Summer 2009 Gta Office Market Report & Forecast

Office Market Repor t & Forecast Colliers International | Greater Toronto Area

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2009

We are pleased to provide you with a copy of Colliers International Summer 2009 Office Market Report & Forecast. It is our hope that you find this report and market forecast informative and valuable. The report’s intent is to provide a current view as well as deeper insight into the dynamics of the Greater Toronto Area office market. Colliers’ Toronto research team has employed a variety of statistical analysis and forecasting models to produce this report, in an effort to provide greater market intelligence. We continue to examine commonly used metrics in the commercial real estate industry, in context with broader macro-economic metrics. For those of you who would like to continue reviewing our statistical tables, we would be more than happy to provide those to you upon request. You can find our contact details listed in the back of the report. As always, we look forward to your questions, feedback as well as discussion of your real estate needs. Best Regards,

John Arnoldi Managing Director, Office Practice Group Toronto

Tor onto Ec o n o m i c O ve r v i e w Toronto Economic Overview

Desperately Seeking Stability Canada’s domestic economy continues to be buffeted by waves of uncertainty, circling the globe in the wake of the global credit crisis of 2008. While Canada still has relatively strong economic indicators, no nation is an island and we are by no means immune from global events. While Canadian fundamentals are solid, the decrease in international demand for commodities, reorganization of our manufacturing sector, the rising loonie, and the increased risk aversion of the financial sector make for a very unstable economic climate. Recent months have seen resurgence in commodity and energy prices, and with it the Canadian dollar. The dollar has risen approximately 20 per cent in the second quarter of 2009, up over $0.90 USD in tandem with oil prices, which have doubled since mid-February. This is a double-edged sword for Canada as these factors, combined with falling Chinese exports - which will eventually precipitate lower imports, a major Canadian profit generator - create a recipe for further macro-economic instability. The Greater Toronto Area (GTA) is feeling the squeeze from such instability. According to the Conference Board of Canada, total GTA GDP is expected to fall by 1.6 per cent in 2009, led by an expected 5.2 per cent drop in manufacturing GDP. Financial, insurance, and real estate sectors are forecasted to avoid this trend by posting a relatively flat 0.8 per cent GDP gain over 2008. Unfortunately for GTA’s economy, this virtual zero growth is a long way off of the 2006 and 2007 levels of 5 per cent and 4.7 per cent respectively. This pullback is already affecting the Toronto office market through lowered demand for space due to staffing cutbacks, disposal of underutilized space, and postponed growth plans. GTA’s unemployment rate is also currently at a 12-year high of 9.1 per cent, 30 basis points lower than the United States, 10 basis points lower than the entire European Union, and almost 100 basis points above Canadian levels. Combined employment numbers for office users in the GTA show percentage losses in Q3 2009, and in Q4 2009 six basis points and 52 basis points respectively. Office employment in the GTA is an indicator that we watch quite closely from the Conference Board of Canada forecasts that stable job growth will not occur again until the fourth quarter of 2010. Until there is macro-economic stability at home and abroad, the GTA office market will be in a state of uncertainty, offering both opportunity and challenge for owners, occupiers and real estate developers. Economic Indicators GTA GDP at Basic Prices (Mil. $ 2002) % change

2008 Q3

2008 Q4

2009 Q1

2009 Q2F

2009 Q3F

2009 Q4F

2010 Q1F

2010 Q2F

2010 Q3F

2010 Q4F

2011 Q1F

2011 Q2F

2011 Q3F

222,285

219,040

217,408

216,955

217,257

218,199

220,741

222,603

224,730

227.120

230,478

233,133

235,779

0.27

-1.46

-0.74

-0.21

0.14

0.43

1.17

0.84

0.96

1.06

1.48

1.15

1.14

GTA Unemployment Rate

6.9

7.3

8.0

8.2

8.4

8.5

8.5

8.5

8.4

8.3

8.0

7.9

7.7

GTA Employment (000s)

2,907

2,924

2,902

2,910

2,901

2,882

2,920

2,910

2,911

2,929

2,976

2,997

3,018

% change

-0.95

0.66

-0.75

0.28

-0.30

-0.65

1.29

-0.32

0.04

0.60

1.60

0.72

0.69

GTA Office Employment* (000s)

1,145

1,151

1,146

1,154

1,153

1,147

1,162

1,159

1,160

1,169

1,188

1,198

1,208

% change

-1.55

0.54

-0.46

0.69

-0.06

-0.52

1.27

-0.25

0.12

0.73

1.69

0.86

0.83

* Utilized in office demand forecast. Source: The Conference Board of Canada, May 2009

During the review of market performance, it is determined that real GDP and office employment correlated well with the GTA office market indicators. Given the strength of the relationship between the economic indicators and office market indicators, this information was utilized in Colliers’ forecast model for the GTA office markets. 1

Great e r To r o n t o A r e a O f fi c e M a r ke t O ve r v i e w Vacancy Rate: 5.7%

Net Absorption: 1,070,243

Asking Net Rent: $17.58

Net New Supply: 521.777

Arrows indicate trend observed since Fall 2008.

Ongoing instability and weakness in the economy have worked their way into the GTA office market. Lagging the business cycle by a number of months, vacancy has steadily increased since the beginning of 2009. Since then, GTA vacancy has increased by almost a percentage point to 5.7 per cent at the end of Q2 2009, or approximately 1.7 million square feet to levels not seen since Q3 2007. This increase is primarily driven by GTA West and downtown office markets, both currently characterized by high construction activity, and new office space soon to be delivered to the market. As a result, both GTA West and GTA downtown are and will continue to manage demand problems, as well as an over supply of space.

GTA North GTA East GTA West

Midtown Downtown

Recognizing softer market conditions, landlords have started to seek lower net rent in their space advertisements. Since peak levels observed in Q3 2008 last year, GTA’s average asking net rent has decreased by 6.4 per cent to $17.58 per square foot at the end of Q2 2009. More notably, landlords have increased the amount of tenant incentives to attract companies looking for space in the market, or retain existing clients through the early renewal of their lease. This dynamic is putting downward pressure on net effective rents, which will present tenant opportunities not seen for a number of years.

GTA Historical Performance & Forecast 12%

$30

FORECAST 10%

$25

$20

$17.58

8%

6%

$15 5.7%

2

$10

4%

$5

2%

$0

0%

Considering Conference Board of Canada’s forecast of GTA GDP and office employment, we conclude that net absorption of office space will be positive, but at a stagnating minimum. We do not expect net absorption to return to levels experienced during the last five years for a number of years. However by 2011, net absorption should regain healthy levels between two to three million square feet per annum.

Greater Toronto Area

Over the course of the next two years we see vacancy in the overall GTA market rising to levels between seven and eight per cent, and average asking net rent falling below $13.00 per square foot in 2010. Technically this still represents a landlord’s market, however one with more flexible landlords, and an increased number of suitable options for tenants. A closer look at GTA vacancy statistics reveals that landlords continue to put office space onto the market, while companies looking to reduce operating expenses are marketing their own space through subletting unused parts of their premises. This strategy is often utilized in softer markets, and since the lows in Q3 2008, marketed sublet space has grown by 68 per cent, up to 1.17 million square feet or 11 per cent of GTA’s total vacancy.

18-Month Vacancy Trend 12

10

9%

9%

10% 8%

8 91%

10% 91%

90%

6

92%

11%

89%

90%

4

2

2008.1

2008.2

2008.3

2008.4

2009.1

2009.2

3

GTA D ow n t ow n GTA Downtown Historical Performance & Forecast $30

11% $24.26

$25

FORECAST

9% 7%

$20 4.4%

$15

5%

$10

3%

$5

1%

$0

-1%

Vacancy Rate: 4.4%

Net Absorption: 285,838

Asking Net Rent: $24.26

Net New Supply: 26,000

Arrows indicate trend observed since Fall 2008.

Toronto’s new office towers are close to being delivered to the market, and their tenants are finalizing preparations for their relocation. This inventory growth of approximately 3.4 million square feet has pushed up availability rates while continuing to push down rental rates, and will increase vacancy once completed due to lateral tenant moves within GTA’s downtown market. This anticipated spike of vacant space will, and has already encouraged tenants in the market to wait until later this year, or early 2010 to finalize any new leasing commitments. Vacancy bottomed in the latter half of 2008, in GTA downtown at 3.8 per cent and has since increased to 4.4 per cent. In comparison to twelve months ago, we have observed an increase of 40 basis points, as average asking net rents are slower to react to the market, however we have not yet observed dramatic decreases. Over the course of the last twelve months, asking net rents post figures indicating they have decreased by 3 per cent to $24.26 per square foot. Looking forward, using office employment growth in our model as an indicator for office space demand, we expect vacancy rates to rise up to almost 9 per cent within the next twelve months. Asking net rents are expected to respond with a decrease of more than 20 per cent from current levels to approximately $19.00 per square foot. With the economy expected to pick up again at the end of 2010, early 2011 is when we expect demand for office space to slowly show signs of recovery, as well as strengthened office market fundamentals.

Asking Net Rent by Submarket 12-Month Change Toronto West (down 20%)

Financial Core (down 9%)

$28.52

$10.79

$25.95

$8.68

$17.27

$15.56

$18.71

$19.40

$21.64 $19.53

Downtown North (down 4%)

$23.18

$22.28

Downtown South (up 14%)

June 2008

4

June 2009

Downtown East (up 11%)

Downtown West (down 7%)

The pace at which asking net rents have been rising throughout GTA downtown has come to an end during the last twelve months. Rents continue to climb in the downtown East submarket, and downtown South has experienced a noticeable increase (up 14 per cent) in anticipation of the new supply coming to market, however the financial core led the losses (down 9 per cent) followed by downtown West and downtown North markets.

Net Absorption by Submarket 12-Month Change Toronto’s downtown market managed to increase occupied space by 540,000 square feet during the last twelve months, despite the instabilities of our financial markets. Downtown North showed the biggest gains, with more than 300,000 square feet of newly occupied space. Only downtown South and GTA West were markets that reduced their occupied space.

Downtown West

Downtown East

Downtown South

Toronto West

Financial Core

The circle graph represents the distribution of occupied space within the downtown submarkets as of June 30, 2009.

GTA Downtown

Downtown North

(28,609)

(15,518)

56,422

76,098

110,266

342,321

18-Month Vacancy Trend 3,500,000

3,000,000

3,018,787

2,872,985 2,709,226

2,852,040 2,675,210

2,569,711

2,500,000

2,000,000

1,500,000 14.0%

1,000,000

500,000

10.8% 8.0%

5.9% 168,982

2008.1

216,359

2008.2

Total Vacant Area

7.8%

8.4%

209,320

215,433

2008.3

2008.4

Vacant Sublease Space

307,890

2009.1

422,331

2009.2

% of Vacant Sublease Space of Total Vacant Space

Vacant space has increased since it bottomed out in Q3 2008 by 12.8 per cent in the Toronto’s downtown market, and sub-landlords are currently marketing the majority, 62 per cent of newly added space. While vacant direct space has increased by 5.3 per cent since the bottom of this cycle, sublet space has more than doubled (102 per cent) in this market, competing with direct vacant space for tenants looking for office premises. Toronto’s downtown market sublet ratio is above the GTA average at the end of Q2 2009, 14 per cent versus 11 per cent respectively, indicating slightly softer conditions than in other markets.

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GTA M i d t ow n GTA Midtown Historical Performance & Forecast $20

10% FORECAST

$18

9%

$16

8%

$16.40

$14

7%

$12 6% $10 5.5%

5%

$8

4%

$6

3%

$4 $2

2%

$0

1%

Vacancy Rate: 5.5%

Net Absorption: 51,481

Asking Net Rent: $16.40

Net New Supply: 0

Arrows indicate trend observed since Fall 2008.

Typically sought after by companies looking for a central, non-core location with proximity to public transit and access to a skilled labour pool, GTA’s midtown market has not been spared from the effects of softening market conditions. Vacancy has steadily increased throughout 2008 and Q1 2009, with a recent decline in Q2 2009 to 5.5 per cent. Asking net rents have responded with a minimal decrease of 1.2 per cent, while tenant inducements such as the number of months of free rent and allowances from landlords for renovations, have increased considerably. Over the course of the next six to twelve months, we project that GTA’s midtown market will follow suit as the market will continue to soften, projecting that vacancy rates will rise to over 6 per cent, and asking net rents will react with a decline of 2.3 per cent to $16 per square foot by the end of 2009.

Asking Net Rent by Submarket 12-Month Change GTA’s midtown posts fairly stable average asking net rents, quoting a minor decrease of 0.6 per cent, compared to twelve months ago. Distinguishing between it’s submarkets reveals that only Yonge & Bloor experienced a decrease in asking net rent, down 1.1 per cent, while the Yonge & St. Clair submarket quoted an increase of 9.4 per cent, and the Yonge & Eglinton submarket remains flat.

Yonge & Bloor (down 1.1%) $17.91 $17.70

$14.97

$15.39

$15.01 $16.83

Yonge & St. Clair (up 9.4%)

Yonge & Eglinton (up 0.2%)

June 2008

6

June 2009

GTA’s midtown market experienced minimal positive absorption over the past year, as Yonge & St. Clair and Yonge & Eglinton remain positive, while Yonge & Bloor show a decrease in the amount of occupied space.

(16,256)

22,100

45,642

Net Absorption by Submarket 12-Month Change

Yonge & St. Clair

Yonge & Eglinton

Yonge & Bloor

The circle graph represents the distribution of occupied space within the midtown submarkets as of July 30, 2009.

18-Month Vacancy Trend 1,200,000

772,379

800,000

800,670

1,038,753

GTA Midtown

996,496

1,000,000

943,421

814,795

600,000

400,000 9.2%

200,000

4.6%

4.4%

35,750

2008.1

35,541

2008.2

Total Vacant Area

3.1%

91,548

25,061

2008.3

Vacant Sublease Space

3.9% 40,771

2008.4

2009.1

4.2% 40,060

2009.2

% of Vacant Sublease Space of Total Vacant Space

Almost all vacant space, 96 per cent in GTA midtown is being marketed directly, while the sublet market seems almost non-existent. Over the course of the last 18 months, GTA’s midtown sublet ratio ranges between 3.1 per cent and 4.6 per cent, with the exception of Q4 2008, well below the GTA office market average of 11 per cent.

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GTA N o r t h GTA North Historical Performance & Forecast 12%

$25

FORECAST 10%

$20 $16.92

8%

$15 6% 4.6%

$10

4%

$5

2%

0%

$0

Vacancy Rate: 4.6%

Net Absorption: 196,679

Asking Net Rent: $16.92

Net New Supply: 103,154

Arrows indicate trend observed since Fall 2008.

Vacancy in Toronto’s GTA North market has steadily increased from a record low of 2.8 per cent in Q3 2008, to 4.6 per cent at the end of Q2 2009, reflecting weakening economic conditions and active occupiers. Ignoring the dynamics of supply and demand, asking net rents have increased, and are currently quoted at almost $17 per square foot. This inverse impact is due to the fact that most of GTA North’s newly added space is located in Class A and Class B buildings in the North Yonge Corridor, both which typically have higher asking rents, and pull the average asking net rent to the higher end of the spectrum. We expect this market to continue to soften until the end of 2009, as the vacancy rate increases to 5 per cent. Asking net rent levels are projected to decrease by 3.3 per cent to a level of approximately $16.35 per square foot.

Asking Net Rent by Submarket 12-Month Change Dufferin/Finch (up 6%)

$9.23

Keele Hwy 401 / Yorkdale (down 2%)

$8.74

$11.91

$17.69 $16.82

$11.67

North-Yonge Corridor (up 5%)

$13.47 $17.40

Vaughan (down 8%)

Julne 2008

8

$19.01

June 2009

$15.34

Richmond Hill (up 14%)

The GTA North market’s asking net rent as a whole rose 5.4 per cent from $16.05 per square foot, to $16.92 per square foot during the last twelve months. Rising asking net rents of available space in the GTA’s North market are evident on Yonge Street in the North-Yonge Corridor (up 5 per cent), Richmond Hill (up 14 per cent) experiencing higher rents, followed by Dufferin-Finch (up 6 per cent). Yorkdale and Vaughan have both decreased, 2 per cent and 8 per cent respectively.

Net Absorption by Submarket 12-Month Change The GTA North market experienced positive net absorption over the past 12-month period. Vaughan, the second largest office submarket in GTA North added over 200,000 square feet of occupied space, while the remaining submarkets added or shed minor amounts of occupied space. (22,749)

(5,768)

10,213

14,970

200,013

North-Yonge Corridor

Vaughan

Richmond Hill

Dufferin/Finch

Keele Hwy 401 / Yorkdale

The circle graph represents the distribution of occupied space within the GTA North submarkets as of July 30, 2009.

18-Month Vacancy Trend 800,000 700,000

706,613 649,407

629,341 575,301

600,000

462,972

500,000

427,847

GTA North

400,000 300,000 12.5%

13.6%

13.0%

200,000

10.3% 8.0%

100,000

81,450

34,190

2008.1

7.1%

78,386

2008.2

Total Vacant Area

2008.3

Vacant Sublease Space

33,032

2008.4

64,756

2009.1

91,589

2009.2

% of Vacant Sublease Space of Total Vacant Space

Direct and sublet vacancies in GTA North have been steadily growing for the past three quarters. The sublet ratio has increased during this period, similar to the situation experienced in Toronto’s downtown market, indicating a growing inventory of sublet space. GTA North’s sublease ratio currently sits at 13 per cent, above the GTA-wide average, while GTA North posts the lowest vacancy rate of all GTA suburban areas.

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GTA E a s t GTA East Historical Performance & Forecast $16

15%

FORECAST

$14

$13.04

$12

13%

11%

$10 8.2%

9%

$8 7% $6 5%

$4

3%

$2 $0

1%

Vacancy Rate: 8.2%

Net Absorption: 575,531

Asking Net Rent: $13.04

Net New Supply: 128,291

Arrows indicate trend observed since Fall 2008.

Toronto’s GTA East market has been traditionally pegged as a softer market with above average vacancy and below average asking net rents. As seen in other markets, it also experienced softening market conditions during the last three quarters. Vacancy in this market has increased by 110 basis points between Q3 2008 to 8.2 per cent in Q2 2009. Average asking net rents also decreased by 2.4 per cent from $13.36 to $13.04 per square foot in the same time period. With office employment projected to further decrease, we expect GTA East’s vacancy rate to continue to rise to 8.4 per cent by the end of 2009, with asking net rents to decrease by almost 10 per cent to approximately $11.74 per square foot.

Asking Net Rent by Submarket 12-Month Change Consumers Road (down 2%)

Woodbine & Steeles (up 1%)

Duncan Mill (up 61%)

$12.60 $12.08

$12.30

$13.91

$12.13

Toronto East (up 10%)

$8.92 $8.77

$14.13

Scarborough Town (down 1%)

$12.15

$7.98

$11.64

Don Mills/Eglinton (down 3%)

$13.70

$10.22

$14.19

$12.51

Hwy 404/

$15.27 Hwy 407

$14.17

(down 10%) $16.29

Pickering/Oshawa (up 16%)

June 2008

10

June 2009

Markham (down 13%)

Net rental rates across GTA East were split as five of the nine markets experienced a drop in rental rates, and the remaining four experienced increases. This is reflected in GTA East’s market average, which was virtually unchanged year-over-year (up only 0.5 per cent). The real story in GTA East is the Duncan Mill submarket, which saw more than a 5 dollar per square foot increase in rents (up 61 per cent) which we believe is related to the recently completed landmark Don Mills Centre at the corner of Don Mills and Lawrence.

Net Absorption by Submarket 12-Month Change

(18,728)

6,003

14,835

32,543

63,117

73,804

92,122

180,135 131,701

Markham

Hwy 404/Hwy 407

Scarborough Town Centre

Consumers Road

Don Mills & Eglinton

Pickering / Oshawa

Duncan Mill

Toronto East

Woodbine & Steeles

Occupied space increased by 575,000 square feet during the last twelve month in GTA East. All but one submarket recorded positive net absorption as Markham, Scarborough Town Centre, and Hwy 404/Hwy 407 achieved the top three sports, offering good highway access to tenants, proximity to public transit, and access to large labour pools. Toronto East is the only submarket that noted negative net absorption during the last 12 months.

The circle graph represents the distribution of occupied space within the GTA East submarkets as of June 30, 2009.

18-Month Vacancy Trend 3,500,000 3,038,571

3,000,000

2,883,118

2,840,629 2,474,491

2,868,386

2,595,710

2,500,000

2,000,000

1,500,000

1,000,000

500,000

9.7%

9.7%

294,905

2008.2

Total Vacant Area

3.4%

3.8%

84,255

98,570

2008.3

2008.4

Vacant Sublease Space

5.5%

5.9%

157,917

168,953

2009.1

GTA East

2008.1

274,743

2009.2

% of Vacant Sublease Space of Total Vacant Space

GTA East, similar to GTA midtown has bucked the sublease trend with 5.9 per cent of all vacant space currently being marketed as sublease space, well below the GTA-wide average. Nevertheless, sublet space has doubled in the GTA East market since it bottomed in Q3 2008, while direct space has only increased by 13 per cent.

11

GTA We s t GTA West Historical Performance & Forecast $18

14% $14.91

$16

FORECAST

12%

$14 10% $12 8%

$10 6.2% $8

6%

$6 4% $4 2%

$2 $0

0%

Vacancy Rate: 6.2%

Net Absorption: 861,245

Asking Net Rent: $14.91

Net New Supply: 815,232

Arrows indicate trend observed since Fall 2008.

Contrasted with GTA Downtown, GTA West has experienced and continues to experience the most construction activity, delivering more than one million square feet of new, state-of-the-art product into softening market conditions. Combined with existing office space that continues to be added to the market due to company’s needs to reduce staff, we expect excess space to take some time to be absorbed. For the time being, GTA West will provide those searching for space with additional options. Vacancy currently sits at 6.2 per cent in the market, a level seen a year ago, but up 160 basis points from two quarters ago. We project vacancy will continue to rise to 7.5 per cent by the end 2009, and as vacancies rise, occupancy costs are expected to decrease by 6 per cent from $14.90 per square foot to $14.00 per square foot.

Asking Net Rent by Submarket 12-Month Change Sheridan (down 2%)

Airport Corporate Centre (up 8%)

Oakville $18.54 (down 12%) Meadowvale (up 3%)

$15.50

$14.73

$16.55 $16.39

Airport East (up 1%)

$15.95

$16.81

$13.62 $13.43 $14.17 $12.50

$15.08

$14.68 $12.94

$11.96 $12.94

$17.06

Mississauga City Centre (no change)

$17.07

$13.90

$10.59 $12.41

$15.07

12

Brampton (up 15%)

Burlington (down 3%) Cooksville (up 17%)

June 2009

Bloor / Islington (down 3%)

$14.07 $14.64

Hwy 401 Hurontario (up 7.5%)

June 2008

Airport West (up 4%)

The net asking rate in GTA West has remained steady since 2008, decreasing just 0.5 per cent from $14.99 per square foot to $14.91 per square foot. We believe this is due to the fact that five of its twelve submarkets experienced declines, six increased and one was left unchanged. The Cooksville submarket rose most significantly up 17 per cent, while the largest reduction was seen in Brampton experiencing a decline of 15 per cent.

Net Absorption by Submarket 12-Month Change

(251,717)

(32,192)

(10,794)

6,625

7,473

34,078

66,334

98,877

98,892

143,856

370,294 329,519

Airport West

Hwy 404/Hurontario

MCC

Oakville

Sheridan

Meadowvale

ACC

Cooksville

Airport East

Brampton

Burlington

Bloor/Islington

The largest decrease in occupied space over the past 12 months was seen in the airport East submarket which gave back 251,717 square feet of space. The airport West submarket that experienced the largest gain for the second year in a row, absorbing 370,294 square feet, countered this.

The circle graph represents the distribution of occupied space within the GTA West submarkets as of June 30, 2009.

18-Month Vacancy Trend 3,000,000 2,736,193

2,820,306

2,766,642 2,435,412

2,500,000

2,286,873 2,045,380

2,000,000

1,500,000 20.3% 15.0%

1,000,000 11.4%

500,000

313,126

2008.1

14.2%

12.8%

352,960

2008.2

Total Vacant Area

342,464

2008.3

Vacant Sublease Space

414,863

2008.4

346,011

2009.1

15.9%

447,306

2009.2

% of Vacant Sublease Space of Total Vacant Space

GTA West

The GTA West market continues to quote the highest sublet ratio in Toronto at 15.9 per cent, although it is off it’s high of 20.3 per cent observed in Q4 2008. This, despite the fact that sublease space has increased over the same time by almost 8 per cent is caused by the growth of total vacancy rates by almost 800,000 square feet, or 38 per cent.

13

Gloss a r y o f Te r m s

Office Inventory

Available Space

The sum of net rentable area in office buildings with more than 10,000 square feet of office space. Buildings owned and occupied by the government are not included.

Space that is available for lease and may or may not be vacant. It includes both head lease (direct), and sublease space.

Net New Supply Change of office inventory associated with a given time period.

Office Employment According to The Conference Board of Canada office employment consists of workers employed in the following industries: Finance, Insurance & Real Estate; Commercial Services and Public Administration.

Availability Rate The amount of available space divided by the building’s inventory base.

Vacant Space Space that is available immediately and physically unoccupied. It includes both head lease (direct), and sublease space.

Vacancy Rate Occupied Space

The amount of vacant space divided by the existing building’s inventory base.

Office space physically occupied by companies, not available to lease.

Vacant Sublease Ratio Net Absorption

The percentage of vacant sublease space in relation to total vacant space.

Change of occupied space associated with a given time period.

Average Asking Net Rent The dollar amount requested by landlords for direct available space (not sublease), expressed in dollars per square foot per year.

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Colliers International represents property investors, developers and occupiers in local, national and global markets. Colliers International offers a full range of property solutions: Brokerage Services Commercial Leasing Corporate Services

Industrial Sales & Leasing Investment Sales Property & Facilities Management

Research & Consulting Services Retail Services

Our Property Solutions Service All Property Types: Office Industrial

Investment Retail

Multi-Family Hotels & Leisure

Technical Facilities

Our Strategic Partners:

Colliers International Contacts John Arnoldi

Duerten Lindenbeck

North Office

Managing Director

Senior Research Analyst

245 Yorkland Blvd., Suite 200

Office Practice Group,

416.643.3764

Toronto, Ontario

Toronto

[email protected]

Canada, M2J 4W9 416.492.2000

416.643.3733 [email protected] Scott Addison

Ian Thompson

Downtown Office

Executive Managing Director,

Research Analyst

One Queen Street East, Suite 2200

Toronto

416.643.3765

Toronto, Ontario

416.620.2800

[email protected]

Canada, M5C 2Z2 416.777.2200

Mary Mowbray

West Office

Manager,

185 The West Mall, Suite 1600

Retail Practice Group

Toronto, Ontario

416.643.3740

Canada, M9C 5L5

[email protected]

416.626.1600

To view this report online, visit: www.colliers.com/toronto This report and other research materials may be found on our website at www.colliers.com/toronto. Questions related to information herein should be directed to the Research Department at 416.777.2200. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers Macaulay Nicolls (Ontario) Inc., Brokerage © 2009 is an owner member of Colliers International, a worldwide affiliation of independently owned and operated companies.

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