MARKET OUTLOOK BREAKFAST

Transcription

1 MARKET OUTLOOK BREAKFAST ATLANTIC CANADA EDITION ev o lu tion ˌevəˈlo osh(ə)n/ noun The gradual development of something, especially from a simple to more complex form. 1

2 EVOLUTION 2

3 FLUSH WITH CAPITAL RECORD FIRST HALF POSSIBLE YEAR-END RECORD $35 Investment Volume ($B) $30 $25 $20 $15 $10 $5 PROJECTED $0 H Source: CBRE Research, RealNet Canada Inc.; RealTrack Inc., Q

4 FOREIGN INVESTMENT H VANCOUVER $1,865 M MONTREAL $175 M TORONTO (GTA) $189 M Source: CBRE Research, RealNet Canada Inc.; RealTrack Inc., Q WHO S PAYING TO PLAY IN CANADA? ($10.2 B) H ($2.26 B) Europe, 15% China, 4% Other, 4% China, 66% Other, 0.4% United States, 77% Europe, 29% United States, 4% Source: CBRE Research, RealNet Canada Inc, Real Capital Analytics, H

5 REIT STRATEGIES EVOLVING 50% % of Total Investment by REITS 40% 30% 20% 10% 0% H Source: CBRE Research, RealNet Canada Inc.; RealTrack Inc., Q REITS COME OF AGE Market Capitalization ($B) $80 $60 $40 $20 3 REITs at the end of 1994: Riocan, CREIT, RealFund Ttl Mkt Cap = $185M Avg Mkt Cap = $60M 50 REITs at October 2016 Ttl Mkt Cap = ~$72.4 Bln Avg Mkt Cap = ~$1.4 Bln $0 Dec-15 Dec-14 Dec-13 Dec-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Dec-03 Dec-02 Dec-01 Dec-00 Dec-99 Dec-98 Dec-97 Dec-96 Dec-95 Dec-94 Source: BMO Capital Markets, Oct Note: Includes REITs listed on the Toronto Stock Exchange and the TSX Venture Exchange. 5

6 REIT RETURNS REBOUND 20% 15% Total Return 10% 5% 0% -5% -10% -15% Multifamily Retail Office Industrial Diversified YTD Source: BMO Capital Markets, Oct REITS DELIVER IN THE SEARCH FOR YIELD 160 Index (100 = Jan. 4, 2010) Apr-10 Jan-10 Jul-10 Oct-10 Apr-11 Jan-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 S&P/TSX Composite Index Apr-13 Jan-13 Jul-13 Oct-13 Apr-14 Jan-14 Jul-14 Oct-14 Apr-15 Jan-15 Jul-15 Oct-15 Jan-16 S&P/TSX Capped REIT Index Apr-16 Jul-16 Oct-16 Source: Thomson Reuters Eikon, Oct 19,

7 EVOLUTION 7

8 ENCOURAGING CORE RETAIL SALES 4.5% 4.0% Y-o-Y Change (%) 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% YTD-2016 Source: Statistics Canada, August

9 ABOVE AVERAGE MALL SALES 8% 6% 4% 2% 0% (2%) (4%) Jan 2010 Jul 2010 Jan 2011 Y-o-Y % Change Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013 Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Mall Sales Growth 10-Yr Avg Source: ICSC, August NATIONAL RETAIL VACANCY DECLINES 8% 6% 4% 2% 0% Total Regional Shopping Centre Power centre Community, Neighbourhood, Strip 2015 Q Source: Select retail REIT/REOC portfolios, CBRE Research, Q *Based on REIT/REOC owned retail properties 9

10 RETAIL REITS RETURNS NEAR THE TOP 20% 15% Total Return 10% 5% 0% -5% -10% -15% Multifamily Retail Office Industrial Diversified YTD Source: BMO Capital Markets, Oct

11 EVOLUTION 11

12 INDUSTRIOUS CANADA AVAILABILITY RATES Q % CANADA 5.1% 6.0% USA 6.4% 9.5% 8.7% Source: CBRE Research, Q CONTINUED LOW CAP RATES FOR HALIFAX Industrial Q2 6.75% Industrial Q3 6.63% Source: CBRE Research, Q

13 EVOLUTION LOOK BEYOND THE HEADLINES 12.8M SF UNDER CONSTRUCTION 2.8% PERCENTAGE OF INVENTORY Source: CBRE Research, Q

14 THE INCREASING OFFICE VACANCY GAP 14% 12% 10% 8% 12.9% 11.1% 6% Vacancy Rate (%) National Vacancy National Vacancy Minus Alberta Source: CBRE Research, Q UNPRECEDENTED PAIN (AND IT AIN T OVER) Vacancy Rate (%) 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% AND TRENDING HIGHER Alberta Average Source: CBRE Research, Q

15 HIGH-TECH JOB GROWTH ( ) San Francisco Phoenix Austin Charlotte Indianapolis Silicon Valley Toronto New York Chicago Dallas/Ft. Worth Pittsburgh Seattle Detroit Vancouver Raleigh-Durham 0% 10% 20% 30% 40% 50% Source: CBRE Research; Statistics Canada Source: CBRE Research; Statistics Canada 15

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17 JOBS VULNERABLE TO TECH ADVANCEMENT RETAIL SALESPERSON ADMIN OFFICER RECEPTION FINANCIAL AUDITOR / ACCOUNTANT FOOD ATTENDANT FOOD & BEVERAGE CASHIER ADMINISTRATIVE ASSISTANT GENERAL OFFICE SUPPORT Brookfield Institute for Innovation + Entrepreneurship at Ryerson University EVOLUTION 17

18 HALIFAX AHEAD OF THE CURVE APARTMENT STARTS BY TYPE (YTD-2016) 100% 80% 60% 40% 20% 0% CAL TOR VAN EDM OTT MTL HFX Purpose-Built Condominium Source: CMHC, Oct

19 CHALLENGES Alberta recovery will take time Get used to slow growth Digital will continue to disrupt Retail bifurcation continues Pricing continues to rise Potential housing slowdown OPPORTUNITIES Interests rates will remain low Cap rates are well supported Abundant capital Alberta is weathering the storm Canada offers stability 19

20 The measure of intelligence is the ability to change. ~ Albert Einstein 20

21 MARKET OUTLOOK BREAKFAST ATLANTIC CANADA EDITION 21