The Canadian Retail Real Estate Market

Presented at:

2013 Land & Development Conference

Presented by:

John G. Crombie

National Retail Director Cushman & Wakefield Ltd.

john.crombie@ca.cushwake.com 416-756-5448

Retail Real Estate Canadian Retail Market – Basic Facts

RETAIL SERVICES

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In 2012, retailers sold an estimated

$467.5 billion worth of goods and services

RETAIL IN CANADA Basic Facts

RETAIL SALES IN CANADA Record high sales of food & beverage in 2012 with $104.3 billion EMPLOYMENT Retail sector is Canada’s largest employer. 12.5% of Canadian jobs RETAIL STORES IN CANADA • 220,000+ retail establishments • 2,773 shopping centres (74 super regional) – 513 million SF (average size Shopping Centre – 186,000 SF) • 522 power centres (3 or more Big Boxes clustered) - 169 million SF (average size Power centre – 323,000 SF) • 236 power node (Power Centres plus nearby Shopping Centres). Almost 40% located in Ontario TOP 100 RETAILERS IN CANADA CONTROL OVER 70% MARKET SHARE 50% of Canada’s leading retailers are foreign owned and operated (largely US) Top 5 Foreign Owned Retailers in Canada • Wal-Mart, Costco, Safeway, Hudson ‘s Bay & Home Depot controls 19% of total retail sales (1,423 stores)

Retail Real Estate Consumer Confidence, Retail Sales - Canada & US

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Canadian Consumer Confidence Three Year Trend

Source: J.C. Williams

50

55

60

65

70

75

80

85

90

95

100

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0 A

ug-1

0 S

ep-1

0 O

ct-1

0 N

ov-1

0 D

ec-1

0 Ja

n-11

Fe

b-11

M

ar-1

1 A

pr-1

1 M

ay-1

1 Ju

n-11

Ju

l-11

Aug

-11

Sep

-11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2 A

ug-1

2 S

ep-1

2 O

ct-1

2 N

ov-1

2 D

ec-1

2 Ja

n-13

Fe

b-13

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Canada vs. U.S. Consumer Confidence

Source: J.C. Williams/ICSC

0

20

40

60

80

100

120

0

20

40

60

80

100

120

Jan-

05

Apr

-05

Jul-0

5 O

ct. 0

5 Ja

n. 0

6 A

pr. 0

6 Ju

l. 06

O

ct. 0

6 Ja

n. 0

7 A

pr. 0

7 Ju

l. 07

O

ct. 0

7 Ja

n. 0

8 A

pr. 0

8 Ju

l. 08

O

ct. 0

8 Ja

n. 0

9 A

pr. 0

9 Ju

l. 09

O

ct. 0

9 Ja

n. 1

0 A

pr. 1

0 Ju

l. 10

O

ct. 1

0 Ja

n. 1

1 A

pr. 1

1 Ju

l. 11

O

ct. 1

1 Ja

n. 1

2 A

pr-1

2 Ju

l-12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

US

CC

I Ind

ex (1

985

=100

)

CD

N C

CI I

ndex

(200

2=10

0)

Canada

U.S.

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Canadian Retail Sales Seasonally Adjusted

Source: Statistics Canada

$30

$32

$34

$36

$38

$40

$42

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

(billi

ons)

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Eastern Canada 7.4%

Quebec 22.1%

Ontario 35.1%

Western Canada 35.1%

Northern Canada 0.4%

Toronto CMA = 16.0%

Source: Statistic Canada

CANADIAN RETAIL SALES GEOGRAPHY - 2012 92.3% of Sales are in Western & Central Canada

Manitoba = 3.6% Saskatchewan = 3.7% Alberta = 14.7% British Columbia = 13.1%

Yukon = 0.1% Northwest Territories = 0.2% Nunavut = 0.1%

Nfld & Labrador = 1.8% PEI = 0.4% Nova Scotia = 2.8% New Brunswick = 2.4%

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Canadian Retail Sales by Province 2013/2012 Year Over Year % Change (as of March 2013)

Source: J.C. Williams

0%

1%

2%

3%

4%

5%

6%

7%

British Columbia Alberta Prairies Ontario Quebec Atlantic Canada

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Retail Sales Productivity – Canadian Malls

Source: ICSC Research

Approximately $605 PSF

$400

$450

$500

$550

$600

$650

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

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Retail Sales Productivity – U.S. Malls

$320

$340

$360

$380

$400

$420

$440

$460

$480

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source: ICSC Research

Approximately $466 PSF

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Recent Arrivals or Expressing Interest in Canada

American Retailers

European Retailers

Source: Cushman & Wakefield 2013

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Foreign Arrivals in Canada 1990 2011

Source: Ryerson University CSCA

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Canadian Retail Space – Square Feet Per Person

14.1

25.1

27.9

22.4

14.7

18

0

5

10

15

20

25

30

Vancouver Calgary Edmonton Toronto Montreal Canadian Average

Squa

re F

eet/C

apita

Source: Ryerson University CSCA

Shopping Centres & Big Box Stores (excludes street front)

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Canadian Regional & Super-Regional Mall Ownership Regional and super-regional mall ownership in Canada is dominated by pension funds

0.0% 4.0% 8.0% 12.0% 16.0% 20.0%

2.4%

2.5%

4.7%

4.8%

5.6%

6.8%

7.0%

14.5%

16.6%

* KingSett Includes: KingSett CREIF and KingSett Growth LP No 5 Source: Ivanhoé Cambridge Market Research Department (based on 2012 Canadian Directory of Shopping Centres)

Pension Fund

Pension Fund

Pension Fund

Pension Fund

Pension Fund

Pension Fund

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Recent Developer Entries into Canada

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Retail Inventory by Age Toronto & Ontario

0%

5%

10%

15%

20%

25%

30%

1950s 1960s 1970s 1980s 1990s 2000s

Toronto Ontario

Almost 80% of retail inventory is more than 20 years old

Source: Cushman & Wakefield 2012

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Technology Affecting Our Industry Omni-Channel Strategies

Evolving multi-channel dynamics increase the

importance of a cohesive omni-channel

strategy

QR CODE-DRIVEN VIRTUAL SUPERMARKETS

(South Korea Subway Stations)

BRICK & MORTAR MOBILE

AMAZON.COM STORE

BRICK & MORTAR

INTERNET

POP-UP STORE

BRICK & MORTAR

SOCIAL MEDIA

Retail Real Estate Rental Rates, Vacancy Rates

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National Retail Rental Rates 2012

Retail Product 2012 Average Net Rent ($/sq.ft.)

CRU (New) $24-$30

Big Box (New) $16-$24

Pads (New) $32-$50

Street Front $30-$120

Source: Cushman & Wakefield 2012

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High Street Rental Rates 2011 vs. 2012 (Street Level)

City Submarket 2011 Average Net Rent ($/sq.ft.)

2012 Average Net Rent ($/sq.ft.)

Vancouver Robson Street $240 $220

Calgary 17th Avenue SW $45 $50

Edmonton Whyte Avenue $40 $45

Montreal Saint-Catherine West (street level) $160 $180

Ottawa Sussex Drive $50 $50

Toronto Bloor Street $315 $320

Toronto Queen Street $100 $100

Source: Cushman & Wakefield 2012

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Retail Vacancy Rates by Shopping Centre Type 2008 2012 (Year End)

Source: Cushman & Wakefield 2012

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Power Centre Super Regional Regional Community Neighbourhood Strip Average

Vacancy Rate 2008 Vacancy Rate 2009 Vacancy Rate 2010 Vacancy Rate 2011 Vacancy Rate 2012

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This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Cushman & Wakefield Ltd. 2013