20/10/2015
MARKET OUTLOOK
Spencer Levy, Americas Head of Research
Vancouver, Canada: October 20, 2015
AGENDA
I. Global Outlook
II. Lightning Round I: The Globe
III. Occupier
IV.Lightning Round II: The Disruptors
V. Conclusion
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20/10/2015
VALUE OF CANADA’S CURRENCY VS. PRICE OF OIL
USD per barrel
USD per barrel
0.94
120.00
0.92
100.00
0.90
0.88
CAD/USD
0.84
60.00
0.82
0.80
US $ per barrel
80.00
0.86
40.00
0.78
0.76
20.00
0.74
0.72
0.00
CAD/USD (left)
West Texas Intermediate (right)
Source: Moody’s Analytics, Oct. 2015.
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RECORD CRE PRICES LEAD TO RECORD CONDUIT LOAN LTV
Source: Moody’s Investor Service Publication. “U.S. CMBS Q2
Review: Twin Peaks – Record Commercial Property Prices Lead to
Record Conduit Loan MLTV Ratio July 2015”.
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20/10/2015
CAPITAL MARKETS - IMPRESSIVE INVESTMENT GAINS
Source: Real Capital Analytics and CBRE Research. Excludes “entity level” acquisitions. Ytd through July.
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THE EVOLUTION OF THE FOREIGN BUYER
Mexico
3%
Japan
3%
Germany
4%
Bahrain
4%
UK
6%
2007
2014
Total Volume: $48.0
Total Volume: $46.3
Other
18%
Australia
28%
Israel
7%
Canada
17%
UAE
10%
Source: Real Capital Analytics, Sep. 2015.
2008
Total Volume: $15.8
1H 2015
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Total Volume: $42.3
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20/10/2015
WHAT DO LARGE OCCUPIERS CARE ABOUT?
1. Workplace Strategy
2. Employee Engagement / Wellness
3. Change Management
• Organization Change / Transformation
• Implementing Workplace Change
• CRM
4. Talent
• CRE Organizational
• Workforce
5. Enterprise Alignment and CRM
6. Portfolio and Data Analytics
7. Occupancy Expense Management
8. Capital Planning and Management
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SIGNIFICANT LEASE TRANSACTIONS IN CANADA – TOP
5 OFFICE INDUSTRIES
Technology takes the lead
Q2 2014
Q1 2015
Q2 2015
6%
9%
31%
18%
12%
12%
44%
12%
38%
15%
17%
21%
21%
Finance/Insurance/Real Estate
Energy/Mining
Technology
27%
18%
Business Services
Creative Industries
Life Sciences/Healthcare
Government/Public Admin
Other
Source: CBRE Research, Q2 2015.
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20/10/2015
EMPLOYMENT: CANADA’S JOB GROWTH BEING LED BY PROF.
SCIENTIFIC, & TECH. SERVICES AND HEALTH CARE
Oil and gas negative year-over-year
% Change in National Employment, Aug. 2015
Professional, scientific and technical services
Health care and social assistance
Construction
Educational services
Forestry, fishing, mining, quarrying, oil and gas
Transportation and warehousing
Accommodation and food services
Business, building and other support services
Total employed, all industries
Trade
Finance, insurance, real estate and leasing
Manufacturing
Information, culture and recreation
Public administration
Agriculture
-15%
-10%
-5%
0%
% Change Since Aug. 2014
5%
10%
15%
20%
25%
% Change Since Aug. 2009
Source: Statistics Canada, Aug. 2015.
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CONVERGENCE IN NORTH AMERICAN OFFICE MARKETS
Time to get a little less smug!
Overall Vacancy (%)
18.0
16.0
14.0
12.0
10.0
8.0
U.S
Q3 2015
Q1 2015
Q3 2014
Q1 2014
Q3 2013
Q1 2013
Q3 2012
Q1 2012
Q3 2011
Q1 2011
Q3 2010
Q1 2010
Q3 2009
Q1 2009
Q3 2008
Q1 2008
Q3 2007
Q1 2007
Q3 2006
Q1 2006
Q3 2005
Q1 2005
6.0
Canada
Source: CBRE Limited, Q2 & Q3 2015.
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20/10/2015
HIGH-TECH SOFTWARE/SERVICES JOB AND OFFICE RENT
GROWTH
Sources: U.S. Bureau of Labor Statistics and CBRE Research, July 2015.
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“THE CHANGING AGE GAME”
The demographic shift of the workforce was identified as a top trend for real
estate by ULI in 2015….
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20/10/2015
MILLENIALS WORKPLACE PREFERENCES…
…are similar to other generations
Source: CBRE Workplace Strategy, Nov. 2014.
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DENSIFICATION: URBAN* VS. SUBURBAN
2010-2015 Population Change
25.0%
22.1%
20.0%
17.7%
15.0%
15.2%
13.0%
11.6%
10.0%
7.0%
5.0%
6.6%
5.5%
0.0%
Toronto
Calgary
Montreal
Urban
Vancouver
Suburban
* Urban defined as a 2 km radius from city centre.
Source: 2015 Environics Analytics
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20/10/2015
SUSTAINABILITY
Brand and reputation drive CSR
Importance of Environmental Certifications
(e.g. LEED ) in Building Selection and
Construction Practices
Leading Driver | Corporate Social
Responsibility (CSR) Program
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CONCLUSION
•
•
•
•
•
Don’t fear China
Don’t fear interest rate hikes either
Talent trumps rent
Infrastructure is the long-game
Canada is ______________
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20/10/2015
Spencer G. Levy | Americas Head of Research CBRE
260 Franklin Street, Suite 400
Boston, MA 02110
T 617-912-5236 | C 443-794-5341
@ SpencerGLevy
spencer.levy@cbre.com | www.cbre.com
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