC.
Bucking the renewal trend were TNS Inc., which signed for 120,000
sf in Reston, and Corporate Executive Boards expansion of 109,000
sf in Rosslyn.
In 2013, some historically tight suburban Metrorail-served locations,
such as Rosslyn-Ballston Corridor and Crystal City, will have further
vacancy increases, while DCs vacancy remains in the single digits.
In the latter part of this year, deal velocity around the region will
likely begin to accelerate, though many submarkets will remain
oversupplied throughout the year.
Retail
Washington continued to attract and retain retailers drawn to the
markets strongdemographics in 2012. In the downtown DCmarket,
retail performed well, with national retailers paying upwards of $80
psf in submarkets like Capitol Hill and even higher in destination
areas such as Chinatown. Expanding food concepts are being
supported by a myriad of multi-residential developments in these
neighborhoods.
In the suburbs, submarkets such as Clarendon and Reston Town
Center are mature mixed-use environments. Plans for a new Tysons,
to coincide with the extension of the Silver Metrorail line, will bring
an enhanced live-work-play environment to this car-and-mall-
based submarket.
Industrial
The Washington regions 187-msf market recorded positive
absorption and a decrease in vacancy (to 10.1%) in 2012. Recent
signifcant leases include Nash Finch taking 365,000 sf in Suburban
Maryland and Cuisine Solutions committing to 163,000 sf in
Northern Virginia.
The regions data center inventory, concentrated in Northern
Virginia, is one of the largest in the country and boasts a sub 9%
vacancy rate. Virginias governor recently signed a bill that expanded
sales tax exemptions for data centers, and both the private and
public sectors are expected to expand.
Investment
By November 2012, year-to-date sales volume for ofce, industrial
and retail properties was $6.4 billion metro-wide. While exceeding
2009 and 2010 totals, volume lagged by 24%of what was achieved
during the same period in 2011. That gap was expected to tighten
before year-end 2012 as major sales were completed (including
Constitution Center, which closed for an estimated $734 million
in the fourth quarter), and as sellers rushed to close before any
scheduled capital gains take efect.
In 2013, the best opportunities will be in high-quality, well-leased
suburban ofce buildings with locations proximate to Metrorail.
L to R: Tysons Tower, Constitution Center, 1812 North Moore
Washington, DC
40 Avison Young 2013 Forecast
Region in transition in 2013 as sequestration plays out
Avison Young 2013
Canada, U.S. Forecast
(2012 Annual Review)
Avison Young 2013 Forecast 9
0%
2%
4%
6%
8%
10%
12%
14%
Calgary Edmonton Halifax Lethbridge Mississauga (TorontoWest) Montreal Ottawa Regina Toronto Vancouver Winnipeg Canada
Vacancy Rate (%)
Canada Overall Industrial Vacancy Rate Comparison
2011
2012
2013F
0%
2%
4%
6%
8%
10%
12%
14%
Cal gar y
E d mont on
Hali f ax
Let h bri dge
Mi ssi ss a uga
(T or ont o West )
Montr eal
Ott a wa
Que bec Ci t y
Re gi na
T or ont o
Va nc ouver
Wi nni pe g
Ca na da
Vacancy Rate (%)
Canada Overall Office Vacancy Rate Comparison
2011
2012
2013F
VANCOUVER
EDMONTON
CALGARY
LETHBRIDGE
REGINA WINNIPEG
QUEBEC CITY
MONTREAL
OTTAWA
MISSISSAUGA
(TORONTO WEST) HALIFAX

TORONTO
CANADA OVERVIEW
& FORECAST
Office Vacancy Forecast 2013:
Increase > 20 bps
Flat -20 to 20 bps
Decrease > 20 bps
Calgary
Edmonton
Halifax
Lethbridge
Mississauga
(Toronto West)
Montreal
Ottawa
Regina
Toronto
Vancouver
Winnipeg
Canada
Calgary
Edmonton
Halifax
Lethbridge
Mississauga
(Toronto West)
Montreal
Ottawa
Regina
Toronto
Vancouver
Winnipeg
Canada
Quebec City
MESSAGE FROM THE CEO
2013: A year to position for the future
Looking much like 2012, minus the Mayan end of the world
A
s we go to print with our 2013 Forecast, we at Avison Young
are happy to report another year of dramatic growth and solid
performance in 2012 for our company. We are proud to have helped
clients successfully traverse a North American real estate landscape
that was bumpy in some markets and asset classes. We are also
pleased that we enabled clients to capitalize on robust growth in the
oil and gas regions, relative stability in the major coastal gateway
markets, and a nascent revival in industrial markets, thanks to a
manufacturing sector that began to ofer glimmers of hope in 2011.
We are forecasting a similar scenario for 2013, although without
the doomsday predictions. Against a global backdrop of fnancial
uncertainty stemming from continuing issues with stability in
Europe, a potential slowdown in China, the debt ceiling and new
fscal clifs in the U.S. and potential plateauing in Canada, North
Americanreal estate markets still appear tobe the most stable with
a healthy balance of risk and opportunity.
Webelievethat thereal estatecommunitywill andshouldposition
and reposition to take advantage of what will likely be a healthier
and clearer picture by 2014. This is not to say that we should write of
2013, or sit on the sidelines. Quite the opposite: there is much to be
transacted in 2013 while strengthening positions for the future, as
economic and political issues in the U.S. and Europe see some form
of resolution.
Most economists predict that Canada and the U.S. will grow their
respective economies, as measured by gross domestic product, at
the rates of 2% and 2.8%, respectively. These rates are still anemic
and have some observers worried. However, considering all of the
economic and political uncertainty in the world, these rates should
be considered positive and defnitely on the right track.
What we at Avison Young have been advising for the last three
years will continue to be our mantra: stay patient, risk-manage your
strategy on the buy-side, and take advantage of of-market and
distressed opportunities when they present themselves. As a seller,
donot beafraidtotakesomeprofts. Coreassets inthemajor markets
are highly sought-after and, therefore, aggressively priced when up
for competitive bid. Multi-residential and high-end retail are the
favoured assets, but signifcant ofce and industrial transactions are
occurring. Plenty of opportunities can still be found in of-market
transactions, if one knows where to look. At Avison Young, we have
been very successful in helping our clients do just that.
Canada: Are we at the top?
In Canada, the shortage of product (evidenced by REITs buying
portfolios and private funds buying REITs) and very low current
vacancy rates suggest more demand-side price upside, even
though the large development pipeline may temper rent growth.
The strong Canadian dollar is a problem for the domestic economy,
though positive for Canadian institutions going global a trend
that we expect to increase in 2013. These factors, combined with
pervasive condo overbuilding, are resulting in Are we at the top?
questions north of the border.
U.S.: Are we at the bottom?
On the other hand, in the U.S., the early signs of a housing recovery
are triggering the question: Are we at the bottom?. The lack of
development is providing confdence for investors making value-
add acquisitions, and core class A product is expensive everywhere.
Thus, as Canada appears to havereached a short-term topin pricing,
the U.S. is just beginning to get its sea legs. Assuming Washington
can reach agreement and avoid inducing a recession, all signs point
to an economy and a real estate environment that has plenty of
capacity to recover and grow.
Leasing advantage to occupiers
As we begin 2013, we see that leasing generally remains tilted in
favour of the occupier, except in select oil and gas cities such as
Houston and Calgary. Vancouver and Toronto are fairly balanced
as well. Most other markets have either been fat-to-down or in
unstable recovery mode. We have not seen extraordinary growth in
rental rates or a huge reduction in vacancy in any major market in
North America. Instead, we continue to see markets that are poised
for positive absorption and rental growth when global factors and
benchmarks turn positive and decision-makers fnally take action.
However, there is still too much pessimism and uncertainty in the
system for a full-blown recovery. It wants to happen, but confdence
needs to lead the way.
Avison Young 2013 Forecast 3
AVISON YOUNG 2013 FORECAST
2012 Annual Review
Commercial Real Estate - Canada & U.S.
partnership. performance.
Mid-Year 2013 Canada, U.S. Office Market Report 15
Atlanta Ofce Market
Boston Ofce Market
D
uring the first half of 2013, Atlantas office market was buoyed by improved
economic conditions. The citys unemployment rate has decreased to 7.6%,
the lowest since the Great Recession. Professional services and IT firms have
been expanding their office space and bringing new jobs to Atlanta. Healthcare
technology company athenahealth confirmed it will lease 75,000 sf at Ponce City
Market, with the possibility of growing to 120,000 sf over the term of the lease.
The healthcare IT group will eventually bring 500 new high-tech jobs to the city
from Alpharetta, GA. Coca-Cola has announced that it will bring its IT center to
Downtown Atlanta, consolidating multiple locations in 275,000 sf at SunTrust Plaza
and bringing 2,000 jobs to the city.
The positive economic improvements and a willingness expressed by firms to
expand have led to gains in the Atlanta office market. Atlanta ended the second
quarter of 2013 with a total inventory of 143.5 msf and a vacancy rate of 19.7%.
The vacancy rate has decreased 200 bps during the last 12 months. Net absorption
for the first half of 2013 totaled 595,445 sf, up slightly from 410,111 sf during the
same period in 2012.
Atlantas CBDhas also recorded an uptick in rent over the past year, with average asking rents climbing to $20.78 from $18.08. Overall suburban market
rents have remained flat during the same period; however, suburban class A rental rates did increase to $22.51 psf from $22.31 psf. CBDclass A market
rents are also improving. Currently standing at $19.81 psf, the rate is the highest since year-end 2011. Moderate job growth and limited development
are expected to continue throughout 2013, leading to a tightening demand for quality space and, eventually, to rent growth across the Metro Atlanta
office market.
0%
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4%
6%
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16%
18%
20%
22%
24%
26%
28%
Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
Atlanta Office Vacancy Rates
Downtown Suburban
B
ostons office market continued to experience strong leasing velocity
in prime submarkets during the second quarter of 2013, resulting in
vacancy declines across most of the class A and B inventory. Vacancies fell
to 17.1%, down 190 bps from a year ago, with vacancy in the CBDs 59-msf
market declining to 12.5%. The CBD saw leasing velocity of 2.5 msf, slightly
off last years annual pace of 5.6 msf. Cambridge and the suburban office
markets dropped below 20% vacancy for the first time since 2008. With 5
msf leased in 2013, the suburbs will struggle to keep pace with the 11 msf
leased in 2012.
Quoted asking rents continued to rise, reaching an estimated $24 psf across
the metro the highest level since 2008. Downtown, full-service rents
averaged $50 psf for class A space while tighter highrise listings, as well as
select listings in the Back Bay, exceeded $70 psf. Average suburban rents
reached $22 psf, an increase of $1 psf versus one year ago, while select
suburban submarket class A asking rents moved back to the low $30s.
When new construction begins to be delivered in the CBD later this year,
a leveling-off in vacancy rates is expected downtown - with major tenants migrating to the new properties, returning excess square
footage to the market, while landlords continue to trade vacancies. Meanwhile, the limited suburban development is almost entirely
build-to-suit and should not impact vacancies greatly. However, as leasing activity is not expected to keep pace with the last several
quarters, a leveling-off of vacancy rates may occur until the business community gains more comfort with federal fiscal policy. When this
occurs, office-using employment should resume its assault on Massachusetts overall unemployment rate of 6.6%, which still sits 400 bps
above the historic low of 2.6% in October 2000.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
Boston Office Vacancy Rates
Downtown Suburban
Avison Young
Ofce Market Report
Canada, U.S.
(Mid-Year 2013)
Mid-Year 2013 Canada, U.S. Office Market Report 6
$0
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$70
U.S. Suburban Class A Average Asking Gross Rents
Suburban Class A Average Asking Rent ($psf net) Suburban Class A Average Additional Rent ($psf)
$0
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U.S. Downtown Class A Average Asking Gross Rents
Downtown Class A Average Asking Rent ($psf net) Downtown Class A Average Additional Rent ($psf)
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Canada Suburban Class A Average Asking Gross Rents
Suburban Class A Average Asking Rent ($psf net) Suburban Class A Average Additional Rent ($psf)
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Canada Downtown Class A Average Asking Gross Rents
Downtown Class A Average Asking Rent ($psf net) Downtown Class A Average Additional Rent ($psf)
* Rental rates are shown in CAN $ * Rental rates are shown in CAN $
* Rental rates are shown in U.S. $ * Rental rates are shown in U.S. $
U.S.
Downtown Class A Average Asking Gross Rents
U.S.
Suburban Class A Average Asking Gross Rents
Canada
Downtown Class A Average Asking Gross Rents
Canada
Suburban Class A Average Asking Gross Rents
Canada
Canada
AY U.S. Markets
AY U.S. Markets
Canada & U.S. Market Highlights
Suburban Class AAverage Asking Rent ($psf net) Suburban Class AAverage Additional Rent ($psf) Downtown Class AAverage Asking Rent ($psf net) Downtown Class AAverage Additional Rent ($psf)
Suburban Class AAverage Asking Rent ($psf net) Suburban Class AAverage Additional Rent ($psf) Downtown Class AAverage Asking Rent ($psf net) Downtown Class AAverage Additional Rent ($psf) Canada Overview
C
anadas office market, at 491 million square feet (msf ) and growing,
closed the first half of 2013 with 7.9% vacancy up from 7.1% at
mid-year 2012, but remaining below the recent recessionary peak
of 9.9% in mid-2010. Half of the 12 Canadian markets were below
the national average and 10 posted single-digit vacancy. The gap in
vacancy between Western and Eastern markets narrowed during the
last 12 months. Representing two-thirds of the national inventory, the
Eastern markets closed the first half of 2013 with a collective vacancy
rate of 8.4%, or +70 basis points (bps), with Ottawa the lowest at 6%.
The growing Western markets combined for a vacancy rate of 7.1%
(+100 bps), with Regina reporting a national low vacancy of 5.2%.
Corporations seeking to attract and retain the young and highly
educated workforce increasingly living and working in urban areas
have created competition in most downtowns. Corporate restructuring,
downsizing and consolidations have raised sublease vacancy in some
markets, elevating Canadas downtown vacancy 40 bps over 2012 to
5.6%at mid-year 2013. The tightest markets are Calgary (4%, +80 bps),
Ottawa (4.4%, -140bps) and Vancouver (4.6%, +130bps). Unsurprisingly,
these markets have the highest average gross rents for class A space,
led by Calgary ($57 per square foot (psf ), a $5.66-psf rise from 2012),
Vancouver ($52 psf, -$2 psf ) and Ottawa ($47.95 psf, -$0.53 psf ).
In contrast, new supply outpaced demand in some markets, pushing
national suburban vacancy to 10.6% up 130 bps since mid-2012
with seven of the 12 markets below average. Except for Lethbridge
and Vancouver, single-digit vacancy persists in the same markets as
one year ago. Once again, Regina (3.1%, +170 bps) had the lowest
suburban vacancy and Mississauga (Toronto West) (13.7%, +130 bps)
the highest, while Lethbridge (11.6%) experienced the greatest year-
over-year swing, spiking 350 bps. Calgary and Regina have the priciest
suburban markets with average gross rent for class A premises of $37
psf, followed closely by Vancouver ($36 psf ).
Office space under construction has increased by 4.5 msf since mid-
2012 to nearly 22 msf (53% preleased), with a 60/40 downtown/
suburban split. Toronto is the biggest development market in the
country, with 7.1 msf (49%preleased) one-third of the national total
and also leads with 5.3 msf (47%preleased/41%of national downtown
total) underway downtown. However, Calgary is narrowly outpacing
Toronto on the suburban front with almost 2 msf (78%preleased) under
development accounting for 23%of the national suburban total.
For the second half of 2013, tight conditions will persist in most
downtown office markets as tenants face eroding space options and
likely higher rents. More options will present themselves later this year
and into 2014 as new supply comes online. In contrast, more favourable
space and rental-rate alternatives will be commonplace in select
suburban markets across the country.
U.S. Overview
T
he 10.3-billion-sf U.S. office market continued its bumpy recovery
over the last 12 months and ended the second quarter of 2013 with
an overall vacancy rate of 11.7%.
Lookingat Avison Youngmarkets, vacancy rates remained in the double
digits at mid-year 2013, with an overall average vacancy of 14.7%, down
slightly from 14.8%at mid-year 2012. Nevertheless, 16 of the 20 Avison
Young markets reported lower vacancy rates when compared to 2012.
Class A rents averaged $48 psf and $27 psf (USD) for central business
district (CBD) and suburban markets, respectively.
San Francisco again saw a significant increase in CBD class A rent this
year, ending the second quarter of 2013 at $52.50 psf, an 11.7%increase
from the second quarter of 2012, following a remarkable 18% spike in
rents between the second quarter of 2011 and the second quarter of
2012. Vacancy fell 140 bps year-over-year to 8.9%. The highest CBDclass
A rents currently are in New York, where the $64-psf rate was a 2.3%
increase compared with 2012, and in Washington, DC, a 1.3% change
at $56 psf. There is currently more than 43 msf under construction,
72% of which is in four markets Houston (10.6 msf ), Metropolitan
Washington, DC (7.8 msf ), New York (7.5 msf ) and Boston (5.3 msf ).
Pittsburghs metropolitan area recorded an 8.2% vacancy rate at mid-
year 2013 the lowest of the Avison Young U.S. markets and one of only
two U.S. markets with a total vacancy rate in the single digits. Although
the Metropolitan Washington, DC office market remains relatively
healthy (posting an average CBDvacancy of 9.3%at mid-year 2013), the
region was one of four U.S. markets to see its overall vacancy increase
(13.8%, +70bps) over thepast year. New Jersey currently has thehighest
vacancy, after experiencing a year-over-year increase in its vacancy rate
(20.9%, +30 bps), although the market is headed in a positive direction
after posting 21.4%vacancy in the first quarter of 2013.
Elsewhere, Chicagos total office market vacancy rate improved to
13.8% at mid-year 2013, down from 14.1% at mid-year 2012. In New
York, leasing activity rebounded, but with large blocks of space being
returned to the market, vacancy rose to 12.1% at mid-year 2013. Los
Angeles is experiencing a slow but stable recovery with strong leasing
activity, although the vacancy rate climbed 330 bps year over year to
16.3% by mid-year 2013. Atlantas elevated vacancy rate persisted and
ended the second quarter at 19.7%, albeit down from 21.7% at mid-
year 2012; and in South Florida, vacancy improved for the third straight
quarter to 15.4%. Turning to Texas, Dallas recorded a vacancy decrease
of 60 bps year-over-year, falling to 15.6%, while energy-driven Houston
ended the second quarter of 2013 with an 11.1%total vacancy.
After years of uneven recovery led by a handful of standout markets,
many U.S. markets remain oversupplied. Expect vacancy to stay on
its downward trajectory through year-end 2013 and some markets to
demonstrate landlord-favorable conditions in the coming months.
Ongoing improvement in US commercial real estate market, tight market conditions in major
Canadian downtown ofce markets
Canadas office markets, resilient during and since the recession, continue to sport relatively healthy market fundamentals; however, some major
markets appear to be softening, turning in less-than-stellar performances in the first half of 2013. Many major U.S. markets remain oversupplied,
with tenant-favoured conditions even while tours and velocity have increased and several metro areas have moved into equilibrium.
Canada & U.S. Market Overview
3 Mid-Year 2013 Canada, U.S. Office Market Report
MID-YEAR 2013
Avison Young Office Market Report
Canada & U.S.
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2007 2008 2009 2010 2011 2012 Mid-Year 2013
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Commercial Real Estate Investment Volume By Property Type (CAD)
Land Multi-Residential Retail Industrial Office
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2007 2008 2009 2010 2011 2012 Mid-Year 2013
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U.S.
Commercial Real Estate Investment Volume By Property Type (USD)
Multi-Residential Retail Industrial Office
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2007 2008 2009 2010 2011 2012 Mid-Year 2013
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U.S.
Multi-Residential Retail Industrial Office
Office Industrial Retail Multi-Residential Land
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Commercial Real Estate Investment Volume By Market (USD)
Mid-Year 2012 Mid-Year 2013
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Office Industrial Retail Multi-Residential
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Calgary Edmonton Montreal Ottawa Toronto Vancouver
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Commercial Real Estate Investment Volume By Market (CAD)
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Calgary Edmonton Montreal Ottawa Toronto Vancouver
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Commercial Real Estate Investment Volume By Market (CAD)
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Canada
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5%
Calgary
Edmonton
Montreal
Ottawa
Toronto
Vancouver
Canada
Average Capitalization Rates By Market
(All Property Types)
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
Downtown Class AA Office
Suburban Class A Office
Single-Tenant Industrial
Multi-Tenant Industrial
Tier I Regional Mall
Multi-Residential
Canada
Average Capitalization Rates By Property Type
(All Markets)
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5%
Atlanta
Boston
Chicago
Dallas
Denver
Houston
Las Vegas
Los Angeles
New Jersey
New York
Orange County
Pittsburgh
Raleigh-Durham
San Diego County
San Francisco
San Mateo
South Florida
Washington, DC
U.S.
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
Office
Industrial
Retail
Multi-Residential
U.S.
(All Markets)
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5%
Calgary
Edmonton
Montreal
Ottawa
Toronto
Vancouver
Canada
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
Downtown Class AA Office
Suburban Class A Office
Single-Tenant Industrial
Multi-Tenant Industrial
Tier I Regional Mall
Multi-Residential
Canada
(All Markets)
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5%
Atlanta
Boston
Chicago
Dallas
Denver
Houston
Las Vegas
Los Angeles
New Jersey
New York
Orange County
Pittsburgh
Raleigh-Durham
San Diego County
San Francisco
San Mateo
South Florida
Washington, DC
U.S.
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
Office
Industrial
Retail
Multi-Residential
U.S.
(All Markets)
C
algarys commercial real estate investment market once again
witnessed significant investment activity in the first half of
2013. Total dollar volume increased by 4% compared with first-
half 2012 levels, amounting to almost $2.2 billion. The key driver
was land sales, which totalled $902 million. This total represents
an increase of 249% compared with first-half 2012 figures;
however, a handful of major transactions are responsible for the
increase, including Capital Powers purchase of a 25% interest at
the KBV Shepard Energy Centre for $261 million. The industrial,
retail and multi-residential sectors experienced changes of 125%,
-78% and -5%, respectively.
The tremendous pace of office investment sales transactions in
the first half of 2012 which exceeded $1 billion in total dollar
volume was expectedly lower in the first half of 2013, down
roughly 40% to $654 million. Early 2012 was a phenomenal
break-through period, demonstrating the return of liquidity in
the office investment market after a gradual recovery period from
the global economic recession. Office investment activity is still
strong and should not be viewed as a declining sector.
Downward adjustments in the pricing of REITs occurred during
the second quarter of 2013. The threat of declining federal
economic stimulus and future interest rate increases have led
several REITs to curtail the amount of equity raised through
capital markets to fund their aggressive appetite for property
acquisitions. However, this situation has created an opportunistic
environment for institutional and other non-REIT buyers. It is
anticipated that pent-up demand from these purchasers will
cause investment activity in the second half of 2013 to outpace
the first.
Cap rates have shown further compression in the first half of
2013. The most notable transaction was the sale of the Jacobs
Engineering building, located in Quarry Park, which was
purchased by EPIC Realty Partners. This class A suburban office
property represents the second-highest transaction in terms
of dollar volume ($171 million) and also marks a historically
low capitalization rate for suburban office product, at 5.2%
(unstabilized.) Although cap rates are not likely to decrease
further, there is also no evidence to predict they will increase any
time soon for best-in-class assets.
Jacobs Engineering building
Calgary
TOP 5 INVESTMENT SALES BY PRICE
Address Property Type Total Price (CAD) Vendor Purchaser
1 KBV Shepard Energy Centre Land $261,210,344 ENMAX Corporation Capital Power Generation Services Inc.
2 Jacobs Engineering building Ofce $171,000,000 KanAm Group EPIC Realty Partners
3
Quarry Professional & Quarry
Parkside A & B
Ofce $154,840,000 Remington Properties Inc. Artis REIT
4 Stonegate Landing Land $135,722,000 1248493 Alberta Ltd. Albari Holdings Ltd.
5 Vintage I & II Ofce $110,000,000
Credit Suisse Real Estate Fund
International
Allied Properties REIT
Mid-Year
2013
Calgary Investment Activity
(By Property Type)
Calgary Investment Volume
$ in billions
(CAD)
Select Average Capitalization Rates
Downtown Class AA Office 5.7% 5.4%
Suburban Class A Office 6.3% 6.1%
Single-Tenant Industrial 6.2% 5.9%
Multi-Tenant Industrial 6.3% 6.0%
Tier I Regional Mall 5.4% 5.0%
Multi-Residential 5.2% 4.7%
0
1
2
3
4
5
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
42% 13% Land
30% 53% Office
17% 8% Industrial
6% 7% Multi-Residential
4% 19% Retail
E
dmonton continues to ride the wave of economic
revitalization taking place in Alberta as all major
indicators point towards another year of healthy growth
for both the city and the province. Investment volume in
Edmonton and the surrounding area for the first half of 2013
was up almost $350 million compared with the first half of
2012, reaching $1.6 billion. These numbers are indicative of
the cyclical trend that has gripped the market during the last
three years, with larger investment totals occurring in the
first and last quarters and dropping off during the second
and third. Despite steady growth, particularly in contrast to
the rest of the country, Edmonton has yet to see investment
volumes top out above the peak rate of $4 billion seen in
2007, the height of the most recent Alberta boom.
Cap rates in Edmonton have been decreasing steadily, due
in large part to increases in revenue associated with the
buoyant economy. Vendors have been taking advantage of
the larger revenue streams and are subsequently requiring
much higher prices to be convinced to sell, even while
factoring in rising valuations on multi-residential buildings.
Cap rates have declined 25 basis points (bps) on average,
most notably in first-tier regional malls where they have
fallen 50 bps to 5%, currently.
The most notable transaction in the Edmonton area was
the sale of Sherwood Park Mall, which was sold into the
T&T portfolio, containing three adjoining Sherwood Park
properties as well as other holdings in Western Canada. This
sale banked an impressive $180 million, comprising 85% of
the retail investment total for the first quarter and 74% of
the first-half total. In a distant second place was the sale
of Broadmoor Plaza. Originally a mixed-use development
comprising four structures, Broadmoor was intended to
be split between office and warehouse use, but has since
become a de facto suburban office complex based on how
it has been used by tenants. This sale brought in $84 million
for vendor LaSalle Investment Management.
Broadmoor Plaza
Edmonton
Edmonton Investment Activity
(By Property Type)
Edmonton Investment Volume
$ in billions
(CAD)
0
1
2
3
4
5
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
42% 37% Land
20% 10% Industrial
15% 35% Retail
10% 13% Office
1 Sherwood Park Mall Retail $180,000,000 H&R REIT Primaris Retail REIT
2 Broadmoor Plaza Ofce $84,000,000 LaSalle Investment Management Dundee REIT
3 1611 199 St. Land $54,893,798 David & Cathy Higgins, et al Riverview Land Company Ltd.
4
RR 211/212 & TR 560
Strathcona County
Land $39,000,000 Statoil Canada Ltd. MEG Energy Corp.
5 City Square Tower Multi-Residential $38,500,000 Harvey Rosenbloom Mainstreet Equity
Mid-Year
2013
T
he Montreal commercial real estate market was particularly
active during the first half of 2013. Sales volume totalled
nearly $1.6 billion, representing an increase of nearly $497
million (46%) compared with the same period in 2012, while the
number of transactions increased by 10%. This is the second-
largest first-half dollar volume experienced during the last five
years. Transaction volume in all asset categories grew, with
the exception of land sales, which declined by 38%. The multi-
residential sector experienced the highest sales volume at $537
million, which represented a 124% upswing. The retail sector
grew 11%, accounting for $233 million of the volume, while the
office and industrial sectors enjoyed increases of 77%, to $205
million, and 73%, to $434 million, respectively.
Among the five largest transactions, two were portfolios of
industrial and office buildings and three were multi-residential.
The top-priced transaction was a portfolio of 18 industrial
buildings and one office building which were purchased by
Cominar REIT. The portfolio comprised a total area of 1.8 msf, and
was located, for the most part, on the South Shore of Montreal.
The second-largest transaction was a retirement home in Pointe-
Claire comprising 530 suites, which sold for $200,000 per unit. The
third most valuable transaction was a portfolio of two industrial
and three office buildings acquired by Manulife for almost $80
million. Rounding out the top five were two multi-residential
properties sold at an average price of $34 million or $125,000
per unit.
With previously announced and ongoing transactions in the
second half of the year, it is likely that 2013 total sales volume
will surpass the 2012 mark and may exceed the record volume
of 2008. For example, Ivanho Cambridge recently acquired 50%
of the Place Ville-Marie, a transaction valued at more than $400
million; and the abandoned project of llot Voyageur was sold for
$40 million for redevelopment.
Despite the rise in interest rates and slow growth of the economy,
all asset classes in the Montreal commercial real estate market
continue to offer investment opportunities.
101 Roland-Therrien Boulevard
Montreal
1 Tecton-Cominar REIT Portfolio Industrial $151,188,552 Tecton Industries Ltd. Cominar REIT
2 300 Hymus Blvd. Multi-Residential $106,500,000 Cambridge Holdings Inc. 83117704 Canada Inc.
3 Redbourne-Manulife Portfolio Ofce/Industrial $79,500,000 Redbourne Properties Manulife Financial Real Estate
4 7460 Kingsley Rd. Multi-Residential $34,900,000 Kingsley Holdings/Trent Holdings Interrent International Properties Inc.
5 1255 Papineau Ave. Multi-Residential $33,200,000 WB Place Papineau Inc. 7037457 Canada Inc.
Montreal Investment Activity
(By Property Type)
Montreal Investment Volume
$ in billions
(CAD)
0
1
2
3
4
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
28% 23% Industrial
15% 20% Retail
13% 11% Office
10% 24% Land
Mid-Year
2013
T
he nations capital continues to be a safe haven for pension
fund advisors, REITs, financial institutions and other
institutional investors looking for stable long-term yields.
Investors assets of choice continue to be office buildings
although the industrial market is ahead of 2012 levels as it
remains popular with institutional and private local investors.
Allied Properties REITs acquisition of 40-42 Elgin Street in
February 2012 for a near-record price per square foot for a
core asset continued the trend of recent years. That trend
line has extended through the first half of 2013. The sale in
March of 495 Richmond Road by Credit Suisse to Artis REIT
of Winnipeg demonstrated that well-placed assets with long-
term leases could command cap rates hovering in the range
of 6%, and did not need to have Government of Canada
leases in place, as non-governmental organizations (NGOs)
with historical longevity and trusted brand-name companies
became worthy of the investment communitys attention.
Development sites, both redevelopment properties and raw
land, have constituted one of the more volatile asset classes
in the latter half of 2012 and the first half of 2013. Serviced
industrial land inside the greenbelt now commands prices
in excess of $600,000 per acre. Small infill multi-residential
redevelopment sites have seen land value prices meet and
exceed $40 per buildable foot in some instances, outstripping
the price points typically paid by Ottawas more seasoned
larger-scale condominium developers.
Ottawas condominium market has certainly slowed in recent
months. A number of projects have been cancelled outright
as unsold inventories in large-scale projects currently under
construction remain high. This is one market sector that
started to run counter-current to all others in 2013 and bears
watching.
Finally, the sale of 57 acres inside the traffic circle at Palladium
Drive for $29 million for a retail power centre development is
a testament to the overall strength of Ottawas economy.
495 Richmond Road
Ottawa
Ottawa Investment Activity
(By Property Type)
Ottawa Investment Volume
$ in billions
(CAD)
0
0.5
1
1.5
2
2.5
3
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
32% 37% Office
19% 3% Industrial
14% 12% Land
12% 6% Retail
1
Conundrum Capital-Skyline
Commercial Portfolio
Industrial/Ofce $117,000,000 Conundrum Capital Corp. Skyline Commercial Real Estate Holdings Inc.
2 340 Laurier Ave. Ofce $75,000,000 Elad Canada Inc. True North Commercial REIT
3 495 Richmond Rd. Ofce $39,000,000 Credit Suisse Real Estate Fund Artis REIT
4 201-219 Bell St. N. Multi-Residential $38,625,000 Devcore Group InterRent International Properties Inc.
5 Palladium Dr. Land $29,428,500 Taggart Construction Ltd. RioCan REIT
Mid-Year
2013
H
ealthy commercial real estate market fundamentals continue to
drive investment activity in the Greater Toronto Area (GTA). Sales
of office, industrial, retail, multi-residential and land properties in the
first half of 2013 reached $6.5 billion, up 15% over the same period
in 2012 capturing 45% of the Canadian tally. Portfolio transactions
boosted sales, and though cap rates remain low, compression
appears to have moderated for some property types.
Industrial sales outpaced the office sector at $1.9 billion (29% share),
recording the greatest year-over-year increase of 112%. GE Capital
Real Estate (GE) and CanFirst Capital were active sellers, collectively
disposing portfolios worth $492 million to PIRET and Dundee
Industrial REIT, respectively. First-half office sales totalled $1.8 billion
(27% share), down 34% from an impressive $2.7 billion in the first
half of 2012. Again, GE was active, selling 22 office buildings worth
$686 million in two separate transactions to Greystone Managed
Investments and Slate Properties.
Retail transactions totalled $1.3 billion (20% share) in the first half of
2013 twice that of one year ago and equal to the sales volume for
all of 2012. Pension funds and REITs swapped prize assets with three
deals greater than $200 million, the largest being Primaris Retail
REITs $259-million sale of Oakville Place to RioCan REIT.
Favourable mortgage rates, steady income and low vacancy
continue to make multi-residential property a desirable investment
with the lowest cap rates. However, this sector failed to crack the
billion-dollar mark, finishing the first half of 2013 with $986 million
(15% share) in sales. This was due more to lack of product than lack
of demand. Nevertheless, the mid-year figure was 25% higher than
in 2012. Maple Leaf Quay was the largest transaction at almost $151
million.
Land was the least-traded asset class with a first-half tally of $617
million (9% share) a modest 6% decline compared with the
same period in 2012. Land remains highly contested, particularly
downtown, where interest is growing in mixed-use projects that
facilitate urban lifestyles.
Toronto could top $13 billion in sales in 2013. However, the recent
uptick in interest rates could curtail investment volume and leave
some of the most active buyers, the interest-sensitive REITs, on the
sidelines.
1 Queen St. E. & 20 Richmond St. E.
Toronto
1
GE Canada Real Estate -
Greystone/Slate Ofce Portfolio
Ofce $541,813,777 GE Canada Real Estate
Greystone Managed Investments / Slate
Properties
2
GE Canada Real Estate - PIRET
GTA Industrial Portfolio
Industrial $340,950,000 GE Canada Real Estate PIRET
3 Oakville Place Retail $258,562,000 Primaris Retail REIT RioCan REIT
4 Upper Canada Mall Retail $251,500,000 Oxford Properties Group Canada Pension Plan Investment Board
5 1 Queen St. E. & 20 Richmond St. E. Ofce $220,000,000 Ontario Pension Board Canada Pension Plan Investment Board
Toronto Investment Activity
(By Property Type)
Toronto Investment Volume
$ in billions
(CAD)
0
2
4
6
8
10
12
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
29% 15% Industrial
27% 47% Office
20% 12% Retail
9% 12% Land
Mid-Year
2013
D
emand for BC commercial real estate attained near-record
levels in the first half of 2013 with almost $2 billion invested.
While dollar volume tapered off compared with the same period
in 2012 (a record-setting $2.4 billion), deal velocity was one of
the strongest recorded in the past decade.
By asset class, office investment declined 70% to $211 million by
the midway point of 2013 compared with $707 million during
the same period in 2012. Retail investment slipped 17% to $421
million from $507 million in the first half of 2012. These declines
are attributed more to a lack of product than flagging demand.
Industrial investment rose 8% to $421 million compared with
$391 million the year previous. The greatest increase came in
land acquisitions, where investments rose 48% to almost $675
million from $456 million in the first half of 2012.
The $66-million sale of Discovery Parks Vancouver was both the
largest office and overall transaction recorded in the first half of
2013. Four industrial transactions, which all closed in February
2013, also contributed significantly to dollar volume, including
the $21-million acquisition of Buckeye Canadas manufacturing
plant by Triovest (on behalf of an undisclosed client) and the
$27-million purchase of 4606 Canada Way/3033 Beta Avenue.
PIRET acquired two significant industrial assets, including the
recently constructed Hopewell Distribution Centre III for $32
million and 18111 Blundell Road for $44 million.
Cap rates have generally stabilized and flattened out. Rising bond
yields have tempered some of the more aggressive purchasers.
Depressed unit prices removed REITs as competitive buyers of
most significant assets. The absence of investment trusts has so
far not triggered downward pressure on marquee asset pricing,
as remaining purchasers continue to be aggressive in pricing.
The first half of 2013 likely marked the start of a transition to a
post-recovery financial environment as various economic levers
such as quantitative easing and the monthly purchase of U.S.
bonds by the Federal Reserve, which has helped keep long-
term borrowing rates near record lows are slowly withdrawn.
Discovery Parks Vancouver
Vancouver
Vancouver Investment Activity
(By Property Type)
Vancouver Investment Volume
$ in billions
(CAD)
0
1
2
3
4
5
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
34% 19% Land
21% 21% Retail
21% 16% Industrial
11% 29% Office
1 Discovery Parks Vancouver Ofce $66,135,000 Discovery Parks Dundee REIT
2 18111 Blundell Rd. Industrial $44,100,000 Kingswood Capital PIRET
3 Hopewell Distribution Centre III Industrial $32,320,000 Hopewell Development Corp. PIRET
4 Lougheed Super Centre Retail $29,853,333 Madison Pacifc Properties Nicola Crosby
5
Aldergrove Village Shopping
Centre
Retail $29,250,000 MDC Properties Manulife Financial Real Estate
Mid-Year
2013
A
tlantas commercial real estate investment market
experienced a significant 63% increase in investment sales
volume during the first half of 2013 compared with the same
time period in 2012. Investment sales in the office, industrial,
retail and multi-residential sectors topped $4.3 billion in the
first half of 2013, the largest mid-year total since 2007.
Bolstered by the $373-million sale of a partial interest in
Terminus 100 and 200, Atlantas office sales volume totaled
$1.8 billion during the first half of 2013, representing 42%
of all sales in the first two quarters. Atlanta office sales for
the first half of 2013 outperformed first-half 2012 sales by
515%, thus already surpassing the 2012 total by $146 million.
Improved job growth arising from local business expansion
and increased relocations are driving the strong rebound in
the Atlanta office market.
The multi-residential market was a close second with
transactions totaling $1.7 billion during the first half of 2013
an $81-million (5%) increase compared with the same period
in 2012. The sale of lower-quality properties has generated a
190-bps increase in the capitalization rate to 7.4%, up from
5.5% at mid-year 2012.
Atlantas industrial investment saw the only decline in sales
at the mid-year point of 2013. Industrial sales at the end of
June 2013 totaled $323 million, a 35% decrease over the same
period in 2012. Build-to-suit activity has increased as a result,
and vacancy remains high amid slow rent growth.
Retail investment in Atlanta has increased 92% year over year.
During the first half of 2013, the retail sector saw $526 million
in transactions, compared with $274 million in the first half of
2012. As the job and housing markets slowly move in the right
direction, the retail market will continue to see modest gains.
A few large projects, mainly in Midtown and the northern
suburban markets, are currently under construction.
Atlantas recovery since the Great Recession has been slow, but
is gaining steam thanks to an improving economic climate,
Atlantas growing strength in the technology sector and an
improved housing market.
Terminus 100
Atlanta
Address Property Type Total Price (USD) Vendor Purchaser
1 Terminus 100 Ofce $209,200,000 Cousins Properties JP Morgan Asset Management
2 Midtown I & II Ofce $205,000,000 KanAm Grund
Cole RE Investments & MacFarlan Capital
Partners
3 Terminus 200 Ofce $164,000,000 Cousins Properties JP Morgan Asset Management
4 999 Peachtree Ofce $157,900,000
Shailendra Group & Jamestown
Properties
Franklin Street Properties
5 Ravinia Center Ofce $144,300,000 Colonial Properties Trust Strategic Partners U.S. Value 6 Fund
Atlanta Investment Activity
(By Property Type)
Atlanta Investment Volume
$ in billions
(USD)
Office 7.9% 8.2%
Industrial 6.5% 7.7%
Retail 7.5% 8.1%
0
2
4
6
8
10
12
14
16
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
42% 11% Office
12% 10% Retail
8% 19% Industrial
Mid-Year
2013
I
nvestment sales volume decreased 13% to $2.7 billion as most
major transactions during the first half of 2013 occurred in
Bostons suburbs, with the top two transactions occurring in the
tech-heavy 128 West and 128 North submarkets. The Blackstone
Group was the big seller, parting ways with the New England
Executive Park in Burlington for $216 million, or $209 psf, and
Riverside Center in Newton, MA for $197.25 million, or a hefty
$387 psf. The Inner Suburbs saw user athenahealth buy Harvards
Arsenal on the Charles in Watertown for $168.5 million. The
largest deal in Boston proper in 2013 involved Pearlmark selling
40 Broad Street to TIAA-CREF for $110 million, reportedly at a
cap rate in the 4.5% range. As mid-year 2013 office sales were
dominated by suburban transactions, the overall office cap rate
increased to 6.5% from 6.1% at mid-year 2012.
The industrial sector saw several deals in excess of $25 million.
TriTower Financial made its first move, buying 300 Riverpark
Drive in North Reading for $32.3 million. While it appears fairly
steep at $154 psf, the 209,000-sf, high-bay building enjoys a
long-term lease with Amazons recently acquired Kiva Systems.
Comparatively, to Bostons south, Sycamore Partners sold 175
Kenneth Welch Drive in Lakeville to AR Capital for $66 psf,
having acquired it in 2012 from long-term tenant Talbots for
roughly $37 psf.
The retail sector saw several challenged mall properties trade,
including The Mall at Whitney Field in Leominster, which sold
for $36.1 million, and Silver City Galleria in Taunton, which sold
for $22.1 million. Retail deals captured 20% of the deals but only
9% of the dollar volume.
Lastly, multi-residential sales declined 22% year-over-year,
garnering just 19% of the invested dollars during the first half of
2013. Excluding bulk portfolio sales, pricing averaged $223,963
per unit, while average cap rates fell to 5.5% from 5.7%.
Continued downward pressure on cap rates kept the investor
pool in the urban core limited to long-term buy/hold players.
Rising interest rates bear watching and may push returns below
acceptable levels for some buyers, likely resulting in continued
activity in suburban product.
The Arsenal on the Charles
Boston
Boston Investment Activity
(By Property Type)
Boston Investment Volume
$ in billions
(USD)
Office 6.1% 6.5%
Retail 9.3% 8.4%
0
4
8
12
16
20
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
62% 49% Office
9% 14% Retail
9% 15% Industrial
1 New England Executive Park Ofce $216,000,000 The Blackstone Group National Development/Charles River
2 Riverside Center Ofce $197,250,000 The Blackstone Group Hines Global REIT
3 The Arsenal on the Charles Ofce $168,500,000 Harvard Alumni Association athenahealth
4 Alterra Multi-Residential $149,250,000 Prudential Real Estate Investors Mack-Cali Realty Corporation
5 40 Broad St. Ofce $110,000,000 Pearlmark Real Estate Partners TIAA-CREF
Mid-Year
2013
C
hicago investment activity dipped slightly during the first
half of 2013, totaling $4.7 billion a 5% decrease compared
with the same period in 2012. The office market continued
to lead in transaction volume, totaling more than $1.7 billion
at mid-2013 a 23% jump compared with 2012. The average
capitalization rate for office properties in Chicago fell 60 bps to
6.9%.
Foreign investors continue to see the CBD office market as a
smart choice as other key office markets across the country
witness an uptick in pricing. South Korean investor Mirae Asset
Global Investments Co. acquired 225 W. Wacker Drive for $218
million, or $335 psf. Canadian REITs, such as the Onni Group and
Agellan Commercial, have purchased office properties during
the last 12 months. Montreal-based Ivanho Cambridge is also
financing the first speculative building to be built in the CBD
since 2009, which broke ground earlier this year.
The industrial investment market saw a 7% increase in activity.
Sales volume was recorded at $891 million as of June 2013. Cap
rates continue to drop, averaging 7.6%. Demand remains strong
as the manufacturing and e-commerce industries continue to
be major market drivers; as a result, vacancy decreased to pre-
recession levels, ending the second quarter at 8.4%. Owners
have begun selling class B and/or vacant product in a bid
to capitalize on improving market conditions. Institutional
investors needing to place capital are purchasing these assets
for premiums. This trend will likely continue throughout the
remainder of 2013.
In other sectors, the multi-residential market witnessed a 19%
increase in total sales volume during the first half of 2013 when
compared with the same period in 2012. The retail market
saw a substantial decrease in investment activity since 2012,
due largely to a stagnant vacancy rate and sluggish consumer
confidence during the first half of 2013.
Both the office and industrial asset classes will likely continue
to attract investors. There is a substantial pipeline of CBD office
properties that are expected to trade in late 2013 or early 2014.
As both the Chicago economy and real estate market continue
to improve, so will the investment market.
225 West Wacker Drive
Chicago
1 130 E. Randolph St. Ofce $410,000,000 Bentley Forbes Berkley Properties
2 225 West Wacker Dr. Ofce $218,000,000 JP Morgan Chase Mirae Asset Global Investments Co.
3
Onterie Center Apartments
and Ofces
Multi-Residential/
Ofce
$188,000,000
Metropolitan Properties of
America, Inc.
LaSalle Investment Management
4 1225 Old Town Multi-Residential $156,906,500 Hines Heitman LLC
5 550 West Washington Ofce $111,000,000 Beacon Capital Partners MetLife Inc.
Chicago Investment Activity
(By Property Type)
Chicago Investment Volume
$ in billions
(USD)
Office 7.5% 6.9%
Retail 7.0% 7.1%
0
4
8
12
16
20
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
37% 29% Office
23% 38% Retail
19% 17% Industrial
Mid-Year
2013
D
allas is considered to be one of the nations most dynamic
markets and a top metro region for employment and
population growth. The city is an acquisition target for
real estate investors who want to capitalize on the metros
favorable business climate. Investment activity during the
first half of 2013 was up 21% compared with the first half
of 2012. Tech and energy markets continue to lead the
nation in terms of growth. Dallas has a strong energy base,
but has also made leaps and bounds in the technology
sector, particularly in software development that benefits
the energy industry. Strong ties to both of these growing
industries have led to an attractive market for investors.
Multi-residential properties remain the most desired
investment property type, leading the way with nearly
$1.8 billion in transaction volume in the first half of 2013,
a 60% increase compared with the first half of 2012. Fiori, a
391-unit complex developed by UDR, sold for $137 million
to MetLife, representing the second-highest-grossing
transaction thus far in 2013. Investment activity in industrial
and retail assets slowed in the first half of 2013, by 2% and
27%, respectively. The retail sector has been slow to recover
from the recession. The sharp decline in retail investment
is mainly due to a lack of new product that is available to
purchase. An incredibly tight market for retail assets has
resulted in significant cap-rate compression.
Office investment sales volume increased 43% in the first
half of 2013, to $1.5 billion from $1.1 billion in the first half
of 2012. Core assets in prime locations, particularly in the
desirable Las Colinas area, continue to be a favorite among
investors. However, value-add properties are gaining
traction, particularly among market-entry buyers who
want to place capital in a growing market. Woods Capital
Management recently purchased Thanksgiving Tower in
downtown Dallas and is planning to invest significant
capital in upgrades for the building, which was 55% leased
at the time of sale. An uptick in value-add investments
displays the confidence that investors have in the secure
and growing Dallas market.
The Colonnade
Dallas
Dallas Investment Activity
(By Property Type)
Dallas Investment Volume
$ in billions
(USD)
Office 8.2% 6.6%
Retail 7.8% 7.4%
0
2
4
6
8
10
12
14
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
31% 27% Office
18% 22% Industrial
14% 23% Retail
1 The Colonnade Ofce $203,000,000 Strategic Partners U.S. Value 5 Fund Fortis Property Group
2 Fiori Multi-Residential $136,607,764 UDR, Inc. MetLife Inc.
3 Preston Commons Ofce $109,542,500 Strategic Partners U.S. Value 5 Fund KBS REIT III
4 University Parke Village Retail $105,000,000 Heitman Glimcher Realty Trust
5 Hallmark I & II Ofce $105,000,000 Bank of America Select Income REIT
Mid-Year
2013
I
nvestment activity in Metropolitan Denver was down 3% in
the first half of 2013 from a year earlier as investment sales
totaled approximately $2.4 billion. Year-over-year figures have
been on the rise since a low of $1.3 billion in 2009, but the
2012 total of $6 billion may prove hard to beat at the current
pace of the market.
Multi-residential investments continue to lead the Denver
market, with almost $1.1 billion in sales during the first half of
2013. Cap rates were up slightly from the same period of 2012,
with an average of 6.8%. Several significant multi-residential
investment sales occurred during the first half of 2013.
Commons Park West sold for $98 million, the Crestwood Resort
apartments traded for $80 million, and Acadia at Cornerstar
went for $69 million. The average price per unit - $101,000 at
the end of June 2013 - is steadily climbing.
Retail and industrial investments remained behind the curve
during the first two quarters of the year. Retail investments
came in with approximately $181 million in sales a 57%
decline from the same period in 2012. As seen in the rest of
the country, investors are focusing more on multi-residential
investments rather than retail investments, but this trend is
expected to shift after apartment growth slows. The industrial
market is also down, closing June 2013 with a total of $136
million in investment transactions a 34% decrease from the
first half of 2012. Additionally, industrial cap rates increased to
8.8% from a 7.8% average.
The office investment market remained active with roughly
$1 billion in sales during the first half of the year. The average
cap rate was flat at 7.3%. A number of notable office buildings
changed ownership, including sales of a portfolio at 1999
Broadway and 2099 Welton Street for $183 million, 1625
and 1675 Broadway for $176 million, 1700 Broadway for $98
million and Westmoor Center, a six-building office park, for
$86 million.
Despite some regression in the investment market, Denver
remains attractive for investors due to strong employment
figures and a successful business environment.
1999 Broadway
Denver
1 1999 Broadway & 2099 Welton St. Ofce $183,000,000 Transwestern Broadreach 1999 Franklin Street Properties Corporation
2 1625 & 1675 Broadway Ofce $176,000,000 LaSalle Investment Management Rosemont Realty
3 1550 Platte St. Multi-Residential $98,100,000 JP Morgan Chase Heitman LLC
4 1700 Broadway Ofce $98,000,000 The BROE Group Artis REIT
5 10055 - 10385 Westmoor Dr. Ofce $86,000,000 Strategic Partners U.S. Value 6 Fund KBS Strategic Opportunity REIT Inc.
Denver Investment Activity
(By Property Type)
Denver Investment Volume
$ in billions
(USD)
Office 7.2% 7.3%
Retail 6.6% 7.4%
0
2
4
6
8
10
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
43% 45% Office
8% 17% Retail
6% 8% Industrial
Mid-Year
2013
H
ouston has made headlines in recent years for its
employment generation. In the 12 months ending in July,
the Houston metro area added 97,700 jobs, a 3.6% increase in
employment. Houston is among the countrys most important
emerging cities, with the largest amount of job growth of any
major metro area driven in large part by the energy industry.
Houstons active investment market indicates that commercial
real estate investment continues to follow jobs. Houston has
historically been considered a secondary investment market,
but in a 2012 year-end survey by the Association of Foreign
Investment Real Estate (AFIRE), Houston was named the fifth
most attractive investment market in the world. Houston is
now well-positioned as a gateway city.
Investment volume in the first half of 2013 increased by 33%
compared with the first half of 2012. The industrial and retail
sectors totaled $379 million and $425 million in this period,
respectively. Office properties traded for a total of $1.8 billion
as a series of high-profile assets changed hands during the first
half of the year. These transactions represent a 62% increase
in activity compared with the first half of 2012. Invesco, on
behalf of the National Pension Service of Korea, purchased BG
Group Place for a record $480 million. This deal exceeded the
$455-million record for a single office building held by the Hess
Tower (sold in 2011) and demonstrated the increasing interest
from overseas buyers. After purchasing the iconic Williams
Tower in 2008 for $271.5 million, Hines sold the building in
March 2013 to Invesco for $412 million. The building was on
the market for just eight months. Invesco has stated that it will
continue to invest in high-profile assets in Houstons major
submarkets.
Demand in the Houston market continues to outpace supply,
translating into rising rental rates. Investors are drawn to
Houston due to its relatively low-cost properties that yield high
returns. Houstons construction boom will deliver more than 10
msf of new product, which could lead to a wave of investment
activity in the coming years. While the Houston economy
continues to perform better than other major U.S. metros,
investment activity is projected to remain active.
BG Group Place
Houston
Houston Investment Activity
(By Property Type)
Houston Investment Volume
$ in billions
(USD)
Office 7.1% 7.0%
Retail 7.2% 7.4%
0
2
4
6
8
10
12
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
42% 34% Office
10% 17% Retail
9% 11% Industrial
1 BG Group Place Ofce $480,000,000 Hines Invesco (Nat'l Pension Service of Korea)
2 Williams Tower Ofce $412,000,000 Hines Invesco
3 Post Oak Central Ofce $232,600,000 JP Morgan Asset Management Cousins Properties
4 919 Milam Ofce $113,700,000 M-M Properties Credit Suisse
5 Camden Post Oak Multi-Residential $108,500,000 Sentinel Real Estate Camden Property Trust
Mid-Year
2013
D
uring the Great Recession, it was difficult to gauge the
true value of real estate. Instead of unloading their
inventory to the most eager buyer, many banks would
hold on to select assets to compete with non-distressed
properties. This tactic had an adverse effect of driving prices
down as many frustrated investors sat on the sidelines,
uncertain of how to time the market. Increasing sales in
recent years are a sign of recovery for the local market.
Investors will have to shift their focus from distressed
acquisitions to include all sale opportunities and lower their
return expectations if they want to participate in the local
economic improvements and capitalize on less expensive
debt.
The biggest news to hit the market in the first half of 2013
was Blackstones $350-million acquisition of the 1.5-msf
Hughes Center, the premier class A office space location
in Las Vegas. The approximate cap rate for the transaction
was 7.7%. This transaction, which closed in September and
is not included in the first-half figures, marked the largest
commercial real estate sale in the past five years.
The SLS Hotel is scheduled to open in 2014. This significant
opening, along with 200,000 sf of unique retail space at
the LINQ, the worlds tallest observation wheel, will create
a much-needed influx of jobs and visitor volume for the
local market. While the Las Vegas unemployment rate has
been slowly ticking down during the past few years, this
increased demand for jobs will undoubtedly help the local
economy.
In recent years, many California-based investors have sought
to avoid the steep tax rates in their home state. Nevadas
business tax climate has always been more attractive. The
recently passed California Assembly Bill 92 states that
taxpayers in a 1031 Exchange who sell in California and
purchase property out of state will be required to file an
annual information return and may have to pay additional
taxes and penalties. This will likely push more California
investors to consider Las Vegas as a viable alternative.
The LINQ
Las Vegas
1 7090 North 5th St. Retail $50,500,000 Regency Centers Stoltz Real Estate Partners
2 7600 South Jones Blvd. Multi-Residential $43,980,000 Watt Cos. John Lai
3 210 Quest Park St. Multi-Residential $41,075,000 Fore Property Company Grifs Group
4 4150 East Cheyenne Ave. Industrial $23,250,000 Bentall Kennedy ProLogis
5 8530 West Sunset Rd. Ofce $21,737,000 AR Capital Trust Realty Income Corp.
Las Vegas Investment Activity
(By Property Type)
Las Vegas Investment Volume
$ in billions
(USD)
Office 9.5% 9.0%
Retail 7.8% 8.0%
0
1
2
3
4
5
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
26% 22% Retail
11% 18% Office
7% 27% Industrial
Mid-Year
2013
L
os Angeles County remains a leader in U.S. investment activity
with $11.3 billion in sales volume for the first half of 2013. The
multi-residential sector led the way with $4.7 billion in transaction
volume, followed by $3.4 billion of office activity, $2 billion of retail
and $1.2 billion of industrial properties.
The distinct lack of available, favorably priced investment
properties in all asset classes has enabled properties with
perceived appropriate prices to sell quickly. Investment-grade
offerings have received multiple offers from qualified buyers, as
there has been more capital looking for a home than available real
estate for sale.
During the past year, the market has experienced cap-rate
compression for all property types, with the overall rate tightening
to 6.3% at mid-year 2013 from 6.5% at mid-year 2012. This trend
was especially acute with investment-grade properties. Based on
cap rates, the strongest investment class was multi-residential,
followed by industrial, retail and office. This point is noteworthy
because cap-rate compression has occurred despite the lack of
rent growth and persistent vacancy levels.
Foreign dollars and bulk acquisitions have played an important
role in the Los Angeles County investment market landscape.
Most notably, the iconic U.S. Bank Tower sold to Singapore-
based Overseas Union Enterprise (OUE) for $367.5 million. In a
blockbuster deal that closed after the first half of 2013, Brookfield
Office Properties acquired a Downtown Los Angeles portfolio that
included the Gas Company Tower and Wells Fargo Tower for $430
million. These strong investments reflect a market that is highly
desirable and profitable.
The entertainment, tech and new media markets have driven
demand for creative office space, especially in the thriving Silicon
Beach submarket. Developers are back in the market, searching
for all types of land. Demand for land is especially healthy in West
Los Angeles, Downtown Los Angeles and Hollywood. As the
U.S. economy begins to create jobs, the prospects are bright for
the Los Angeles investment market, which has benefited from
strong cross-border investment, low interest rates, decreasing
unemployment and a diverse economic base.
U.S. Bank Tower
Los Angeles
Los Angeles Investment Activity
(By Property Type)
Los Angeles Investment Volume
$ in billions
(USD)
Office 7.2% 7.2%
Retail 6.2% 6.4%
0
5
10
15
20
25
30
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
30% 24% Office
17% 38% Retail
11% 18% Industrial
1 U.S. Bank Tower Ofce $367,500,000 MPG Ofce Trust Overseas Union Enterprise (OUE)
2 Antelope Valley Mall Retail $327,973,687 Forest City Enterprises QIC
3 Hollywood & Highland Center Retail $310,655,000 CIM Group H&H Retail Owner LLC
4 1888 Century Park E. Ofce $305,000,000 Blackstone CommonWealth Partners
5
Esprit Marine Apartment
Complex
Multi-Residential $225,000,000 Ring Group Kennedy Wilson
Mid-Year
2013
D
uring the first six months of 2013, New Jersey experienced
consistent job growth throughout most employment
sectors. Moreover, payrolls have also increased steadily as the
average weekly wage for the private sector is one of the fastest-
growing in the country, increasing by 2.2% from March 2012
to March 2013. These improving economic conditions have
attracted buyers to the region. As a result, when comparing the
first half of 2013 with the first six months of 2012, overall sales
volume is higher by 46%, improving in three of the four major
property sectors (office, industrial and multi-residential).
Powered by strengthening market fundamentals, the industrial
property sector has the highest level of investor demand. Positive
absorption has been recorded in eight of the past 11 quarters,
while asking rents increased by 4.7% in the past 12 months. Bulk
warehousing has been of particular interest, as was the case for
the sale of the 1.1-msf Barnes and Noble distribution center
in Monroe Township to CenterPoint Properties. The property
is located in the red-hot Exit 8A submarket, where four of the
five largest leases were completed during the second quarter
of 2013.
Office investment activity represented 28% of overall property
sales volume. Velocity for the first half of 2013 was lower than
the previous six months, but 94% higher when compared with
mid-year 2012. Portfolio sales largely accounted for the increase.
As part of a $650-million purchase, The Herrick Company of
Florida acquired four AT&T office/research facilities totaling
more than 1 msf in Middletown. The telecommunications giant
had occupied the space since the 1960s. In Lawrenceville, a
joint-venture between Prism Capital Partners LLC and Angelo,
Gordon & Co. acquired Princeton Pike Corporate Center, an
eight-building, 800,000-sf office park, for $151 psf. The Princeton
area is one of New Jerseys most active regions.
Multi-residential sales volume also improved year over year, by
35%, and is expected to outperform its 2012 total, which was
15% lower than 2011. A joint-venture between Greystar Real
Estate Partners and Goldman Sachs & Co. made the largest
acquisition, purchasing Prospect Towers in Hackensack as part
of a 27-property portfolio encompassing seven markets.
900 Sylvan Avenue
New Jersey
1 200 Laurel Ave. Ofce $122,770,000 SunTrust Banks, Inc. The Herrick Company, Inc.
2
Princeton Pike Corporate
Center
Ofce $121,000,000 Brandywine Realty Trust
Prism Capital Partners LLC & Angelo,
Gordon & Co.
3 Prospect Towers Multi-Residential $99,182,000 Equity Residential
Greystar Real Estate Partners &
Goldman, Sachs & Co.
4 900-904 Sylvan Ave. Ofce $92,044,000 General Electric Company Comcast Corporation
5 Barnes & Noble Industrial $83,000,000 Utah State Retirement Fund CenterPoint Properties
New Jersey Investment Activity
(By Property Type)
New Jersey Investment Volume
$ in billions
(USD)
Office 7.7% 6.3%
Retail 7.3% 6.5%
0
2
4
6
8
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
37% 23% Industrial
28% 21% Office
11% 30% Retail
Mid-Year
2013
T
wo themes appear to be materializing in the Manhattan
real estate investment sales market. First, pricing for class A
office buildings and quality development sites has accelerated
due to limited supply and robust investor demand. These two
situations are being driven by the long-term perspective of
private investors about the growth of Manhattan office rents
and escalating prices being paid by homeowners for residential
condominiums especially new product in luxury buildings
where expectations of developers are consistently being
exceeded. For class A office buildings, there is a perception
among institutional owners that the fundamentals of the office
rental market may not carry forward indefinitely, which has led
to a paring of class A office assets. Meanwhile, private investors
sensing a forthcoming pricing spike are pushing to acquire the
few high-caliber office assets that are offered for sale.
The second theme is the rise of Manhattan sales volume. The
fervor of buyers and sellers has resulted in a substantial overall
transaction volume improvement when compared with the first
six months of 2012. Through mid-year 2013, total dollar volume
of Manhattan real estate sales was up 59% year-over-year, and
was reportedly the highest of any market in the United States,
at almost $15 billion.
While institutional investors began to dispose of major assets,
private equity capital has been quick to accelerate purchases.
Thirty-six per cent of capital directed into the office market
year-to-date is from private equity, up from 29% in 2012 and
8% in 2011. The concurrence of low interest rates and a robust
investment sales market has opened the door for private equity
to take a stronger ownership role in the Manhattan office
segment.
The second half of 2013 should remain strong for investment
sales activity as the economy continues to grow. While interest
rates remain low, residential condominium sales and office cap
rates will maintain their strength, thereby driving investors and
developers into the market. These low interest rates should
remain central to skyrocketing prices as eventual rate increases
seem not to be on the radar screen or are reasonably distant for
most real estate investors.
30 Rockefeller Plaza
New York
New York Investment Activity
(By Property Type)
New York Investment Volume
$ in billions
(USD)
Office 5.3% 4.6%
Industrial N/A N/A
Retail 5.8% 5.1%
0
10
20
30
40
50
60
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
62% 55% Office
6% 9% Retail
N/A N/A Industrial
1 767 5th Ave. (40% interest) Ofce $1,360,000,000
Meraas Capital/Goldman, Sachs & Co./
Kuwait & Qatar Investment Authorities
Zhang Xin & M. Safra & Co.
2 30 Rockefeller Plaza Ofce $1,310,000,000 General Electric Comcast Corp.
3 550 Madison Ave. Ofce $1,100,000,000 Sony Chetrit Group & Clipper Equity
4 425 Lexington Ave. Ofce $630,000,000 Hines US Core OFF Fund & Sumitomo Life JP Morgan
5 30th St. & 10th Ave. Ofce $530,000,000
Related Companies & Oxford
Properties Group
Coach Inc.
Mid-Year
2013
U
nquenchable demand has sparked a transformation in the
Orange County commercial real estate landscape, from low-
density suburbia to pockets of high-density urbanization. The
investment market has been a driving force in Orange County
based on the global outpouring of capital from traditional equity
markets into real estate. These factors will ultimately affect not
only the commercial real estate industry but, on a broader scale,
how and where people live, work and find recreation.
Orange County is ripe with commercial real estate investment
opportunities. Beyond the dot-com crash, low interest rates
have driven capital traditionally earmarked for the stock market
into the realm of commercial real estate. Private and institutional
investors such as individual entrepreneurs, pension funds and
REITs continue to blanket Orange Countys five commercial
real estate submarkets in search of all product types, whether
industrial, retail, office or multi-residential.
The challenge in todays market is finding available product.
The shortage of inventory is creating an extreme imbalance in
supply and demand, driving property values to unprecedented
highs. Cap rates are lower than normal considering todays soft
lease rates and economic uncertainty. These unusual market
dynamics have led to multiple offers behind almost every
building for sale. Additionally, more investors are liquidating
their assets now while the market remains primed for sellers.
Of the $4.8 billion in investments in the first half of 2013, multi-
residential was the bright spot with $2.3 billion in investments,
up from $779 million one year earlier. Orange County was one
of the first metros in Southern California where the construction
of multi-residential units gained notable traction after a virtual
five-year halt. Steady job gains in the office and industrial sectors
have led to strong investments at $1.6 billion and $627 million,
respectively. Multi-residential development and construction
will continue to lead in investments, as the market continues
to improve and job growth remains stable. Additionally, the
market has experienced cap-rate compression for all property
types, with the overall rate tightening to 5.9% at mid-year 2013
from 6.6% at mid-year 2012.
Oakwood Long Beach Marina
Orange County
1 Oakwood Long Beach Marina Multi-Residential $136,373,560 Lehman Bros. Holdings AvalonBay Communities
2 Laguna Hills Mall Retail $110,000,000 Simon Property Group Merlone Geier Partners
3 Bixby Ofce Park Ofce $84,250,000 American International Group Parallel Cap Partners
4 3300 S Fairview St. Industrial $63,336,000 PacTrust Alere Property Group
5 2601 Campus Dr. Industrial $56,194,000 Guggenheim Partners Campos Verdes LLC
Orange County Investment Activity
(By Property Type)
Orange County Investment Volume
$ in billions
(USD)
Office 7.4% 6.0%
Retail 6.8% 5.6%
0
2
4
6
8
10
12
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
32% 17% Office
13% 20% Industrial
7% 35% Retail
Mid-Year
2013
T
he Pittsburgh investment market continued to hum along
in the first half of 2013. While rental rates increased, vacancy
decreased, and with interest and cap rates as they were, owners
became sellers with the market very one-sided in their favor.
Pittsburgh continued to see outside investors looking to make
a splash in the market, with substantial moves in all sectors
resulting in first-half investment volumes in 2013 exceeding
first-half 2012.
While first-half 2013 office investment volume was only
approximately half of what it was in the first half of 2012, the
CBD/Fringe still saw major complexes trade, including Forest
City selling Federated Office Tower and the adjoining Westin
Convention Center Hotel to Starwood Capital in August. KKR
also came storming into town with its purchase of the 270,000-
sf Del Monte Center on the North Shore. In addition, the Federal
Reserve Building of Pittsburgh changed hands and is being
repositioned for multi-tenant office space.
The Pittsburgh retail market continues to perform well as
vacancy rates are at single-digit lows and demand for prime
retail acquisitions remains high. Two dozen retail deals have
traded during the last 12 months totaling in excess of $300
million, plus an exchange of interests between locally owned
Zamagias Properties and national player Forest City Enterprises
in an equity swap that included the Mall at Robinson and
Robinson Town Centre. Other retail sales of note include the
150,000-sf Plaza at the Pointe for $16.8 million and the 144,000-
sf Holiday Center for $20 million.
Cap rates averaged 7.5% to 8% throughout the first half, which
is in line with reported rates by Integra Realty Resources (IRR) in
its 2013 viewpoint report.
In a market with a thriving multi-residential sector and a
resilient office segment, retail remained king and is expected to
be highly coveted for the foreseeable future. Given the overall
well-being of the metropolitan statistical area, coupled with
investors looking for better returns on investment, interest
rates at historical lows, and a strong retail market with high
occupancy, Pittsburgh appears to be on pace to have a strong
finish to 2013.
Federated Ofce Tower
Pittsburgh
Pittsburgh Investment Activity
(By Property Type)
Pittsburgh Investment Volume
$ in millions
(USD)
Office 8.0% 7.6%
Retail 9.1% 7.1%
0
200
400
600
800
1,000
1,200
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
55% 35% Retail
25% 55% Office
13% 8% Industrial
1 Federated Ofce Tower Ofce $60,600,000 Forest City Enterprises Starwood Capital Group
2 Del Monte Center Ofce $52,500,000 Continental Real Estate Co. KKR
3 Turnpike Distribution Center Industrial $20,000,000 Al Neyer Inc. Centurion Investments LLC
4 Holiday Center Retail $20,000,000 UBS Blackstone
5 Plaza at the Pointe Retail $16,800,000 JER Partners WP Realty Inc.
Mid-Year
2013
R
aleigh-Durham commercial real estate sales totaled $1.1
billion during the first half of 2013, up 20% compared
with the first half of 2012. Multi-residential transactions
continued to lead the way with $610 million in volume
during the first and second quarters, matching the volume
witnessed during the same period in 2012. While demand
from renters remains strong, a wave of construction
completions during the next 12 to 18 months will likely
push vacancy higher and dampen rent growth. As a result,
investor demand for multi-residential properties is likely at
or near its peak for the current cycle.
While Raleigh-Durhams overall office vacancy rate remains
elevated, a lack of construction in recent years has driven
class A vacancy to approximately 12%, leaving tenants in
need of large blocks of space with few quality options. This
trend is helping to fuel an increase in investor demand for
prime class A buildings, as well as some older buildings
that may need improvements but are in premium locations.
Office sales totaled $287 million, up slightly compared with
the same period in 2012, but still well below historical norms
in terms of market share. Volume was driven primarily by
a handful of large transactions. The sale of the 300,389-sf
CAPTRUST Tower at North Hills during the first quarter set
a new pricing record for the region at $98.3 million or $327
psf.
Retail and industrial sales were relatively modest in the first
half of 2013, with volume totaling $157 million and $95
million, respectively. A single transaction represented more
than one-third of the industrial volume: NTRG purchased
two buildings totaling 458,815 sf at 2525 and 2532 Whilden
Avenue in Durham for $33.4 million.
Moving forward, institutional, core assets will continue to
be the most coveted product type. With interest rates rising
sharply during the past several months, many owners are
looking to sell properties before rates climb further and
spreads are no longer as favorable.
CAPTRUST Tower at North Hills
Raleigh-Durham
1 CAPTRUST Tower at North Hills Ofce $98,275,000 Duke Realty/Kane Realty KBS Realty Advisors
2 Lodge at Crossroads Multi-Residential $57,119,000 Pearlmark Real Estate Partners Morguard North American Residential REIT
3 Perry Point Multi-Residential $55,606,000 Pearlmark Real Estate Partners Morguard North American Residential REIT
4 Alexan Garrett Farms Multi-Residential $49,300,000
Trammell Crowe Residential/
Prudential Real Estate Investors
Global Securitization Services/Bentall
Kennedy
5 Artisan at Brightleaf Multi-Residential $43,800,000 Greystar RE Partners/Prudential Insurance AEW Capital Management
Raleigh-Durham Investment Activity
(By Property Type)
Raleigh-Durham Investment Volume
$ in billions
(USD)
Office 8.5% 8.3%
Retail 9.1% 8.7%
0
1
2
3
4
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
25% 25% Office
14% 6% Retail
8% 6% Industrial
Mid-Year
2013
L
ong-term prospects for the San Diego commercial real estate
investment market are a mixed bag. The regions multi-
residential investment market, and to a lesser extent its office
market, are considered to be in expansion mode for 2013 through
2016 with $1 billion and $482 million in investments, respectively,
midway through 2013.
Meanwhile, the retail market, in part because of an uneven
recovery in consumer spending and a dearth of desirable new
product being built or sold, is expected to remain in recovery
mode through 2016.
The industrial market, which also has limited supply and
construction compared with other regions, is expected by
investors to stay in a relative recessionary mode for 2013-14,
heading into recovery for 2015-16. At the halfway point of
2013, the overall cap rate for all San Diego investment classes
compressed to 6.2%, down from 6.7% in 2012.
San Diegos office market has lately been bucking national trends
of flattening vacancy rates and rents, registering rising absorption
and rents amid dropping vacancy rates in several submarkets for
the past year. While San Diego Countys office market has seen
modest improvement in supply-demand trends this year, growth
in the small-tenant segment of leasing has not fully rebounded,
as companies decide to do more with less space. Full recovery in
the countys market will likely come in the next two to four years.
The most sought-after properties are stabilized, class A trophy
assets located in the major metro markets with long-term leases
in place and potential for increased cash flow. These markets are
perceived to be the most resilient and successful investment
options and will continue to be investors favorite markets for the
foreseeable future. Investment activity in major markets has been
losing momentum due to the limited number of class A trophy
properties available for acquisition. Furthermore, investors have
pushed the prices for the best properties to premium levels
activity fueled by increased debt availability to those who qualify
resulting in a very competitive market dominated by large
institutional and ultra-wealthy investors.
First Allied Plaza
San Diego County
San Diego County Investment Activity
(By Property Type)
San Diego County Investment Volume
$ in billions
(USD)
Office 7.1% 6.0%
Retail 6.6% 6.5%
0
2
4
6
8
10
12
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
23% 15% Office
17% 41% Retail
12% 16% Industrial
1 First Allied Plaza Ofce $140,440,000 Wereldhave Lone Star Funds
2 Santee Trolley Square Retail $98,000,000 Vestar Development Kimco
3 Missions at Sunbow Multi-Residential $90,000,000 Equity Residential R&V Management Corp.
4 1551 Union St. Multi-Residential $63,400,000 MetLife UDR, Inc.
5 Archstone Del Mar Heights Multi-Residential $61,743,449
Lehman Bros Holdings a.k.a.
Archstone
Equity Residential
Mid-Year
2013
S
an Francisco witnessed a slowing of investment deals in
the first half of 2013 as it came off one of the strongest
investment market years since 2007. With the increase in capital
gains tax starting in January 2013, many investors were eager
to sell before the end of 2012. Additionally, the city saw the
largest single-building office investment transaction in recent
history with the sale of 101 California, a 1.2-msf trophy asset, for
$910 million in December 2012. It will be tough to match 2012s
performance, but even though investment deals have slowed,
the first half of 2013 still demonstrated strong investor interest.
With foreign investors still looking to stake their claims in one
of the hottest markets in the country, San Francisco remains
a strong competitor globally. Limited capacity for new
development, rising rents and a thriving technology sector
continue to enhance favorable investment opportunities in San
Francisco real estate.
Multi-residential activity dominated the first quarter of 2013,
accounting for $458 million in trades during the first half of
2013. Office sales continue to be a driving force in the market,
but as availabilities for top-tier office investment are decreasing,
interest in multi-residential buildings is increasing. Three of the
top five investment deals in the last six months have been multi-
residential.
Investment activity continued to thrive in both the South
Financial District and the South of Market (SOMA) neighborhoods
(home to future multi-residential developments) - dominating
technology industry demand and all five of the top investment
transactions in the first half of 2013. Among the top investments
was the 1-msf Transbay Terminal Tower site which sold for $191
million in the first quarter of 2013, making it the top investment
in the first half of 2013. Investment activity is likely to remain
strong in these areas. Although the North Financial District
witnessed a slowing in activity in the first six months of 2013,
the area can expect to see a second round of investors by the
end of the year.
Future Transbay Terminal Building
San Francisco
1 101 First St. Land $191,816,196 Transbay Joint Powers Authority Hines/Boston Properties
2 Archstone South Market Multi-Residential $149,259,814 Lehman Brothers Equity Residential
3 1390 Market St. (Portfolio Sale) Mixed $135,050,000 Asn Fox Plaza LLC Essex Fox Plaza, LP
4 SOMA at 788 Multi-Residential $130,000,000 Avalon Bay Communities, Inc. LPF Yerba Buena, Inc.
5 2-50 First St. (Portfolio Sale) Ofce $122,000,000 Lincoln Property Company Prudential Insurance
San Francisco Investment Activity
(By Property Type)
San Francisco Investment Volume
$ in billions
(USD)
Office 5.5% 5.1%
Retail 6.0% 6.0%
0
3
6
9
12
15
18
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
59% 64% Office
6% 16% Retail
3% 5% Industrial
Mid-Year
2013
T
here was more than $930 million worth of commercial
investment sales throughout San Mateo County in the first
half of 2013. This was a 56% increase from the first half of 2012
when only $597 million in property changed hands and
nearly equal to the $1.1 billion of total deal volume in 2012.
While office sales were the driving force in San Mateo County
during the first half of 2012, multi-residential sales dominated
the first half of 2013. During the first six months of 2013, multi-
residential sales accounted for more than $610 million. The
average cap rate fell 40 bps compared with the same period
in 2012, ending the first half of 2013 at 4.7%. All but one of
the top five transactions in San Mateo County was a multi-
residential property.
Office product accounted for slightly more than $226 million
in trades during the first half of 2013. This total was a 43%
decrease from the first half of 2012. In the past 24 months,
investors have focused their efforts primarily in San Francisco
where low vacancy, high demand, and rising rents are the
fundamentals, unlike San Mateo County where vacancy
has risen during the last few quarters and demand seemed
stagnant. Industrial and retail product sales in San Mateo
County were minimal during the first six months of 2013.
Industrial product trades totaled $24 million while retail assets
were involved in $69 million worth of transactions. If industrial
vacancy decreases as expected, investors should become
more active in this sector during the next year. Quality retail
product in San Mateo County is scarce, resulting in very little
interest from investors.
There is approximately 400,000 sf of office product and more
than 500,000 sf of industrial product on the market. This is
currently the most active sale market that San Mateo Countys
office and industrial sectors have witnessed since the start of
the recession.
One of the big factors moving forward into the latter half of
2013 for all property types will be rising interest rates. As a
result, investors are likely to be cautious during the next six
months.
Archstone San Mateo
San Mateo
San Mateo Investment Activity
(By Property Type)
San Mateo Investment Volume
$ in billions
(USD)
Office 5.7% 5.7%
Retail 7.5% 5.9%
0
1
2
3
4
5
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
24% 67% Office
7% 7% Retail
3% 17% Industrial
1 Archstone San Mateo Multi-Residential $169,629,145 Lehman Brothers Equity Residential
2 Archstone San Bruno I Multi-Residential $117,047,145 Lehman Brothers Avalon Bay Communities, Inc.
3 850 Davit Ln. Multi-Residential $89,682,191 Lehman Brothers Equity Residential
4 Woodside Technology Center Ofce $87,000,000 BMR RREEF
5 Archstone San Bruno III Multi-Residential $72,959,387 Lehman Brothers Avalon Bay Communities, Inc.
Mid-Year
2013
South Florida, comprising Miami-Dade, Broward and Palm
Beach counties, is the seventh-largest MSA in the nation
with roughly one-third of Floridas total population. Though
hit hard by the recent recession, the Florida commercial real
estate market and, in particular, the South Florida region
have begun to bounce back and are on the road to recovery.
Leading the charge out of the Great Recession in South Florida
was the multi-residential segment. Total multi-residential
sales volume through mid-year 2013 was slightly more than
$1.1 billion, an almost 40% year-over-year increase from mid-
year 2012, which saw total sales reach approximately $796
million. Due to the increased demand for these perceived
safer assets, multi-residential cap rates have continued their
steady decline. As of mid-year 2013, cap rates have dropped
to an average of 5.8%, a 130-bps decrease from their peak
of 7.1% back in 2009. Class A core properties have also seen
continued cap-rate compression with assets trading at less
than 5% at mid-year 2013.
Not to be outdone, both the industrial and retail segments
of the South Florida market have also been on a continued
upswing. Most recently, industrial properties have begun
to hit their stride as sales volume for mid-year 2013 totaled
more than $706 million, almost 5% higher than all of 2011,
which had a total annual figure of slightly less than $675
million. If industrial volume remains on its current mid-year
trend, then projected sales for 2013 will outpace 2012 totals
by almost 30%. Industrial cap rates remain steady, increasing
only 10 bps year-over-year, with very little compression while
averaging 6.6% at mid-year 2013.
Retail properties have also returned to pre-Recession levels
with 2012 recording sales of more than $2.4 billion, the
second-highest volume in the last 10 years. As of mid-year
2013, the retail sector remains strong with a total sales
volume of more than $1.1 billion and an estimated annual
total of slightly less than $2.3 billion. Average retail cap rates
continue to hold firm in the high 6% to low 7% range.
Sabadell Financial Center
South Florida
1 The Resort at Pembroke Pines Multi-Residential $225,000,000
Strategic Partners US Value Fund 5
Pembroke Pines, LLC
Carroll Organization
2 Shops at Pembroke Gardens Retail $188,000,000 Duke Realty Corporation Jefrey R. Anderson Real Estate, Inc.
3 Sabadell Financial Center Ofce $185,000,000 Testa Inmuebles en Renta Prudential Real Estate Advisors
4 Miracle Marketplace Retail $92,000,000 AWE Talisman Heitman, LLC
5 BAC Colonnade Tower Ofce $81,000,000 Deka Immobilien Global Fund TA Associates Realty
South Florida Investment Activity
(By Property Type)
South Florida Investment Volume
$ in billions
(USD)
Office 6.6% 6.7%
Retail 7.0% 7.2%
0
3
6
9
12
15
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
32% 41% Retail
20% 18% Industrial
17% 19% Office
Mid-Year
2013
I
nstitutional investment activity for Metropolitan Washington in
the first half of 2013 was headlined by a series of large portfolio
transactions: First Potomacs industrial portfolio sale to Blackstone;
Wereldhaves office and industrial portfolio sale to Lone Star
Funds; Archstones multi-residential portfolio sale to AvalonBay
Communities and Equity Residential; Alony Hetzs $330-million
investment in Carr Properties; and the pending sale of WRITs
medical portfolio. Aside from the portfolio deals, there were several
one-off core deals that were marketed or traded in the first half
of 2013 at record-low cap rates because of the sustained strong
interest in downtown DC from foreign investors. Demand for core
product remains high and, therefore, pricing for those deals will
remain aggressive for the foreseeable future.
First-half 2013 multi-residential sales exceeded 2012s total volume
for this property type and reached the highest level since 2007 the
peak in the most recent cycle. Thanks to this strong multi-residential
demand, total investment sales volume is up 107% compared with
first-half 2012. The Archstone portfolio sale alone accounted for
approximately $5 billion of sales in the region during the first six
months of the year. Volume for office and industrial is down slightly
year over year, and that trend should hold through 2013, though
institutional buyers demonstrate significant interest for industrial
properties.
There has been a shortage of middle-market deals for several
reasons. At the beginning of 2013, long-term debt was at historic
lows, allowing owners to refinance their way out of problems or
vastly improving a propertys cash flow. Additionally, leasing activity
was lower than historical averages region-wide during the first half
of the year because of sequestration and tenants systematically
rightsizing. This slow leasing velocity has created a fundamental
disconnect between buyers and sellers in underwriting vacancy
and re-leasing.
In June 2013, long-term interest rates increased by approximately 100
bps, and now the leasing market in certain areas of Virginia appears
to be showing signs of increased activity despite sequestrations
impact on market conditions. Middle-market investment activity
should increase in the fourth quarter as owners refinancing options
remain less attractive and buyers revert to underwriting vacancy.
1200 19th Street NW
Washington, DC
Washington, DC Investment Activity
(By Property Type)
Washington, DC Investment Volume
$ in billions
(USD)
Office 6.4% 6.6%
Retail 6.6% 6.6%
0
5
10
15
20
25
30
Mid-Year
2013
2012 2011 2010 2009 2008 2007
Mid-Year
2013
Mid-Year
2012
21% 46% Office
6% 15% Retail
3% 7% Industrial
1
1600 S. Eads St. (Archstone
Crystal Towers)
Multi-Residential $322,250,000 Equity Residential Dweck Properties Ltd.
2 1200 19th Street NW Ofce $296,000,000
Hines U.S. Core Ofce Fund/
Sumitomo Life
Fosterlane Management
3 2000 S. Eads St. (Crystal House I & II) Multi-Residential $262,500,000 AvalonBay Communities Mack-Cali/UBS
4 Air Rights Center Ofce $205,000,000 TIAA-CREF Rockpoint Group/MRP Realty
5 901 N. Glebe Rd. (Arlington Gateway) Ofce $175,600,000 Ralph Dweck Piedmont REIT
Mid-Year
2013
About Avison Young
Avison Young at a Glance
Avison Young is the worlds fastest-growing commercial
real estate services frm. Headquartered in Toronto,
Canada, Avison Young is a collaborative, global frm
owned and operated by its principals. Founded in 1978,
the company comprises 1,300 real estate professionals
in 53 ofces, providing value-added, client-centric
investment sales, leasing, advisory, management,
fnancing and mortgage placement services to owners
and occupiers of ofce, retail, industrial and multi-
family properties.
Transaction Services
- Tenant representation, lease
acquisition and disposition
- Investment acquisition
and disposition for owners
and occupiers
- Landlord representation
all property typesofce,
industrial, retail, build-to-suit,
land and multi-family
Consulting & Advisory
Services
- Portfolio review and analysis
- Valuation and appraisal
- Benchmarking
- Transaction management
- Asset rationalization
- Mergers and acquisitions
- Workplace solutions
- Acquisitions and dispositions
Management Services
- Project management
- Property and operations review
- Property/facility management
- Tenant coordination and
relations
- Financial reporting
- Lease administration
- Operations consulting
- First stage lease review
Enterprise Solutions
- Integrated services coordination
- Transaction management
- Optimization strategies
- Portfolio lease administration
- Project coordination and
reporting
Founded: 1978
Total Real Estate Professionals: 1,300+
Ofces: 53
Brokerage Professionals: 500+
Property Under Management: 70 million sf+
WASHINGTON, DC
RALEIGH-DURHAM (2)
BETHESDA
HALIFAX
NEW YORK CITY
IRVINE
DALLAS
HOUSTON
ATLANTA
FLORIDA (5)
BOSTON
PITTSBURGH
OTTAWA
CHICAGO (2)
DETROIT
GUELPH
MISSISSAUGA
MONTREAL
EDMONTON
REGINA
WINNIPEG
CALGARY
VANCOUVER
LETHBRIDGE
DENVER
RENO
LAS VEGAS
SAN FRANCISCO
LOS ANGELES (4)
NEW JERSEY
TYSONS
CORNER, VA
SOUTH CAROLINA (3)
TORONTO (2)
QUEBEC CITY
TORONTO
NORTH
CHARLOTTE
SAN DIEGO
SACRAMENTO
SAN MATEO
LONG ISLAND
PHILADELPHIA
Canadian Offices
Toronto (HQ)
18 York Street
Suite 400, Mailbox #4
Toronto, ON M5J 2T8
T 416.955.0000
Calgary
401 - 9th Avenue SW
Suite 309
Calgary AB T2P 3C5
T 403.262.3082
Edmonton
Suite 2800, Bell Tower
10104-103 Avenue NW
Edmonton, AB T5J 0H8
T 780.428.7850
Guelph
299 Brock Road South
Building A
Guelph, ON N1H 6H9
T 226.366.9090
Halifax
1533 Barrington Street
Suite 300
Halifax, NS B3J 1Z4
T 902.442.4050
Lethbridge
515 7th Street South
Suite 300
Lethbridge, AB T1J 2G8
T 403.330.3338
Mississauga
77 City Centre Drive
Suite 301
Mississauga, ON L5B 1M5
T 905.712.2100
Montreal
2000 McGill College Avenue
Suite 1950
Montreal, QC H3A 3H3
T 514.940.5330
Ottawa
155 Queen Street
Suite 1301
Ottawa, ON K1P 6L1
T 613.567.2680
Quebec City
1300 Sainte-Anne Boulevard
Quebec, QC G1E 3M5
T 418.694.3330
Regina
2550-12th Avenue
Suite 300
Regina, SK S4P 3X1
T 306.359.9799
Toronto
(Property Management)
60 Adelaide Street East
Suite 900, Mailbox #15
Toronto, ON M5C 3E4
T 416.343.0078
Toronto North
600 Cochrane Drive
Suite 220
Markham, ON L3R 5K3
T 905.474.1155
Vancouver
2100-1055 West Georgia
Street
Box 11109, Royal Centre
Vancouver, BC V6E 3P3
T 604.687.7331
Winnipeg
330 Portage Avenue
Suite 1000
Winnipeg, MB R3C 0C4
T 204.947.2242
U.S. Offices
Atlanta
30 Ivan Allen Jr. Boulevard, NW
Suite 900
Atlanta, GA 30308-3035
T 404.865.3663
Bethesda
6430 Rockledge Drive
Suite 400
Bethesda, MD 20817
T 301.657.8386
Boston
200 State Street
7th Floor
Boston, MA 02129
T 617.250.7600
Charlotte
2200 Floral Avenue
Charlotte, NC 28203
T 980.225.5994
Chicago (Downtown)
120 North LaSalle Street
Suite 3300
Chicago, IL 60602
T 312.957.7600
Chicago (Suburban)
9700 West Higgins Road
Suite 500
Rosemont, IL 60018
T 847.881.2045
Dallas
5910 North Central Expressway
Suite 800
Dallas, TX 75206
T 214.559.3900
Denver
1900 16th Street
Suite 1300
Denver, CO 80202
T 720.508.8100
Detroit
T 313.510.2825
Florida (Boca Raton)
1875 NW Corporate Boulevard
Suite 280
Boca Raton, FL 33431
T 954.903.1800
Florida (Fort Lauderdale)
515 E Las Olas Boulevard
Suite 400
Fort Lauderdale, FL 33301
T 954.903.1800
Florida (Miami)
2525 Ponce De Leon Boulevard
3rd Floor
Coral Gables, FL 33134
T 305.504.2045
Florida (Tampa)
1715 North Westshore Boulevard
Suite 130
Tampa, FL 33607
T 813.288.1800
Florida (West Palm Beach)
250 South Australian Avenue
Suite 1100
West Palm Beach, FL 33401
T 561.721.7000
Houston
2800 Post Oak Boulevard
Suite 1950
Houston, TX 77056
T 713.993.7700
Las Vegas
3993 Howard Hughes Parkway
Suite 350
Las Vegas, NV 89169
T 702.472.7979
Long Island
68 South Service, #100
Melville, NY 11747
T 516.962.5400
Los Angeles
(Downtown)
555 S. Flower Street
Suite 3200
Los Angeles, CA 90071
T 213.935.7430
Los Angeles
(Santa Monica)
301 Arizona Avenue
Suite 303
Santa Monica, CA 90401
T 310.899.1800
Los Angeles (North)
6711 Forest Lawn Drive
T 323.851.6666
Los Angeles (West)
10940 Wilshire Boulevard
Suite 2100
T 424.265.9200
New Jersey
1120 Headquarters Plaza
West Tower, 4th Floor
Morristown, NJ 07960
T 973.898.6360
New York
623 Fifth Avenue
22nd Floor
New York, NY 10022
T 212.729.7140
Orange County (Irvine)
2030 Main Street
Suite 1300
Irvine, CA 92614
T 949.757.1190
Philadelphia
200 Barr Harbor Drive
Suite 400
West Conshohocken, PA 19428
T 610.276.1080
Pittsburgh
20 Stanwix Street
Suite 401
Pittsburgh, PA 15222
T 412.944.2130
Raleigh-Durham
1511 Sunday Drive
Suite 200
Raleigh, NC 27607
T 919.785.3434
Raleigh-Durham
(Chapel Hill)
100 Europa Drive
Chapel Hill, NC 27517
T 919.968.4017
Reno
6151 Lakeside Drive
Suite 1000
Reno, NV 89511
T 775.332.2800
Sacramento
Park Tower
980 9th Street
Suite 350
Sacramento, CA 95814
T 916.426.3773
San Diego County
4225 Executive Square
Suite 600
San Diego, CA 92037
T 858.201.7070
San Francisco
601 California Street
Fifth Floor
San Francisco, CA 94108
T 415.322.5050
San Mateo
T 650.740.1666
South Carolina (Charleston)
550 Long Point Road
Mt. Pleasant, SC 29464
T 843.725.7200
South Carolina (Columbia)
717 Lady Street
Suite C
Columbia, SC 29201
T 803.298.3010
South Carolina (Greenville)
300 East Coffee Street
Grenville, SC 29601
T 864.334.4145
Tysons Corner
8484 Westpark Drive
Suite 150
McLean, VA 22102
T 703.288.2700
Washington, DC
1999 K Street NW
Suite 650
Washington, DC 20006
T 202.644.8700
Canadian Research
Bill Argeropoulos
Vice-President & Director of Research (Canada)
416.673.4029
bill.argeropoulos@avisonyoung.com
U.S. Research
Margaret Donkerbrook
Vice-President, U.S. Research
202.644.8677
margaret.donkerbrook@avisonyoung.com
Corporate Communications & Media
Sherry Quan
National Director of Communications & Media Relations
604.647.5098
sherry.quan@avisonyoung.com
Our Contacts Canada & U.S.
2013, Avison Young (Canada) Inc.
The statistics contained in this report were obtained from sources
deemed reliable, including Altus InSite, Avison Young, Collette, Plante &
Associs, CoStar Group Inc., Desjarlais Prvost Inc., Gettel Network, Real
Capital Analytics, Inc., RealNet Canada, RealTrack, Reis Services, LLC. How-
ever, Avison Young (Canada) Inc. does not guarantee the accuracy or
completeness of the information presented, nor does it assume any re-
sponsibility or liability for any errors or omissions. All opinions 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.
avisonyoung.com

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