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GTA Office Market Report Toronto Q4 2020

• Vacancy across the city increased this quarter to 6.2%. The downtown market had the highest YoY vacancy rate growth by climbing 320 bps to 4.3% in Q4 2020. • Downward pressure on rents began to surface this quarter, with lower averages recorded across submarkets relative to Q3. • The proportion of sublease availability compared to total availability across the GTA continued to climb this quarter, resting at 22.7% as of Q4 2020. • Looking forward to 2021, an adjustment in price expectations between landlords and tenants will be imperative to propelling transaction activity.

• Vacancy across the city increased this quarter to 6.2%. The downtown market had the highest YoY vacancy rate growth by climbing 320 bps to 4.3% in Q4 2020.

• Downward pressure on rents began to surface this quarter, with lower averages recorded across submarkets relative to Q3.

• The proportion of sublease availability compared to total availability across the GTA continued to climb this quarter, resting at 22.7% as of Q4 2020.

• Looking forward to 2021, an adjustment in price expectations between landlords and tenants will be imperative to propelling transaction activity.

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Market Metro

Overview

01

Rental Rates by Building Class

02

Weighted Average Asking Net Rates ($PSF)

Rental Rate Growth*

By Market | Q4 2019 – Q4 2020

$50

$40

$30

$20

$10

$0

AAA

AAA

A

B

A

C

B C

A

A

A

B

B C

B

C

C

Downtown Midtown GTA N/E GTA W GTA Total

Downtown -6%

Midtown

7%

GTA N/E

3%

GTA W

2%

GTA Total

9%

*Weighted Average Asking Net Rent

03

Leasing Activity by Industry

By Square Feet Leased

FIRE and TAMI

represents 44%

of all leases in

Q4

FIRE | Financial Services,

Insurance and Real Estate

TAMI | Technology, Advertising,

Media and Information

HEG | Healthcare, Education and

Government

ACE | Accountants, Consultants,

Engineers

Legal

Other

04

320 bps

Downtown

1.1% Q4’19

GTA W

8.0% Q4’19

Vacancy Rate by Market

Q4 2019 – Q4 2020

170 bps 190 bps

Midtown

1.6% Q4’19

160 bps 220 bps

GTA Total

4.0% Q4’19

GTA N/E

4.9% Q4’19

Net Absorption / New Supply (SF)

05

1,500,000

1,000,000

500,000

0

-500,000

-1,000,000

Historical Overview

Vacancy vs. Net Absorption and New Supply

Vacancy Rate Net Absorption New Supply

6.2%

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

-6.0%

Vacancy

-1,500,000

Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20

-8.0%

Colliers Canada | GTA Office Market Report | Q4 2020

collierscanada.com/research P.2

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