The Canadian Retail Real Estate Market Overview

Presented for:

Toronto Real Estate Forum 2013

Presented by: John G. Crombie, National Retail Director

Cushman & Wakefield Ltd. john.crombie@ca.cushwake.com

(416) 756-5448

December 5, 2013

RETAIL SERVICES

1 CUSHMAN & WAKEFIELD

In 2012, retailers sold an estimated

$469.9 billion worth of goods and services

RETAIL IN CANADA Basic Facts

FOOD & BEVERAGE 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 SPACE IN CANADA 513 million SF of Shopping Centres (average size – 186,000 SF) 169 million SF of Power Centres (average size – 323,000 SF) 236 power node (Power Centres plus nearby Shopping Centres). Almost 40% located in Ontario RETAILERS IN CANADA Top 100 Retailers in Canada control over 70% of the market share 50% of Canada’s leading retailers are foreign owned and operated (largely US) Top 5 Foreign Owned Retailers in Canada control 19% of total retail sales (1,423 stores)

» Wal-Mart, Costco, Safeway, Hudson ‘s Bay & Home Depot

Canadian Retail Real Estate Consumer Confidence, Retail Sales

RETAIL SERVICES

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CANADA VS. UNITED STATES – CONSUMERS CONFIDENCE

Source: J.C. Williams/ICSC

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CANADIAN RETAIL SALES Seasonally Adjusted

Source: Statistics Canada

$25

$30

$35

$40

$45

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

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Retail Sales are Going Up … but Retailer ‘s Margins are Going Down

RETAIL SERVICES

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Retail Spending vs. Canadian Housing Prices Growth Rate, year over year

-10

-5

0

5

10

15

20

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Teranet/National Bank Home Price Index Retail Spending

%

Source: The Globe & Mail/Bloomberg

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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%

RETAIL SERVICES

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RETAIL SALES PRODUCTIVITY – CANADIAN MALLS

Source: ICSC Research

Approximately $601 PSF

$400

$450

$500

$550

$600

$650

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

RETAIL SERVICES

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CANADIAN MALL PERFORMANCE – RETAIL SALES By Province - 3Q 2013

Source: ICSC Research

RETAIL SERVICES

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RETAIL SALES PRODUCTIVITY – US SHOPPING 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

RETAIL SERVICES

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RECENT ARRIVALS OR EXPRESSING INTEREST IN CANADA

American Retailers

European Retailers

Source: Cushman & Wakefield 2013

RETAIL SERVICES

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FOREIGN ARRIVALS IN CANADA – 1990 TO 2011

Source: Ryerson University CSCA

RETAIL SERVICES

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RECENT DEVELOPERS INTO CANADA – OUTLET MALLS

Canadian Retail Real Estate Technology Effecting the Retail Business

RETAIL SERVICES

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TECHNOLOGY EFFECTING 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 SERVICES

15 CUSHMAN & WAKEFIELD

TECHNOLOGY EFFECTING OUR INDUSTRY

RETAIL SERVICES

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TECHNOLOGY EFFECTING OUR INDUSTRY

Retail Real Estate Rental Rates, Vacancy Rates

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CANADIAN HIGH STREET - RENTAL RATES 2012 vs. 2013 (Street Level)

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

2013 Average Net Rent ($/sq.ft.)

Vancouver Robson Street $220 $215

Calgary 17th Avenue SW $45 $50

Edmonton Whyte Avenue $45 $45

Montreal Saint-Catherine West (street level) $180 $190

Ottawa Sussex Drive $50 $50

Toronto Bloor Street $320 $320

Toronto Queen Street $100 $110

Source: Cushman & Wakefield 2013

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STORE VACANCY RATES BY SHOPPING CENTRE TYPE 2007 2012

Source: CSCA, 2013

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Power Centre Super Regional Regional Community Neighbourhood Strip

Vacancy Rate 2007 Vacancy Rate 2009 Vacancy Rate 2012

RETAIL SERVICES

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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