1Q15 DOWNTOWN CALGARYMARKET OVERVIEW

Office Vacancy Rates (%)Calgary CBD & by Class 1Q15

Downtown OfficeClass AA, A, B & C Overview

Total Buildings: 147

Class AA: 17

Class A: 30

Class B: 21

Class C: 79

Office Vacancy Rates (%)Calgary CBD & by CBD Submarkets 1Q15

Class C: 79

Total Rentable Space: 41.02 M SF

Under Construction: 3,827,500 SF

Headlease Vacancy: 6.3%Sublease Vacancy: 4.8%

Total Vacancy: 11.1%

1Q15 Absorption: -1,159,100 SF

YTD Absorption: -1 159 100 SFHistorical Net AbsorptionDowntown Calgary YTD Absorption: -1,159,100 SF

11.1%, Up from 8.3% in 4Q14

Vacancy

-1,159,100 SFDown from -561,700 SF in 4Q14

Absorption

4Q14 1Q15Lease Rates

Downtown Calgary

4Q14 1Q15Class AA: $37.50 $33.80Class A: $30.15 $26.70Class B: $22.25 $21.70Class C: $17.35 $16.85

Largest Tenants

Shell

Chevron

Shaw Communications

Enbridge Inc

Large Blocks

Cenovus

Encana

Syncrude

AMEC

CNRL

Devon

Talisman Energy

Conoco Philips

Imperial Oil

g

Total

BP

Telus

MEG Energy

ERCB

StatOil

Pengrowth Energy

Enerplus

Husky OilCalgary City Centre Bankers Hall - West Bow Valley Square IV 150 – 9th Ave

Market Overview Contact:Michael Gigliuk, BComm (Fin.)Vice President, AssociateDir: 403-444-5662Mob: 403-464-7576mike@nkfdcalgary.com

Source: Newmark Knight Frank Devencore -Calgary

2rd Avenue & 2nd Street SW159,460 SF, Flrs 4-9$60.00 - $65.00 Gross

888 – 3rd Street SW107,334 SF, Flrs 11 -16$58.21 Gross

250 – 4th Avenue SW152,561 SF, Flrs 18 - 30$50.95 Gross

150 – 9th Avenue SW287,253 SF, Flrs 12-28$45.00 to $50.00 Gross

736 – 6th Avenue SW, Suite 2020Calgary, AB T2P 3T7

Newmark Knight Frank Devencorewww.devencorenkf.com

NKFD CORPORATE OVERVIEW

During the first quarter of 2015, the Downtown Office Market endured its worst quarterly demand in history when well over 1 million square feet of office space was added to the already swelling vacant inventory

The first quarter 2015 survey by, Newmark Knight Frank Devencore recorded negative absorption of 1,159,100 square feet. The result is the worst negative demand quarter recorded in market history. As a result of the increase in vacant square footage the vacancy rate increased by 2.8% during the first quarter. Coupled with the negative absorption results from the last quarter of 2014 of minus 561,700 square feet, the 2 quarter total already surpasses the worst absorption year on record which occurred in 2009 at negative 1,625,000 square feet. As is normally the case the lower quality buildings Classes B and C fared th t i t f t l i t 5 7% d 2 4% ti l Th Cl AA t l

Who We Are

Newmark Knight Frank Devencore (NKFD) isCanada’s largest corporate real estate advisorexclusively representing office industrial and the worst in terms of quarterly vacancy increases at 5.7% and 2.4% respectively. The Class AA quarterly

vacancy rate was up by 1.6% and Class A inventory buildings had an average vacancy rate increase of 1.8% (refer to table #1 below).

When the first quarter survey is separated by the increase in headlease and sublease vacancy, the square footage coming on market was virtually evenly split at 576,600 square feet for headlease and 582,500 square feet for Sublease.

Some historical trends were analyzed and yielded some interesting results;a balanced Landlord Tenant office market in Calgary is widely considered to be in the 8% to 10% vacancy range A balanced market results in Tenants having a reasonable number of office leasing options to

exclusively representing office, industrial andretail space users.

INDUSTRY SPECIALISTS

• Leading global corporate real estate consulting services

range. A balanced market results in Tenants having a reasonable number of office leasing options to choose from and Landlords are able to achieve rents with a reasonable return on the investment in the property. The 40 plus year historical average vacancy rate in downtown Calgary is11.5%, or what would be considered a healthy market, slightly in favour of the Tenant. Thus in the long term, the standard supply, demand and price competitive forces are effectively at work pulling the vacancy rate towards a balanced level. However, due to the dramatic positive and negative shifts in office demand, the Calgary downtown market has been balanced only +/- 15% of the time since the early 1970's. Since then, the market has been in favour of the Tenant the majority of the time. The last 20 years has seen a more even split between Landlord and Tenant markets. More recently, over the last 10 years, Landlord market conditions have prevailed the majority of the time, up to the end of 2014. The near term trend looks to be

turning back towards the Tenant and will continue until the Oil and Gas market fundamentals improve

• Offices across Canada and in 340 cities around the world

• Global team of over 11,000 professionals

Newmark Knight Frank DevencoreCanadian Office Coverage

turning back towards the Tenant and will continue until the Oil and Gas market fundamentals improve.

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