The Canadian Retail Real Estate Market

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Warren Miles
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1 The Canadian Retail Real Estate Market Presented at: 2013 Land & Development Conference Presented by: John G. Crombie National Retail Director Cushman & Wakefield Ltd

2 Retail Real Estate Canadian Retail Market Basic Facts

IN CANADA Basic Facts In 2012, retailers sold an estimated $467.5 billion worth of goods and services SALES IN CANADA Record high sales of food & beverage in 2012 with $104.

3 IN CANADA Basic Facts In 2012, retailers sold an estimated $467.5 billion worth of goods and services 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 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) 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 ERS 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) 2

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

5 Canadian Consumer Confidence Three Year Trend Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Source: J.C. Williams 4

6 Canada vs. U.S. Consumer Confidence CDN CCI Index (2002=100) U.S. Canada US CCI Index (1985 =100) 0 Jan-05 Apr-05 Jul-05 Oct. 05 Jan. 06 Apr. 06 Jul. 06 Oct. 06 Jan. 07 Apr. 07 Jul. 07 Oct. 07 Jan. 08 Apr. 08 Jul. 08 Oct. 08 Jan. 09 Apr. 09 Jul. 09 Oct. 09 Jan. 10 Apr. 10 Jul. 10 Oct. 10 Jan. 11 Apr. 11 Jul. 11 Oct. 11 Jan. 12 Apr-12 Jul-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 0 Source: J.C. Williams/ICSC 5

7 Canadian Retail Sales Seasonally Adjusted $42 $40 $38 $36 $34 $32 $30 Jul-06 Jan-07 Jul-07 Jan-08 (billions) Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Source: Statistics Canada 6

8 CANADIAN SALES GEOGRAPHY % of Sales are in Western & Central Canada Yukon = 0.1% Northwest Territories = 0.2% Nunavut = 0.1% Northern Canada 0.4% Eastern Canada 7.4% Nfld & Labrador = 1.8% PEI = 0.4% Nova Scotia = 2.8% New Brunswick = 2.4% Western Canada 35.1% Quebec 22.1% Manitoba = 3.6% Saskatchewan = 3.7% Alberta = 14.7% British Columbia = 13.1% Ontario 35.1% Toronto CMA = 16.0% Source: Statistic Canada 7

9 Canadian Retail Sales by Province 2013/2012 Year Over Year % Change (as of March 2013) 7% 6% 5% 4% 3% 2% 1% 0% British Columbia Alberta Prairies Ontario Quebec Atlantic Canada Source: J.C. Williams 8

10 Retail Sales Productivity Canadian Malls Approximately $605 PSF $650 $600 $550 $500 $450 $ Source: ICSC Research 9

11 Retail Sales Productivity U.S. Malls Approximately $466 PSF $480 $460 $440 $420 $400 $380 $360 $340 $ Source: ICSC Research 10

12 Recent Arrivals or Expressing Interest in Canada American Retailers European Retailers Source: Cushman & Wakefield

13 Foreign Arrivals in Canada Source: Ryerson University CSCA 12

14 Canadian Retail Space Square Feet Per Person Shopping Centres & Big Box Stores (excludes street front) Square Feet/Capita Vancouver Calgary Edmonton Toronto Montreal Canadian Average Source: Ryerson University CSCA 13

Canadian Regional & Super-Regional Mall Ownership Regional and super-regional mall ownership in Canada is dominated by pension funds Pension Fund 16.6% Pension Fund Pension Fund Pension Fund 5.6% 7.

15 Canadian Regional & Super-Regional Mall Ownership Regional and super-regional mall ownership in Canada is dominated by pension funds Pension Fund 16.6% Pension Fund Pension Fund Pension Fund 5.6% 7.0% 6.8% 14.5% Pension Fund 4.8% 4.7% 2.5% Pension Fund 2.4% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% * KingSett Includes: KingSett CREIF and KingSett Growth LP No 5 Source: Ivanhoé Cambridge Market Research Department (based on 2012 Canadian Directory of Shopping Centres) 14

16 Recent Developer Entries into Canada 15

17 Retail Inventory by Age Toronto & Ontario 30% Almost 80% of retail inventory is more than 20 years old 25% 20% 15% 10% 5% 0% 1950s 1960s 1970s 1980s 1990s 2000s Toronto Ontario Source: Cushman & Wakefield

18 Technology Affecting Our Industry Omni-Channel Strategies BRICK & MORTAR MOBILE QR CODE-DRIVEN VIRTUAL SUPERMARKETS (South Korea Subway Stations) Evolving multi-channel dynamics increase the importance of a cohesive omni-channel strategy BRICK & MORTAR INTERNET AMAZON.COM STORE BRICK & MORTAR SOCIAL MEDIA POP-UP STORE 17

19 Retail Real Estate Rental Rates, Vacancy Rates

20 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

21 High Street Rental Rates 2011 vs (Street Level) City Submarket 2011 Average Net Rent ($/sq.ft.) 2012 Average Net Rent ($/sq.ft.) Vancouver Robson Street $240 $220 Calgary 17 th 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

22 Retail Vacancy Rates by Shopping Centre Type (Year End) 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Power Centre Super Regional Regional Community Neighbourhood Strip Average Vacancy Rate 2008 Vacancy Rate 2009 Vacancy Rate 2010 Vacancy Rate 2011 Vacancy Rate 2012 Source: Cushman & Wakefield

This report contains information available to the public and has been relied upon by Cushman &

Cushman & Wakefield accepts no responsibility if this should prove not to be the case.

information contained herein, and same is submitted subject to errors, omissions, change of

23 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

MLS Sales vs. Listings (seasonaly adjusted)

MLS Sales vs. Listings (seasonaly adjusted) QUARTER 4: Canada Guaranty Housing Market Review OCTOBER - DECEMBER 21 The Canadian economy posted positive indicators of growth in early 21; however, the optimistic sentiment deteriorated in the latter