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

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Partnership. Perormance.

FALL 2013

Avison Young Commercial Real EstateInvestment ReviewCanada & U.S.


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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 24New 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

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Canada Overview

Healthy market fundamentals continue to drive investment activity inCanada. Slightly more than $14.4 billion (CAD) worth of commercialreal estate assets (office, industrial, retail, multi-residential and land,greater than $1 million) traded in the first half of 2013 up $1 billion or8% compared with the first half of 2012.

Led by industrial transactions, Torontos $6.5 billion was the highestinvestment dollar volume in Canada up 15% compared with the firsthalf of 2012 and capturing 45% of the national total. Toronto led in everycategory except land. Active land sales helped Calgary ($2.2 billion / +4%

/ 15% share) displace Vancouver ($2 billion / -20% / 14%) from one yearago for second position. Land sales also boosted Edmonton ($1.6 billion

/ +28% / 11%) past Montreal ($1.6 billion / +46% / 11%), which saw asignificant uptick in multi-residential sales. Despite a surge in industrialtrades, Ottawa ($618 million / -29% / 4%) remained below the $1 billionmark.

Nationally, industrial sales outpaced office with 24% of total first-half investment dollar volume. In all, $3.5 billion worth of industrialproduct sold the greatest year-over-year increase at 92%. Industrialsales increased in every market. While Ottawa saw the most notableimprovement (+351%), Toronto recorded the largest industrial dollarvolume $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 billionin the first half of 2012, falling everywhere except Montreal (+77%) and

most sharply in Vancouver (-70%). Toronto was the most active officemarket, as sales reached $1.8 billion.

Land was in demand (especially in Western Canada) with first-half salesof $3.1 billion (22% share) up $925 million (42%) over 2012. Calgary wasthe hottest land market as sales jumped 249% to $902 million, 30% ofthe Canadian total. Retail transactions increased a modest 3% over 2012to $2.3 billion (16% share). The eastern markets (Toronto, Ottawa andMontreal) were busiest, combining for $1.6 billion worth of retail trades two-thirds of the national total. Toronto garnered $1.3 billion (55% ofnational 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 volumewith $986 million (44% of national total).

Though capitalization rates (cap rates) are lower on average than oneyear ago, further interest rate hikes may moderate or even signal the endof cap-rate compression for some property types. Cap rates are lowest formulti-residential investments and Vancouver yields the lowest cap ratesin every asset category except retail (tied with Toronto).

Even if the interest rate-sensitive REITs take a pause from their frenziedbuying, the void will more than likely be filled by pension funds andprivate equity players, who in some instances have lost out to REITs fortop-tier assets. For 2013, investment volume is poised to match or exceed2012s record of $28 billion.

U.S. Overview

In Avison Youngs U.S. markets, commercial sales rose during the fhalf of 2013 compared with the first half of 2012 primarily on tstrength of multi-residential asset dispositions. Sales volumes for offiindustrial, retail and multi-residential properties reached $77.5 bill(USD) by mid-year 2013, compared with $60.3 billion for the same periin 2012, a 28% increase. Three stand-out markets comprised 47% ofsales volume in the U.S.: New York ($14.6 billion / +59% / 19% share), LAngeles ($11.3 billion / +54% / 15% share), and Washington, DC ($1billion / +107% / 14% share). Other markets that registered notable ye

over-year changes in volume included Las Vegas (+73%), Orange Cou(+66%), Atlanta (+63%) and San Mateo (+56%).

Multi-residential and office sales comprised 79% of all sales volumby mid-year 2013. Multi-residential sales showed the most markimprovement, jumping to $31.9 billion in the first six months of 20(+88%) from $16.9 billion for the same period in 2012. All Avison Youmarkets, with the exception of four (Boston, -22%; San Francisco, -21San Diego County, -3%; Raleigh-Durham, no change), recorded gain multi-residential sales volume. The leaders were San Mateo, whincreased from $56 million to $611 million in volume (+990%) aWashington, DC, increasing from $1.7 billion to $7.6 billion (+355%).

Overall office sales volume rose during the past year, reflecting strengthenmarket fundamentals in many U.S. cities, climbing to $29 billion in the fsix months of 2013 (+37%) from $21.2 billion in the first half of 2012. N

surprisingly, New York ($9 billion / +76%), Los Angeles ($3.4 billion / +96and Washington, DC ($2.2 billion / -7%) led asset sales in this category as wAtlanta, with overall office sales of $1.8 billion (+515%), and Orange Counwith office sales volume of $1.6 billion (+208%), demonstrated the greatyear-over-year increases.

First-half 2013 sales of retail properties declined by 35% to $9.4 billion fr$14.4 billion in the first half of 2012. Only five Avison Young markets in tU.S. reported any uptick in volume (Raleigh-Durham, +191%; Las Veg+100%; Atlanta, +92%; Pittsburgh, +75%; New York, +3%). Lastly, industsales volume in the first half of 2013 declined slightly compared with fihalf 2012, slipping 7% to $7.2 billion from $7.7 billion. While Los Angehad the greatest volume with $1.2 billion in sales, New Jersey reported tgreatest positive change with $909 million (+138%).

Cap rates in the U.S. moved lower in the first half of 2013 for all as

classes (except multi-residential) and averaged 6.8% compared with one year earlier. Multi-residential cap rates are the lowest (although thare experiencing upward pressure) on average for all of Avison YounU.S. markets. Of note, cap rates for office product fell significantly in Da(-160 bps), New Jersey (-140 bps), Orange County (-140 bps) and San DieCounty (-110 bps).

Look for further improvement in the second half of 2013, with overall savolume likely to exceed 2012 levels. Office sales should be led by gatewand energy-driven markets with improving fundamentals, and muresidential sales may begin to cool due to the increased developmeoccurring in some markets.

Investment capital fows into Canada and U.S. markets, deying initial interest-rate hike

Canada has exceeded pre-credit crisis investment dollar volumes and pricing for most asset categories, while improving property marfundamentals continue to fuel investment activity in the U.S. There is no evidence that the recent rise in interest rates slowed activity on eithside 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 ratsensitive real estate investment trusts (REITs) - taking a break from their insatiable buying spree.

Canada & U.S. Commercial Real EstateInvestment Market Overview

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Avison YoungCommercial Real EstateNewsletter (Canada,U.S.)

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Followingseveralyearsof lesstha n7% v a cancy,N orthernVirginias22-msfRosslyn-Ballston(R-B)Corridorsawvacancybegintoclimbin 2011andreach15%b ythe fi rst q ua rterof 2013.Manyfactorscontributedtothisdramaticchangeandwilllikelytestthemarketforyearstocome.

TheconsolidationrelatedtotheBaseClosure andRealignmentl egi s la t i on of 2005(BRAC)whereindefenseagenciesvacateleasedspaceinthe private-sectormarketandmovetogovernment-ow ned fa ci l i ti es w a s to ha veb een com pl eted i n2011.Theprogramwillnowcarryonatleastthrough2015withsome2msfofadditionalmove-outsplannedinthissubmarket.4040NorthFairfax

Driveisaprimeexample.A back-officefunctionforthe DepartmentofDefensevacatedtheentire184,000-sfbuildingattheendof2012andmovedtoaneighboringsubmarket.

Newdevelopmentactivityiscurrentlyoutpacingabsorption.TheR-BCorridors10-yearaverageannualabsorptionis273,000sfandbytheendof2013,538,000sfofspeculativeconstruction(nearlytwoyearssupply)isslatedtobe deliveredinasinglebuildingat1812NorthMooreStreet,beingdevelopedbyMondayProperties.

Thatbeingsaid,ownersofnewbuildingscanexpecttoattractafairshareoftenants.Asignificantdichotomyexistsbetweentheperformanceofnewerpropertiesandolderonesbeyondthegeneralflight-to-qualitytrendalsoatplay.The22newestbuildingsintheR-BCorridor,whichweredeliveredbetween2002and2012,averaged424,000sfofabsorptionannuallyduringthatperiodandboastedan8.6%vacancyrateatyear-end2012,comparedwith14.9%forbuildingscompletedpriorto2002.Ablelandlordsarerenovatingorrepositioningolderassetstohelpthemstandoutorconvertingthemtootherusessuchasmulti-residentialprojects.

AdditionalmarketchallengesincludeMetrorailsSilverLineextensionintoTysonsCornerwhich,whencompleted,willcreatemoreaffordableleasingopportunitiesforoccupiersseekingMetrorail-servedlocations.Thereisalsoapullback,beyondBRAC,fromfederaltenantsduetoamandatetoincreasespace-useefficienciesandpendingfurthertightening,fromgovernmentcontractorsaswell,asaresultofsequestrationsspendingcuts.Similarly,spaceutilizationratesarefallingamongprivate-sectortenantsasworkculturechangesbroughtaboutbyayoungerworkforceandtechnologyareleadingtomoredenselypacked,open-workspacefloorplans.

DespitetheR-BCorridorsmanydesirablequalities,itisexpectedthatthesemarketinfluenceswillleadtoaprolongedunderlyingvacancy,especiallyinclassBbuildings.TheR-BCorridorislikelytoexperienceintensecompetitionforviabletenantsfortheforeseeablefuture.

Washington, DC

Recent LeaseTransactionsVAData, Inc., Ashburn(industrial) 200,000sTNS, Inc., Reston(oce) 120,000s

NorthernVirginiaCommunity College, Fairax(oce) 84,900s

PacifcArchitects andEngineers, Courthouse

(oce) 71,100sLevel 3Communications, Tysons Corner

(ocerenewal) 64,100sArlingtonPublicSchools,Arlington(oce)62,300s

AlionScience& Technology, Alexandria(ocerenewal) 57,300s

Recent ExclusiveLeaseListingsTrinityCentre1-4, TrinityParkway, Centreville

(oce) 488,200s

5911&5971KingstowneVillageParkway,Alexandria(oce) 304,000s

3150Fairview Park Drive, Merrifeld(oce) 252,600s

10740ParkridgeBoulevard, Reston

(oce) 215,700s8609WestwoodCenterDrive, Tysons Corner

(oce) 159,300s11790SunriseValleyDrive,Reston(oce)139,500sRecent PropertiesSold1900-1902Campus Commons Drive, Reston

(oce) 239,600s10740ParkridgeBoulevard, Reston

(oce) 215,700s

8609WestwoodCenterDrive, Tysons Corner(oce) 159,300s

10800-10802ParkridgeBoulevard, Reston(oce) 121,700s

9990Fairax Boulevard, Fairax (oce) 93,000s607HerndonParkway, Herndon(oce) 78,300s

Avison Youngacted on behalothebuyer inthepurchaseo10740 ParkridgeBoulevard

in May 2012and hassincerepresented thenewlandlord in threelease transactionstotaling170,000s.

In late2012, 4040North Fairax DriveelttheeectsoBRA C when t he ent i re bui ldi ngwasvac at ed.Renovationsareplanned in an eortto better attracttenantstobackfllthespace.

Rosslyn-Ballston Corridor facinga new reality

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Theunendingwaveofmulti-residential developmentt h at t o ok p l ac e i n S o u t hF l ori da dur i ng r e cent ye a rs

broughtwithit someconcernastowhetherthemarketcouldha ndle s uchr ob us ta ct i v ity.

As the SouthFlorida BusinessJournal r e p or te d r e ce nt l y,

developmentactivityhasbeenstrongandexpertsbelievethemarketisreadyforit.

Oneof thoseexperts,Alliance

Re s ide nt ia l chi e f op e ra t i ngofficerBrad Cribbins,pointedo u t o n e t r e n d f u e li n g t h e

marketdemand:Muchof whatisgetting builtismidrisedowntown/urbanbuildings.Whatsdrawingpeopleto thatparticularbuildingtypeis mobility. Headds thatthe25-to35-year-oldgroupisredefininghow longtheywantto betieddownto ahome.

Furthersupportingthe claimthat demandin themulti-residentialmarketremains

healthyisCVRRealtysreportthatSouth Floridaisonpaceto surpassthe100proposedcondomi ni um de v el op me nts thr es hol di n2013wi tha s m a nya s 15 condomi ni umprojectsalreadyunderconstruction.Most oftheseprojectsare midrisedevelopments

ne a r thr iv i ngur b ana r e a s .Addi ngthe s e condotota ls tothe b r oads cop e ofS outhFloridasmulti-residentialdevelopmentboosts thelocal marketto thetop ofmost

metrosnationwide.

Additionally,accordingtoMulti-HousingNews,atyear-end2012,theSouthFloridamarket

hadvastlyoutsoldits shareofmulti-residentialdevelopmentsitescomparedwiththerestofthe country,withmorethan $315millioninsales(comparedwith second-place

LosAngelesatmorethan$108million).

TheSouthFloridasitesseeingthemostactivityseemtobe infilllocationsintheprimary

s ub ma r kets .Once the ne ws up p lyhi ts the m a r ke t,i tdoe s notta ke l ongtos e l l .Asanticipated,classAinventoryisstillexpectedto betheproduct tobeat.Reportsshow

thatbrandnewproductsellsveryquickly,withthemajorityofthehighlycovetedprojectsstillattractingall-cashbuyersasthetopbidders.

Mostoftheregionsexpertsbelievethemarketshouldmaintainasteadyg rowthrateasconstructionloanshavebecomeeasierto obtainandcapitalfrom secondarymarkets

isstartingto becomeafactor.Foreigninvestment,especiallyfromLatin America,alsoremainsasastrongcomponentof privatecapitalwithmoreoverseasinterestgrowingbythequarter.Simplystated,the sustainedlevelofactivityacrossthemulti-residential

marketseemstoindicatethatthe sectorshouldremainoneof thehottestcommercialmarketsinSouthFlorida.

Viewo Sunny Isles, Florida - hometomany oSouthFloridasmarqueecondominiums.

Recent LeaseTransactions

CastoInvestmentsCompany,LLP(retail)126,400s

LNR PropertyCorporation(retail) -28,100 s

InBoundCall Experts, LLC (ofce) 26,500s

TNHYIF REIV Kilo(ofce) 16,700s

LFC Development, LLC (ofce) 12,900s

BocaR &DProject(ofce) 12,600s

MSEastchester, LLC (retail) 12,300s

BocaR &DProject7, LLC (ofce) 10,500s

Recent ExclusiveLeaseListings

3998FAUBoulevard, BocaRaton(ofce) 283,900s

5900N.AndrewsAvenue,Ft.Lauderdale(oice)215,000s

100W.CypressCreek Road,Ft.Lau derdale(oice )215,000s

8051CongressAvenue,BocaRaton(ofce)160,000s

1875NWCorporateBoulevard, BocaRaton

(ofce) 123,800s

900BrokenSound, BocaRaton (ofce) 120,700s

1100, 2200&2100Park Central Boulevard,

Pompano Beach(ofce) 112,500s

1300Sawgrass CorporateParkway, Sunrise

(ofce) 106,600s

3201N.UniversityDrive,CoralSprings(ofce)105,900s

150S.PineIslandRoad,Plantation(ofce)102,000s

2307W. BrowardBoulevard, Ft. Lauderdale

(ofce) 66,900s

604-622BanyanTrail,BocaRaton(ofce)65,000s

141NW20thStreet, BocaRaton(ofce) 61,800s

Recent PropertiesSold

Stearns Bank (ofce) 14,200s

Recent SalePropertiesListed

604-622BanyanTrail,BocaRaton(ofce)65,000s

6501&6531Park oCommerceBoulevard,

BocaRaton(ofce) 50,900s

900BrokenSound, BocaRaton(land) 17acres

TheTradeCentre South building, locatedin Fort Lauderdale, continuesto attract

high-end ofcetenants.

South Florida

Multi-residential development leads market


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Ne wl y founded te ch-focus edcompanieshave specificneedsi n c h oo s in g a l o ca t io n : p u bl i ct r a nsp or tat i on, downtown a cce ss ,

affordable living accommodations

and,of course,accessto inexpensiverealestatebeitof fice,laborflexible

s p a ce .Ye a r s a go, E a s tC a m b ri dgeb e cam e one ofthe wor l ds l a r ge s t

l a unchp a ds for s ta rtup s a ndte chs.Theareameteverydemandincluding

MI T ,one of the l a r ge stge ne r a torsofstartupsin thenation.Today, with

EastCambridgerentsleadingGreaterBos ton, m a nys ta r tups wi l l ne e d

alternativelocationoptions.

Therelocation patternsof theseyoung, nimbleand technology-drivencompaniesareexplainedbythe decisionsoftheir globalcorporatecounterparts,suchas Google

andMicrosoft.In aneffort tocoexist,industry behemothseffectsupplyand demandconstraintsuponsmaller,youngerfirms.Hopingto capitalizeonthehumancapitalthat

issocriticaltotheircorebusiness,theseglobalcompaniesoccupyrealestateinlocations

densewithstartups.As corporationsabsorbspacesupwardsof200,000 sf,themarkettightens.Theareasbecomelessaffordablefortheverytenantswhocreatedthed esireto

enterthemarketearly-stageandtechventures.

In1995,office spacewasrentingin themid$20s psfinEast Cambridge.Asrentshavedoubledand,in somecases,tripledtherehasbeena tremendousshift.Startupsand

techsbegantakingspaceinthe SeaportDistrictin2009.DubbedtheInnovationDistrictbyBostonMayorThomasMenino, theSeaport,withitsvibrantlifestyleand lowerrents,

hasattractedmanysmallthriving companies. Inrecentyears, however,$25psf rentshavebecome$38 psfrents.Availabilityhasdropped withthe additionof companies

rangingfromLife IsGood toVertexPharmaceuticals.Tenantsnearingleaseexpirationsfaceproposalsthatareasmuchas30%higher thantheircurrentleaserates,sothecycle

continues.

WithtightmarketsinSeaportandCambridge,startupsandtechs areseekingrentrelief.Itisexpectedthat companieswillbeattractedto theSouthStation andNorthStation

submarkets,whererentscanstill befound startinginthe high$20spsf. Manyshouldconsiderthe financialdistrict.Although previouslytooexpensive, thehigh vacancy

stemmingfromthe GreatRecessionis providingopportunitiesforaffordable classB

space.CompaniessuchasPayPal(aneBaysubsidiary)have takenadvantageoftheglutoflower-floorvacancywithinthefinancialdistrictsclassAhighrises.Asitturnsout, early-

stageandtechnology-driven companiesareprovidedwith moregeographicoptionsthanever;gonearethedayswhen EastCambridgewastheonlychoice.Therealquestion

is:whatsubmarketwillholdthe crownasBostonsinnovationhubin fiveyearstime?

Recent LeaseTransactions

CaliperLieSciences (ofce/R&D) 198,300s

athenahealth, Inc. (ofce) 83,000s

EmersonHospital (ofce/medical) 80,800s

PayPal (ofce) 62,800s

Proto-PacEngineeringInc. (industrial) 45,900s

A.I.M.MutualInsuranceCompanies(ofce)34,500s

Zwicker&Associates PC (ofce) 34,400s

AcaciaCommunications (ofce) 28,200s

VecnaTechnologies, Inc. (ofce) 26,600s

TeraDiode, Inc. (industrial) 24,500s

Sotax Corporation(ofce) 21,900s

Park PlaceInternational (ofce) 17,800s

VantagePartners, LLC (ofce) 16,200s

MaidPro FranchiseCorporation(ofce) 13,900s

Crunchtime!InormationSystems,Inc.(ofce)13,700s

LexingtonEyeAssociates(ofce/medical)12,200s

FlexionTherapeutics (ofce) 11,800s

SmartDestinations (ofce) 10,900s

Recent ExclusiveLeaseListings526MainStreet, Acton, MA(ofce) 36,000s

Recent PropertiesSold221BakerAvenue, Concord, MA(land) 6.3acres

Recent SalePropertiesListed

354&356MountainVie w Drive, Colchester, VT

(ofce) 110,400s

393FortuneBoulevard, Milord, MA

(ofce/retail) 107,600s

60HartlandStreet,EastHartord,CT(ofce)40,800s

Boston

Musical chairs for startups and techs

BostonsHubwaybicycle rentalnetworkisa valuableamenitytoemployees andresidentsalike.

P ayPal sl easeof 6 2 ,81 4 sfat 1 I nt er nat i onal Placehaschanged theway companiesviewthedowntown market.

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Todays 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).AccordingtoStatistics Canada and theU.S. Bureau ofLaborStatistics,Gen Y represents approximately 35%and 34%ofthe Canadian and U.S.labour forces,respectively.Educated and tech-savvy, theyaretransformingthe workplace,physically andpsychologically.

For decades,officedesigns changed little,withtraditional privateoffices,cubicles and meetingrooms.In the1990s,personal computers,mobilephones and theInternet brought dreams ofapaperless officeand hotelling.Still,over thepast20years,officespacelooked much thesame.

Enter Gen Y:today,CEOs arein cubicles and thereis a new business glossary:distributed workforce hiring regardless of geography;BYOD bringyour own deviceto work;and ROWEresults-only work environment.Smart phoneshave becomevirtual desks,offering unifiedcommunicationsacross platforms and media.Accordingto CTIA The Wireless Association,American data usagefrom July 2011 to June2012increased 104%from the previous year.Work is now mobileand,when it comes to office

premises,less is more.Gen Ys work characteristics (moreflexibility,flathierarchy,mobiledevices and social networking)and businessesfocus on cost reductions havechanged theofficelandscapetoward open plansand a collaborativework environment.Erodingwork-lifeboundaries means work is no longerwhereyou go,its what you do.SinceGen Ywillbecomethe dominant groupin theworkforce,businesses are adaptingto attract toptalent.Ciscos Connected Workplaceis a big drawwith new recruits,wheremany staffdont have

assigned workplaces a trend evident not onlyin new,but also existingbuildings.In theiconic1960s-era TDCentrein Torontos financial core,TDBank is retrofitting20storeys of old officeswith an array offlexible work areas.Elsewhere,Deloitte introduced the Deloitte Journey,replacingassigned desks with shared workspaces.In contrast, Yahoo! clearly values face-to-face interaction,recalling work-from-homeemployees back to theofficein a bid to rebuildthecompetitiveadvantageit oncehad.

Therise in the urban supply pipelineand thetechnological advances beingoffered aremakingsomelease renewals problematic as tenantseschew in-placerenovations.Traditional officeconfigurations simply wont work. Generally,tenants aretakingless spaceon a per-personbasis as they relocate.A 2012study found thatcorporations arelookingto reduceofficespaceby17%by 2020 leavingolder,obsoletebuildingsready for renovation and adaptivere-use.

As officespaceper employeecontinues to decline,what happens to all ofthe underutilized space,and,indeed, to thetraditional single-purposeoffi ceb ui ld i ng ? Thefutureofoffi ceb ui l d ing smay end upbeing theHackableBuilding aterm coined in global architecturefirm Genslers

recent work on the evolution ofthe NorthAmerican building.A Hackable Buildingis anexistingstructurethat has been updated beyondrecognition to incorporatea diversemix ofusessuch as residential,office,retail,educational andpublic spaces.

Advancing technology and generationalshifts continue to shape the evolution of theworkplace. When these changes have playedout, what will the office of the future look like?Only time will tell.

Avison YoungCommercial Real EstateNewsletter(Canada,U.S.)Spring/Summer 2013

Partnership. Performance.

Generationsandtechnology transformingtheworkplace

CANADA2 Calgary3 Edmonton4 Guelph5 Lethbridge

6 Mississauga7 Montreal8 Ottawa9 Quebec City

10 Regina11 Toronto12 Toronto North13 Vancouver

14 Winnipeg U.S .15 Atlanta16 Boston

17 Charleston18 Chicago19 Dallas20 Detroit

21 Houston22 Irvine23 Las Vegas24 Los Angeles

25 New Jersey26 New York27 Pittsburgh

28 Raleigh-Durham29 Reno30 San Francisco31 South Florida

32 Washington, DC33 About Avison Young34 Avison Young Research35 Our Offices

Avison Young ResearchCanada & U.S. Publications

Turning Inormation into Intelligence

Avison Youngs multi-disciplinary group o dedicated research proessionals works collectively to deliver marketanalysis and insights that drive value in real estate decisions. We translate data into market intelligence to helpour clients strategically solve their real estate concerns and concentrate on what their business does best.

Avison Young regularly produces an array o local, regional and North American market research, including quarterlyand special reports, and annual orecasts. Our research is quoted extensively in local, national, business and globalmedia outlets.

Through Avison Youngs proessionals, our research team engages with a wide variety o corporate, investor andinstitutional clients to conduct customized research, due diligence and market assessments, as well as demographic

and location analysis.Leveraging in-depth knowledge rom our broad services platorm with inormation rom internal proprietary andindependent third-party data-tracking systems, our clients real estate decisions are ully supported by best-in-class, interpreted data true market intelligence.

By November 2012,theWashington metro areas unemployment

ratewas 5.3%,oneo thelowest levels in theU.S.Washingtons

employment gains and other strongindicators beliethe overall

senseocaution that has existed sincemid-year.In 2012,anticipated

vacancies dueto BaseClosureand Realignment o2005 (BRAC),

constrained ederal government leasing,new construction and

private-sector tenant consolidation resulted in a soter real estate

m a r ket .At the s a m e t i m e ,s t r ongte na nt-a v ora b l e condi ti ons

created opportunities or occupiers,and some tenants restructured

leases well in advanceoexpiration dates or signicant savings.

Thenext 12months will bea timeotransition whilethemarket waits

out thebudget impasseand the ederal government implements

new policies regardingspaceutilization, security standards and

energy eciency.Thesenseo uncertainty will persist in early 2013

with deal velocity gradually improvingin thesecond halo theyear.

Ofce

Themetro markets vacancy roseto 13.3%in 2012 rom 12.2%at

year-end 2011,while transaction velocity ell and net absorption

turned negative.Construction increased last year as 3.5ms

was completed,with roughly 65%preleased.Another 4ms is

scheduled to deliver this year.Notably,somesizabledevelopments

werestarted speculatively in 2012.Among them wereMonday

Properties540,000-s 1812North Moore Street in Rosslyn and

Macerichs 530,000-sTysons Tower in Tysons Corner.

With avorableconditions or tenants,renewals still dominated

leasingtransaction activity,including theNational Institutes o

Healths 356,000-slease in North Bethesda and theU.S. Small

Business Administrations 254,000-slease in Southwest DC.

Buckingthe renewal trend wereTNS Inc.,which signed or 120,000

sin Reston,and CorporateExecutiveBoards expansion o109,000

sin Rosslyn.

In 2013,somehistorically tight suburban Metrorail-served locations,

such as Rosslyn-Ballston Corridor and Crystal City,will haveurther

vacancy increases,whileDCs vacancy remains in thesingledigits.

In thelatter part othis year,deal velocity around theregion will

likely begin to accelerate,though many submarkets will remain

oversupplied throughout theyear.

Retail

Washington continued to attract and retain retailers

markets strongdemographics in 2012.In thedowntow

retail perormed well,with national retailers payingu

psin submarkets likeCapitol Hill and even higher i

areas such as Chinatown.Expanding ood concep

supported by a myriad o multi-residential develop

neighborhoods.

In thesuburbs, submarkets such as Clarendon and

Center arematuremixed-useenvironments.Plans or

to coincidewith theextension o theSilver Metrorail

an enhanced live-work-play environment to this c

based submarket.

Industrial

The Washington regions 187-ms market record

absorption and a decreasein vacancy (to 10.1%) in

signicant leases includeNash Finch taking365,000s

Maryland and CuisineSolutions committing to

Northern Virginia.

The regions data center inventory, concentrated

Virginia,is oneo thelargest in thecountry and bo

vacancy rate.Virginias governor recently signed a bill t

sales tax exemptions or data centers,and both the

public sectors areexpected to expand.

Investment

By November 2012,year-to-datesales volumeor oand retail properties was $6.4billion metro-wide.Wh

2009and 2010totals,volumelagged by 24%o what

duringthesame period in 2011.That gapwas expec

beoreyear-end 2012as major sales werecomplete

Constitution Center,which closed or an estimated

in theourth quarter), and as sellers rushed to clo

scheduled capital gains takeefect.

In 2013,thebest opportunities will bein high-qualit

suburban ocebuildings with locations proximateto

LtoR: TysonsTower, Constitution Center, 1812North Moore

Washington,DC

40 Av i son Young2013For e cas t

Region in transition in 2013as sequestration plays out

Avison Young 2013Canada, U.S. Forecast

(2012 Annual Review)

Avison Young2013Forecast 9

0%

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C a l ga r y E d m ont on H a l if a x L e t h br i d ge M i s si s s au g a( T r t s t )

Montreal Ottawa Regina Toronto Vancouver Winnipeg Canada

VacancyRate( %)

Canada OverallIndustrialVacancyRate Comparison

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2013F

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CanadaOverallOfficeVacancyRateComparison

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2013F

VANCOUVER

EDMONTON

CALGARY

LETHBRIDGE

REGINAWINNIPEG

QUEBECCITY

MONTREAL

OTTAWA

MISSISSAUGA

(TORONTO WEST)HALIFAX

TORONTO

CANADA OVERVIEW& FORECAST

OfficeVacancy Forecast 2013:

Increase>20bps

Flat-20to20bp s

Decrease>20bps

Calga

ry

Edmo

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City

MESSAGE FROM THE CEO

2013: A year to position or the utureLookingmuch like2012,minus theMayan end oftheworld

As w eg oto p ri ntw i th ou r2013Forecast,w ea tAv i s on You n garehappytoreportanotheryearo dramaticgrowthandsolidperormancein2012orour company.Weareproudtohavehelped

clientssuccessullytraverseaNorthAmericanrealestatelandscape

thatwasbumpy insome marketsandassetclasses. Weare also

pleasedthatweenabledclientstocapitalizeonrobustgrowthinthe

oilandgasregions,relativestabilityinthe majorcoastalgateway

markets,anda nascentrevivalinindustrialmarkets, thankstoa

manuacturingsectorthatbegantooerglimmersohopein2011.

Weare orecastingasimilar scenarioor 2013,althoughwithout

thedoomsdaypredictions.Againsta globalbackdropo nancial

uncertaintystemmingrom continuingissues withstability in

Europe,a potentialslowdowninChina,the debtceilingandnew

scalclisin theU.S. andpotentialplateauingin Canada,North

Americanrealestatemarketsstillappeartobethemoststablewith

ahealthybalanceoriskandopportunity.

Webelievethattherealestatecommunitywillandshouldposition

andrepositiontotake advantageowhatwilllikelybe ahealthier

andclearerpictureby2014.Thisisnottosaythatweshouldwriteo

2013,orsito nthesidelines.Quitetheopposite:thereismuch tobe

transactedin2013whilestrengtheningpositionsortheuture, as

economicandpoliticalissuesintheU.S. andEuropeseesomeorm

oresolution.

Mosteconomistspredictthat CanadaandtheU.S. willgrowtheir

respectiveeconomies,asmeasuredbygross domesticproduct,at

therateso 2%and2.8%, respectively.Theseratesarestillanemic

andhavesomeobserversworried.However,consideringallo the

economicandpoliticaluncertaintyintheworld,theseratesshould

beconsideredpositiveanddenitelyontherighttrack.

Wh a tw ea tAv i s on You n g h a v eb een a d v i s in g orth ela s tth ree

yearswillcontinuetobeour mantra:staypatient,risk-manageyour

strategyonthe buy-side,andtake advantageoo-marketand

distressedopportunitieswhentheypresentthemselves.Asaseller,

donotbearaidtotakesomeprots.Coreassetsinthemajormarkets

arehighlysought-aterand,thereore,aggressivelypricedwhenup

orcompetitivebid. Multi-residentialand high-endretailarethe

avouredassets,butsignicantoceandindustrialtransactionsare

occurring.Plentyo opportunitiescanstillbe oundino-market

transactions,i oneknowswheretolook. AtAvisonYoung,wehave

beenverysuccessulinhelpingourclientsdojustthat.

Canada:Areweat thetop?

In Canada, the shortage o product (evidenced by REITs buyingportolios and private unds 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 or the domestic economy,

though positive or Canadian institutions going global a trend

that we expect to increase in 2013. These actors, combined with

pervasive condo overbuilding, are resulting in Are we at the top?

questions north othe border.

U.S.:Areweat thebottom?

On the other hand, in the U.S., the early signs oa housing recovery

are triggering the question: Are we at the bottom?. The lack o

development is providing condence or investors making value-

add acquisitions, and core class A product is expensive everywhere.

Thus, as Canada appears to have reached a short-term top in 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 o

capacity to recover and grow.

Leasingadvantagetooccupiers

As we begin 2013, we see that leasing generally remains tilted in

avour othe o ccupier, except in select oil and gas cities such as

Houston and Calgary. Vancouver and Toronto are airly 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

or positive absorption and rental growth when global actors and

benchmarks turn positive and decision-makers nally take action.

However, there is still too much pessimism and uncertainty in the

system or a ull-blown recovery. It wants to happen, but condence

needs to lead the way.

Avison Young2013 Forecast 3

AVISON YOUNG 2013 FORECAST

2012 Annual Review

Commercial Real Estate- Canada & U.S.

partnership. performance.

Mid-Year 2013Canada,U.S.OfficeMarket Report 15

Atlanta Ofce Market

Boston Ofce Market

Duringthe first halfof201 3,Atlantas officemarket was buoyed by improvedeconomic conditions.Thecitys unemployment ratehas decreased to 7.6%,thelowest since theGreat Recession. Professional services and IT firms havebeen expandingtheir officespaceand bringingnew jobs to Atlanta.Healthcare

technology company athenahealth confirmed it will lease75,000 sfat PonceCity

Market,w ith th epo ssibility o fg ro w in g to 120,000sfo ver th eterm o fth elease.

Thehealthcare IT groupwill eventually bring5 00new high-tech jobs t o thecityfrom Alpharetta,GA. Coca-Cola has announced that it will bringits IT center to

Downtown Atlanta,consolidatingmultiplelocations in 275,000sf at SunTrust Plaza

and bringing2,000jobs to thecity.

Thepositive economic improvements and a willingness expressed by firms toexpand haveled to gains in theAtlanta officemarket .Atlanta ended thesecond

quarter of2013wit h a total inventory of143.5msfand a vacancy rateof19.7%.

Thevacancy ratehas decreased 200 bps duringthelast 1 2months.Net absorptionfo r th efirst h alfo f2013to taled 595,445sf ,u pslig htly fro m 410,111sfdu ring th e

sameperiod in 2012.

Atlantas CBDhas also recorded an uptick in rent over thepast year,with averageaskingrents climbing to $20.78from $18.08.Overal l suburban market

rents haveremained flat duringthesameperiod; however,suburban class A rental rates did increaseto $22.51psffrom $22.31psf. CBDclass A marketrents arealso improving.Currently standingat $19.81psf,the rateis thehighest sinceyear-end 2011.Moderate jobgrowth and limited development

areexpected to continuethroughout 2013,leadingto a tighteningdemand for quality spaceand,eventually,to rent growth across theMetro Atlanta

officemarket.

0%

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Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013

Atlanta Office Vacancy Rates

Downtown S uburba n

Bostons office market continued to experience strong leasing velocityin prim e su bm arkets du rin g th e sec o n d q u arter o f 2013, resu ltin g invacancy 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

m arket dec lin in g to 12.5%. Th e CB D saw leasin g velo c ity o f 2.5 m sf , slig h tlyoff last years annual pace of 5.6 msf. Cambridge and the suburban office

m arkets dro pped belo w 20% vac an cy fo r th e f irst tim e sin c e 2008. W ith 5

m sf leased in 2013, th e su bu rbs w ill stru g g le to keep pac e w ith th e 11 m sf leased in 2012.

Quoted asking rents continued to rise, reaching an estimated $24 psf across

th e m etro th e h ig h est level sin c e 2008. Do w n to w n , fu ll-service ren ts

averag ed $50 psf fo r c lass A spac e w h ile tig h ter h ig h rise listin g s, as w ell as

select listings in the Back Bay, exceeded $70 psf. Average suburban rentsreac h ed $22 psf , an in c rease o f $1 psf versu s o n e year ag o , w h ile selec t

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 - w ith m aj o r ten an ts m ig ratin g to th e n ew pro perties, retu rn in g ex c ess sq u arefootage to the market, while landlords continue to trade vacancies. Meanwhile, the limited suburban development is almost entirely

build-to-sui t 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 thiso c c u rs, o ff ic e-u sin g em plo ym en t sh o u ld resu m e its assau lt o n Massac h u settso verall u n em plo ym en t rate o f 6.6%, w h ic h still s its 400 bps

abo ve th e h isto ric lo w o f 2.6% in Oc to ber 2000.

0%

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Q2 2 0 0 9 Q2 2 0 0 Q2 2 0 Q2 2 0 2 Q2 2 0 3

BostonOffice Vacancy Rates

Downtown S uburba n

Avison YoungOfce Market Report

Canada, U.S.(Mid-Year 2013)

Mid-Year 2013Canada,U.S.OfficeMarket Report6

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r l e r e i e t ( f e t) r l e r e i ti l e t ( f )

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Downtown Class A Average AskingRent($psf net) Downtown Class A Average AdditionalRent($psf)

* Rental rates areshown in CAN$ * Rental rates areshown in CAN$

* Rental rates areshown in U.S.$ * Rental rates areshown in U.S.$

U.S.

Downtown ClassAAverage AskingGrossRents

U.S.

Suburban ClassAAverage AskingGrossRents

Canada

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Canada

Suburban ClassAAverage AskingGrossRents

Cana

da

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AYU.S.Marke

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Canada & U.S. Market Highlights

SuburbanClassAAverageAsking Rent($psfnet) SuburbanClassAAverageAdditionalRent ($psf)DowntownClassAAverageAskingRent($psf net) DowntownClassAAverageAdditionalRent($psf)

SuburbanClassAAverageAsking Rent($psfnet) SuburbanClassAAverageAdditionalRent ($psf)DowntownClassAAverageAskingRent($psf net) DowntownClassAAverageAdditionalRent($psf)Canada Overview

Canadas officemarket,at 491million squarefeet (msf) andgrowing,closedthefirst halfof2013with 7.9%vacancy upfrom7.1% at

mid-year 2012,but remaining below therecent recessionary peakof9 .9 %i n mi d-2 01 0 .Hal foft he 1 2 C anadian mar ket s we r e be lowthenational averageand 10posted single-digit vacancy.Thega pinvacancy between Western andEastern markets narrowedduringthelast 12months.Representingtwo-thirds ofthenational inventory,theEastern markets closedthefirst halfof2013with a collectivevacancyrateof8.4%, or +70basis points (bps),with Ottawa thelowest at 6%.ThegrowingWestern markets combined for a vacancy rateof 7.1%(+100bps),with Regina reportinga national low vacancy of5.2%.

Corporations seekingto attract and retain theyoung and highlyeducatedworkforce increasingly livingand workingin urban areashavecreatedcompetition in most downtowns.Corporaterestructuring,downsizingandconsolidations haveraiseds ubleasevacancy in somemarkets,elevatingCanadas downtown vacancy 40bps over 2012to5.6%at mid-year 2013.Thetightest markets areCalgary (4%,+80bps),Ottawa (4.4%,-140bps) andVancouver (4.6%,+130bps).Unsurprisingly,thesemarkets havethehighest averagegross rents for class Aspace,ledby Calgary ($57per squarefoot (psf),a $5.66-psfrise from2012),Vancouver ($52psf,-$2 psf) andOttawa ($47.95psf,-$0.53 psf).

In contrast,new supply outpaceddemandin somemarkets, pushingnational suburban vacancy to10.6%up 130bps sincemid-2012with seven ofthe12 markets below average.Except for LethbridgeandVancouver, single-digit vacancy persists in thesame markets asone ye ar ago. O nce agai n,Re gi na (3 .1 %,+ 1 7 0 bps) hadt he l owe stsuburban vacancy andMississauga (TorontoWest) (13.7%,+130bps)thehighest,while Lethbridge(11.6%) experiencedthe greatest year-over-year swing,spiking350bps.Calgary andRegina havethepriciestsuburban markets with averagegross rent for class Apremises of$37psf,followedclosely by Vancouver ($36psf).

Officespace under construction has increasedby 4.5msf sincemid-2 0 1 2 t one ar l y 2 2 msf(5 3 %pr e l e ase d),wi t h a 6 0 /40 downt own/suburban split.Toronto is thebiggest development market in thecountry,with 7.1msf(49%preleased) one-thirdofthe national total andalsoleads with 5.3msf(47%preleased/41%of national downtowntotal) underway downtown.However,Calgary is narrowly outpacingTorontoon thesuburban front with almost 2msf(78%preleased) underdevelopment accountingfor 23%ofthenational suburban total.

For thesecond halfof 2013,tight conditions will persist in mostdowntown officemarkets as tenants faceerodingspace options andlikely higher rents.Moreoptions will present themselves later this yearandinto2014as new supply comes online.In contrast,morefavourablespace and rental-ratealternatives will becommonplace in selectsuburban markets across thecountry.

U.S. Overview

The10.3-billion-sfU.S. officemarket continuedits bumpy recoveryover thelast 12months andendedthesecondquarter of2013with

an overall vacancy rateof11.7%.

Lookingat Avison Youngmarkets,vacancy rates remainedin thedoubledigits at mid-year 2013,with an overall averagevacancy of14.7%,downslightly from14.8%at mid-year 2012.Nevertheless,16of the20AvisonYoungmarkets reportedlower vacancy rates when comparedto2012.Class Arents averaged$48psfand $27psf (USD) for central businessdistrict (CBD) andsuburban markets,respectively.

San Franciscoagain saw a significant increasein CBDclass Arent thisyear,endingthesecondquarter of2013at $52.50psf,an 11.7%increasefromthesecond quarter of2012,followinga remarkable18%spikeinrents between thesecondquarter of2011and thesecondquarter of2012.Vacancy fell 140bps year-over-year to8.9%.Thehighest CBDclassArents currently arein New York,wherethe $64-psfratewas a 2.3%increasecomparedwith 2012,andin Washington,DC,a 1.3%changeat $56psf.There is currently morethan 43msf under construction,72%of which is in four markets Houston (10.6msf), MetropolitanWashington,DC(7.8msf), New York (7.5msf) andBoston (5.3msf).

Pittsburghs metropolitan area recordedan 8.2% vacancy rateat mid-year 2013thelowest oftheAvison YoungU.S.markets andoneofonlytwoU.S.markets with a total vacancy ratein thesingledigits.AlthoughtheMetropolitan Washington,DC officemarket remains relativelyhealthy (postingan averageCBDvacancy of9.3%at mid-year 2013),theregion was oneoffour U.S.markets tos eeits overall vacancy increase(13.8%,+70bps) over thepast year.New Jersey currently has thehighestvacancy,after experiencinga year-over-year increasein its vacancy rate(20.9%,+30bps),although themarket is headedin a positivedirectionafter posting21.4%vacancy in thefirst quarter of2013.

Elsewhere,Chicagos total officemarket vacancy rateimproved to13.8%at mid-year 2013,down from14.1%a t mid-year 2012.In NewYork,leasingactivity rebounded,but with largeblocks ofspacebeingreturnedtothe market,vacancy roseto12.1%at mid-year 2013.LosAngeles is experiencinga slow but stable recovery with strongleasingactivity,although thevacancy rateclimbed330 bps year over year to16.3%by mid-year 2013.Atlantas elevatedvacancy ratepersistedandendedthesecond quarter at 19.7%,albeit down from21.7%at mid-year 2012;andin South Florida,vacancy improvedfor thethirdstraightquarter to15.4%.TurningtoTexas,Dallas recordeda vacancy decreaseof60bps year-over-year,fallingto15.6%,whileenergy-driven Houstonendedthesecondquarter of2013with an 11.1%total vacancy.

After years ofuneven recovery ledby a handful ofstandout markets,many U.S.markets remain oversupplied.Expect vacancy tostay onits downwardtrajectory through year-end2013and somemarkets todemonstratelandlord-favorableconditions in thecomingmonths.

Ongoing improvement in US commercial real estate market, tight market conditions in majorCanadiandowntownofce markets

Canadas officemarkets,resilient duringandsincetherecession,continueto sport relatively healthy market fundamentals;however,somemajormarkets appear tobesoftening,turning in less-than-stellar performances in thefirst halfof2013.Many major U.S. markets remain oversupplied,with tenant-favouredconditions even whiletours andvelocity haveincreasedandseveral metroareas havemoved intoequilibrium.

Canada & U.S. Market Overview

3Mid-Year 2013Canada,U.S.OfficeM arket Report

Partnership. Performance.

MID-YEAR 2013

Avison Young Office Market Report

Canada & U.S.


5/36Fall 2013 Canada, U.S. Commercial Real Estate Investment Review

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ons

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Commercial Real Estate Investment Volume By Property Type (USD)

Multi-Residential Retail Industrial Office

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B

ons

CanadaCommercial Real Estate Investment Volume By Property Type (CAD)

Land Multi-Residential Retail Industrial Office


Oice Industrial Retail Multi-Residential Land

Oice 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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Calgary Edmonton Montreal Ottawa Toronto Vancouver

Billions

Canada

Commercial Real Estate Investment Volume By Market (CAD)




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Commercial Real Estate Investment Volume By Property Type (CAD)





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% 8.5%

Atlanta

Boston

Chicago

Dallas

Denver

Houston

Las Vegas

Los Angeles

New Jersey

New York

Orange CountyPittsburgh

Raleigh-Durham

San Diego County

San Francisco

San Mateo

South Florida

Washington, DC

U.S.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

CanadaAverage 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%

Office

Industrial

Retail

Multi-Residential

U.S.

Average Capitalization Rates By Property Type(All Markets)





Calgarys commercial real estate investment market once again

witnessed signiicant investment activity in the irst hal o2013. Total dollar volume increased by 4% compared with irst-hal 2012 levels, amounting to almost $2.2 billion. The key driverwas land sales, which totalled $902 million. This total representsan increase o 249% compared with irst-hal 2012 igures;however, a handul o major transactions are responsible or theincrease, including Capital Powers purchase o a 25% interest atthe KBV Shepard Energy Centre or $261 million. The industrial,retail and multi-residential sectors experienced changes o 125%,-78% and -5%, respectively.

The tremendous pace o oice investment sales transactions inthe irst hal o 2012 which exceeded $1 billion in total dollar

volume was expectedly lower in the irst hal o 2013, downroughly 40% to $654 million. Early 2012 was a phenomenalbreak-through period, demonstrating the return o liquidity inthe oice investment market ater a gradual recovery period romthe global economic recession. Oice investment activity is stillstrong and should not be viewed as a declining sector.

Downward adjustments in the pricing o REITs occurred duringthe second quarter o 2013. The threat o declining ederaleconomic stimulus and uture interest rate increases have ledseveral REITs to curtail the amount o equity raised throughcapital markets to und their aggressive appetite or propertyacquisitions. However, this situation has created an opportunisticenvironment or institutional and other non-REIT buyers. It is

anticipated that pent-up demand rom these purchasers willcause investment activity in the second hal o 2013 to outpacethe irst.

Cap rates have shown urther compression in the irst hal o2013. The most notable transaction was the sale o the JacobsEngineering building, located in Quarry Park, which waspurchased by EPIC Realty Partners. This class A suburban oiceproperty represents the second-highest transaction in termso dollar volume ($171 million) and also marks a historicallylow capitalization rate or suburban oice product, at 5.2%(unstabilized.) Although cap rates are not likely to decreaseurther, there is also no evidence to predict they will increase any

time soon or best-in-class assets.

Jacobs Engineering building

Calgary

TOP 5 INV EST ME NT SA LES BY PRI CE

Address Property Type Total Price (CAD) Vendor Purchaser

1 KBV Shepard Energy Centre Land $261,210,344 ENMAX Corporation Capital Power Generation Services In

2 Jacobs Engineering building Oce $171,000,000 KanAm Group EPIC Realty Partners

3Quarry Proessional & Quarry

Parkside A & BOce $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 Oce $110,000,000Credit Suisse Real Estate Fund

InternationalAllied Properties REIT

Calgary Investment Activity(By Property Type)

Calgary Investment Volume

$ in billions(CAD)

Select Average Capitalization Rates


Downtown Class AA Oice 5.7% 5.4%

Suburban Class A Oice 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%

Oice Industrial Retail Multi-Residential Lan

0

1

2

3

4

5

Mid-Y

201

201220112010200920082007

Mid-Year2013

Mid-Year2012

42% 13% Land

30% 53% Oice

17% 8% Industrial

6% 7% Multi-Residen

4% 19% Retail



Edmonton continues to ride the wave o economic

revitalization taking place in Alberta as all majorindicators point towards another year o healthy growthor both the city and the province. Investment volume inEdmonton and the surrounding area or the irst hal o 2013was up almost $350 million compared with the irst hal o2012, reaching $1.6 billion. These numbers are indicative othe cyclical trend that has gripped the market during the lastthree years, with larger investment totals occurring in theirst and last quarters and dropping o during the secondand third. Despite steady growth, particularly in contrast tothe rest o the country, Edmonton has yet to see investmentvolumes top out above the peak rate o $4 billion seen in2007, the height o the most recent Alberta boom.

Cap rates in Edmonton have been decreasing steadily, duein large part to increases in revenue associated with thebuoyant economy. Vendors have been taking advantage othe larger revenue streams and are subsequently requiringmuch higher prices to be convinced to sell, even whileactoring in rising valuations on multi-residential buildings.Cap rates have declined 25 basis points (bps) on average,most notably in irst-tier regional malls where they haveallen 50 bps to 5%, currently.

The most notable transaction in the Edmonton area wasthe sale o Sherwood Park Mall, which was sold into theT&T portol io, containing three adjoining Sherwood Park

properties as well as other holdings in Western Canada. Thissale banked an impressive $180 million, comprising 85% othe retail investment total or the irst quarter and 74% othe irst-hal total. In a distant second place was the saleo Broadmoor Plaza. Originally a mixed-use developmentcomprising our structures, Broadmoor was intended tobe split between oice and warehouse use, but has sincebecome a de acto suburban oice complex based on howit has been used by tenants. This sale brought in $84 millionor 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-Y

201

201220112010200920082007

Mid-Year2013

Mid-Year2012

42% 37% Land

20% 10% Industrial

15% 35% Retail

13% 6% Multi-Residen

10% 13% Oice

TOP 5 INV ESTM ENT SAL ES BY PR ICE


1 Sherwood Park Mall Retail $180,000,000 H&R REIT Primaris Retail REIT

2 Broadmoor Plaza Oce $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.

4RR 211/212 & TR 560

Strathcona CountyLand $39,000,000 Statoil Canada Ltd. MEG Energy Corp.

5 City Square Tower Multi-Residential $38,500,000 Harvey Rosenbloom Mainstreet Equity



The Montreal commercial real estate market was particularly

active during the irst hal o 2013. Sales volume totallednearly $1.6 billion, representing an increase o nearly $497million (46%) compared with the same period in 2012, while thenumber o transactions increased by 10%. This is the second-largest irst-hal dollar volume experienced during the last iveyears. Transaction volume in all asset categories grew, withthe exception o land sales, which declined by 38%. The multi-residential sector experienced the highest sales volume at $537million, which represented a 124% upswing. The retail sectorgrew 11%, accounting or $233 million o the volume, while theoice and industrial sectors enjoyed increases o 77%, to $205million, and 73%, to $434 million, respectively.

Among the ive largest transactions, two were portolios oindustrial and oice buildings and three were multi-residential.The top-priced transaction was a portolio o 18 industrialbuildings and one oice building which were purchased byCominar REIT. The portolio comprised a total area o 1.8 ms, andwas located, or the most part, on the South Shore o Montreal.The second-largest transaction was a retirement home in Pointe-Claire comprising 530 suites, which sold or $200,000 per unit. Thethird most valuable transaction was a portolio o two industrialand three oice buildings acquired by Manulie or almost $80million. Rounding out the top ive were two multi-residentialproperties sold at an average price o $34 million or $125,000per unit.

With previously announced and ongoing transactions in thesecond hal o the year, it is likely that 2013 total sales volumewill surpass the 2012 mark and may exceed the record volumeo 2008. For example, Ivanho Cambridge recently acquired 50%o the Place Ville-Marie, a transaction valued at more than $400million; and the abandoned project o llot Voyageur was sold or$40 million or redevelopment.

Despite the rise in interest rates and slow growth o the economy,all asset classes in the Montreal commercial real estate marketcontinue to oer investment opportunities.

101 Roland-Therrien Boulevard

Montreal



1 Tecton-Cominar REIT Portolio 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-Manulie Portolio Oce/Industrial $79,500,000 Redbourne Properties Manulie Financial Real Estate

4 7460 Kingsley Rd. Multi-Residential $34,900,000 Kingsley Holdings/Trent Holdings Interrent International Properties In

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-Y

20

201220112010200920082007

Mid-Year2013

Mid-Year2012


28% 23% Industrial

15% 20% Retail

13% 11% Oice

10% 24% Land



The nations capital continues to be a sae haven or pension

und advisors, REITs, inancial institutions and otherinstitutional investors looking or stable long-term yields.Investors assets o choice continue to be oice buildings although the industrial market is ahead o 2012 levels as itremains popular with institutional and private local investors.

Allied Properties REITs acquisition o 40-42 Elgin Street inFebruary 2012 or a near-record price per square oot or acore asset continued the trend o recent years. That trendline has extended through the irst hal o 2013. The sale inMarch o 495 Richmond Road by Credit Suisse to Artis REITo Winnipeg demonstrated that well-placed assets with long-term leases could command cap rates hovering in the range

o 6%, and did not need to have Government o Canadaleases in place, as non-governmental organizations (NGOs)with historical longevity and trusted brand-name companiesbecame worthy o the investment communitys attention.

Development sites, both redevelopment properties and rawland, have constituted one o the more volatile asset classesin the latter hal o 2012 and the irst hal o 2013. Servicedindustrial land inside the greenbelt now commands pricesin excess o $600,000 per acre. Small inill multi-residentialredevelopment sites have seen land value prices meet andexceed $40 per buildable oot in some instances, outstrippingthe price points typically paid by Ottawas more seasonedlarger-scale condominium developers.

Ottawas condominium market has certainly slowed in recentmonths. A number o projects have been cancelled outrightas unsold inventories in large-scale projects currently underconstruction remain high. This is one market sector thatstarted to run counter-current to all others in 2013 and bearswatching.

Finally, the sale o 57 acres inside the traic circle at PalladiumDrive or $29 million or a retail power centre development isa testament to the overall strength o 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-Y

20

201220112010200920082007

Mid-Year2013

Mid-Year2012

32% 37% Oice


19% 3% Industrial

14% 12% Land

12% 6% Retail



1Conundrum Capital-Skyline

Commercial PortolioIndustrial/Oce $117,000,000 Conundrum Capital Corp. Skyline Commercial Real Estate Holdings

2 340 Laurier Ave. Oce $75,000,000 Elad Canada Inc. True North Commercial REIT

3 495 Richmond Rd. Oce $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 In

5 Palladium Dr. Land $29,428,500 Taggart Construction Ltd. RioCan REIT



Healthy commercial real estate market undamentals continue to

drive investment activity in the Greater Toronto Area (GTA). Saleso oice, industrial, retail, multi-residential and land properties in theirst hal o 2013 reached $6.5 billion, up 15% over the same periodin 2012 capturing 45% o the Canadian tally. Portolio transactionsboosted sales, and though cap rates remain low, compressionappears to have moderated or some property types.

Industrial sales outpaced the oice sector at $1.9 billion (29% share),recording the greatest year-over-year increase o 112%. GE CapitalReal Estate (GE) and CanFirst Capital were active sellers, collectivelydisposing portolios worth $492 million to PIRET and DundeeIndustrial REIT, respectively. First-hal oice sales totalled $1.8 billion(27% share), down 34% rom an impressive $2.7 billion in the irst

hal o 2012. Again, GE was active, selling 22 oice buildings worth$686 million in two separate transactions to Greystone ManagedInvestments and Slate Properties.

Retail transactions totalled $1.3 billion (20% share) in the irst hal o2013 twice that o one year ago and equal to the sales volume orall o 2012. Pension unds and REITs swapped prize assets with threedeals greater than $200 million, the largest being Primaris RetailREITs $259-million sale o Oakville Place to RioCan REIT.

Favourable mortgage rates, steady income and low vacancycontinue to make multi-residential property a desirable investmentwith the lowest cap rates. However, this sector ailed to crack thebillion-dollar mark, inishing the irst hal o 2013 with $986 million

(15% share) in sales. This was due more to lack o product than lacko demand. Nevertheless, the mid-year igure was 25% higher thanin 2012. Maple Lea Quay was the largest transaction at almost $151million.

Land was the least-traded asset class with a irst-hal tally o $617million (9% share) a modest 6% decline compared with thesame period in 2012. Land remains highly contested, particularlydowntown, where interest is growing in mixed-use projects thatacilitate urban liestyles.

Toronto could top $13 billion in sales in 2013. However, the recentuptick in interest rates could curtail investment volume and leavesome o the most active buyers, the interest-sensitive REITs, on the

sidelines.

1 Queen St. E. & 20 Richmond St. E.

Toronto



1GE Canada Real Estate -

Greystone/Slate Oce PortolioOce $541,813,777 GE Canada Real Estate

Greystone Managed Investments / SlaProperties

2GE Canada Real Estate - PIRET

GTA Industrial PortolioIndustrial $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 Oxord Properties Group Canada Pension Plan Investment Boa

5 1 Queen St. E. & 20 Richmond St. E. Oce $220,000,000 Ontario Pension Board Canada Pension Plan Investment Boa

Toronto Investment Activity(By Property Type)

Toronto Investment Volume

$ in billions(CAD)










0

2

4

6

8

10

12

Mid-Y

20

201220112010200920082007

Mid-Year2013

Mid-Year2012

29% 15% Industrial

27% 47% Oice

20% 12% Retail


9% 12% Land



Demand or BC commercial real estate attained near-record

levels in the irst hal o 2013 with almost $2 billion invested.While dollar volume tapered o compared with the same periodin 2012 (a record-setting $2.4 billion), deal velocity was one othe strongest recorded in the past decade.

By asset class, oice investment declined 70% to $211 million bythe midway point o 2013 compared with $707 million duringthe same period in 2012. Retail investment slipped 17% to $421million rom $507 million in the irst hal o 2012. These declinesare attributed more to a lack o product than lagging demand.Industrial investment rose 8% to $421 million compared with$391 million the year previous. The greatest increase came inland acquisitions, where investments rose 48% to almost $675

million rom $456 million in the irst hal o 2012.The $66-million sale o Discovery Parks Vancouver was both thelargest oice and overall transaction recorded in the irst hal o2013. Four industrial transactions, which all closed in February2013, also contributed signiicantly to dollar volume, includingthe $21-million acquisition o Buckeye Canadas manuacturingplant by Triovest (on behal o an undisclosed client) and the$27-million purchase o 4606 Canada Way/3033 Beta Avenue.PIRET acquired two signiicant industrial assets, including therecently constructed Hopewell Distribution Centre III or $32million and 18111 Blundell Road or $44 million.

Cap rates have generally stabilized and lattened out. Rising bond

yields have tempered some o the more aggressive purchasers.Depressed unit prices removed REITs as competitive buyers omost signiicant assets. The absence o investment trusts has soar not triggered downward pressure on marquee asset pricing,as remaining purchasers continue to be aggressive in pricing.

The irst hal o 2013 likely marked the start o a transition to apost-recovery inancial environment as various economic levers such as quantitative easing and the monthly purchase o 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-Y

20

201220112010200920082007

Mid-Year2013

Mid-Year2012

34% 19% Land

21% 21% Retail

21% 16% Industrial


11% 29% Oice



1 Discovery Parks Vancouver Oce $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 Pacic Properties Nicola Crosby

5Aldergrove Village Shopping

CentreRetail $29,250,000 MDC Properties Manulie Financial Real Estate



Atlantas commercial real estate investment market

experienced a signiicant 63% increase in investment salesvolume during the irst hal o 2013 compared with the sametime period in 2012. Investment sales in the oice, industrial,retail and multi-residential sectors topped $4.3 billion in theirst hal o 2013, the largest mid-year total since 2007.

Bolstered by the $373-million sale o a partial interest inTerminus 100 and 200, Atlantas oice sales volume totaled$1.8 billion during the irst hal o 2013, representing 42%o all sales in the irst two quarters. Atlanta oice sales orthe irst hal o 2013 outperormed irst-hal 2012 sales by515%, thus already surpassing the 2012 total by $146 million.Improved job growth arising rom local business expansion

and increased relocations are driving the strong rebound inthe Atlanta oice market.

The multi-residential market was a close second withtransactions totaling $1.7 billion during the irst hal o 2013 an $81-million (5%) increase compared with the same periodin 2012. The sale o lower-quality properties has generated a190-bps increase in the capitalization rate to 7.4%, up rom5.5% at mid-year 2012.

Atlantas industrial investment saw the only decline in salesat the mid-year point o 2013. Industrial sales at the end oJune 2013 totaled $323 million, a 35% decrease over the sameperiod 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 irst hal o 2013, the retail sector saw $526 millionin transactions, compared with $274 million in the irst hal o2012. As the job and housing markets slowly move in the rightdirection, the retail market will continue to see modest gains.A ew large projects, mainly in Midtown and the northernsuburban markets, are currently under construction.

Atlantas recovery since the Great Recession has been slow, butis gaining steam thanks to an improving economic climate,Atlantas growing strength in the technology sector and animproved housing market.

Terminus 100

Atlanta


Address Property Type Total Price (USD) Vendor Purchaser

1 Terminus 100 Oce $209,200,000 Cousins Properties JP Morgan Asset Management

2 Midtown I & II Oce $205,000,000 KanAm GrundCole RE Investments & MacFarlan Cap

Partners

3 Terminus 200 Oce $164,000,000 Cousins Properties JP Morgan Asset Management

4 999 Peachtree Oce $157,900,000Shailendra Group & Jamestown

PropertiesFranklin Street Properties

5 Ravinia Center Oce $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)



Oice 7.9% 8.2%

Industrial 6.5% 7.7%

Retail 7.5% 8.1%


Oice Industrial Retail Multi-Residential

0

2

4

6

8

10

12

14

16

Mid-Ye

2013

201220112010200920082007

Mid-Year2013

Mid-Year2012

42% 11% Oice


12% 10% Retail

8% 19% Industrial



Investment sales volume decreased 13% to $2.7 billion as most

major transactions during the irst hal o 2013 occurred inBostons suburbs, with the top two transactions occurring in thetech-heavy 128 West and 128 North submarkets. The BlackstoneGroup was the big seller, parting ways with the New EnglandExecutive Park in Burlington or $216 million, or $209 ps, andRiverside Center in Newton, MA or $197.25 million, or a hety$387 ps. The Inner Suburbs saw user athenahealth buy HarvardsArsenal on the Charles in Watertown or $168.5 million. Thelargest deal in Boston proper in 2013 involved Pearlmark selling40 Broad Street to TIAA-CREF or $110 million, reportedly at acap rate in the 4.5% range. As mid-year 2013 oice sales weredominated by suburban transactions, the overall oice cap rateincreased to 6.5% rom 6.1% at mid-year 2012.

The industrial sector saw several deals in excess o $25 million.TriTower Financial made its irst move, buying 300 RiverparkDrive in North Reading or $32.3 million. While it appears airlysteep at $154 ps, the 209,000-s, high-bay building enjoys along-term lease with Amazons recently acquired Kiva Systems.Comparatively, to Bostons south, Sycamore Partners sold 175Kenneth Welch Drive in Lakeville to AR Capital or $66 ps,having acquired it in 2012 rom long-term tenant Talbots orroughly $37 ps.

The retail sector saw several challenged mall properties trade,including The Mall at Whitney Field in Leominster, which soldor $36.1 million, and Silver City Galleria in Taunton, which sold

or $22.1 million. Retail deals captured 20% o the deals but only9% o the dollar volume.

Lastly, multi-residential sales declined 22% year-over-year,garnering just 19% o the invested dollars during the irst hal o2013. Excluding bulk portolio sales, pricing averaged $223,963per unit, while average cap rates ell to 5.5% rom 5.7%.

Continued downward pressure on cap rates kept the investorpool in the urban core limited to long-term buy/hold players.

Rising interest rates bear watching and may push returns belowacceptable levels or some buyers, likely resulting in continuedactivity in suburban product.

The Arsenal on the Charles

Boston

Boston Investment Activity(By Property Type)

Boston Investment Volume

$ in billions(USD)



Oice 6.1% 6.5%


Retail 9.3% 8.4%



0

4

8

12

16

20

Mid-Ye

2013

201220112010200920082007

Mid-Year2013

Mid-Year2012

62% 49% Oice


9% 14% Retail

9% 15% Industrial



1 New England Executive Park Oce $216,000,000 The Blackstone Group National Development/Charles Rive

2 Riverside Center Oce $197,250,000 The Blackstone Group Hines Global REIT

3 The Arsenal on the Charles Oce $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. Oce $110,000,000 Pearlmark Real Estate Partners TIAA-CREF



Chicago investment activity dipped slightly during the irst

hal o 2013, totaling $4.7 billion a 5% decrease comparedwith the same period in 2012. The oice market continuedto lead in transaction volume, totaling more than $1.7 billionat mid-2013 a 23% jump compared with 2012. The averagecapitalization rate or oice properties in Chicago ell 60 bps to6.9%.

Foreign investors continue to see the CBD oice market as asmart choice as other key oice markets across the countrywitness an uptick in pricing. South Korean investor Mirae AssetGlobal Investments Co. acquired 225 W. Wacker Drive or $218million, or $335 ps. Canadian REITs, such as the Onni Group andAgellan Commercial, have purchased oice properties during

the last 12 months. Montreal-based Ivanho Cambridge is alsoinancing the irst speculative building to be built in the CBDsince 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 o June 2013. Caprates continue to drop, averaging 7.6%. Demand remains strongas the manuacturing and e-commerce industries continue tobe major market drivers; as a result, vacancy decreased to pre-recession levels, ending the second quarter at 8.4%. Ownershave begun selling class B and/or vacant product in a bidto capitalize on improving market conditions. Institutionalinvestors needing to place capital are purchasing these assetsor premiums. This trend will likely continue throughout the

remainder o 2013.

In other sectors, the multi-residential market witnessed a 19%increase in total sales volume during the irst hal o 2013 whencompared with the same period in 2012. The retail marketsaw a substantial decrease in investment activity since 2012,due largely to a stagnant vacancy rate and sluggish consumerconidence during the irst hal o 2013.

Both the oice and industrial asset classes will likely continueto attract investors. There is a substantial pipeline o CBD oiceproperties that are expected to trade in late 2013 or early 2014.As both the Chicago economy and real estate market continueto improve, so will the investment market.

225 West Wacker Drive

Chicago



1 130 E. Randolph St. Oce $410,000,000 Bentley Forbes Berkley Properties

2 225 West Wacker Dr. Oce $218,000,000 JP Morgan Chase Mirae Asset Global Investments Co

3Onterie Center Apartments

and Oces

Multi-Residential/

Oce$188,000,000

Metropolitan Properties o

America, Inc.LaSalle Investment Management

4 1225 Old Town Multi-Residential $156,906,500 Hines Heitman LLC

5 550 West Washington Oce $111,000,000 Beacon Capital Partners MetLie Inc.

Chicago Investment Activity(By Property Type)

Chicago Investment Volume

$ in billions(USD)



Oice 7.5% 6.9%


Retail 7.0% 7.1%



0

4

8

12

16

20

Mid-Ye

2013

201220112010200920082007

Mid-Year2013

Mid-Year2012

37% 29% Oice

23% 38% Retail


19% 17% Industrial



Dallas is considered to be one o the nations most dynamic

markets and a top metro region or employment andpopulation growth. The city is an acquisition target orreal estate investors who want to capitalize on the metrosavorable business climate. Investment activity during theirst hal o 2013 was up 21% compared with the irst halo 2012. Tech and energy markets continue to lead thenation in terms o growth. Dallas has a strong energy base,but has also made leaps and bounds in the technologysector, particularly in sotware development that beneitsthe energy industry. Strong ties to both o these growingindustries have led to an attractive market or investors.

Multi-residential properties remain the most desired

investment property type, leading the way with nearly$1.8 billion in transaction volume in the irst hal o 2013,a 60% increase compared with the irst hal o 2012. Fiori, a391-unit complex developed by UDR, sold or $137 millionto MetLie, representing the second-highest-grossingtransaction thus ar in 2013. Investment activity in industrialand retail assets slowed in the irst hal o 2013, by 2% and27%, respectively. The retail sector has been slow to recoverrom the recession. The sharp decline in retail investmentis mainly due to a lack o new product that is available topurchase. An incredibly tight market or retail assets hasresulted in signiicant cap-rate compression.

Oice investment sales volume increased 43% in the irst

hal o 2013, to $1.5 billion rom $1.1 billion in the irst halo 2012. Core assets in prime locations, particularly in thedesirable Las Colinas area, continue to be a avorite amonginvestors. However, value-add properties are gainingtraction, particularly among market-entry buyers whow

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

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Transcript of Avison Young’s Fall 2013 Canada, U.S. Commercial Real Estate Investment Review