Downtown Toronto Confirmed and Proposed Developments Office Commercial Real Estate

1. About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking
increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate
offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing
services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013.
Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. JLL is
the brand name of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
JLL Research
JLL’s research team delivers intelligence, analysis, and insight through market-leading reports and services that illuminate today’s
commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our 415 professional researchers track and analyze
economic and property trends and forecast future conditions in over 70 countries, producing unrivalled local and global perspectives. Our
research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our
clients and drives successful strategies and optimal real estate decisions. For further information, visit www.jll.ca/research.
© 2014 Jones Lang LaSalle All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or
warranty is made to the accuracy thereof.
Prepared by JLL Research:
Thomas Forr
National Research Coordinator
Taylor McCarten
Associate
199 Bay Street
Suit 4610, Box 407.
Toronto, Ontario M5L 1G3
Tel: +1 416 304 6000
Fax: : +1 416 304 6001
www.jll.ca
The Quartet:
Look Forward
Toronto | Summer 2014
MON
TREALTORO
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VAVV NC
OUVER

2. RISING LEASEHOLD INVESTMENTS
A recent trend of increasing leasehold investments has emerged in the market – in some cases exceeding $300 per square foot. For tenants, the
increased adoption of Alternative Workplace Strategies to optimize mobility/productivity and lower on-going costs of space management is the key driver.
For landlords, amortizing some of the improvement costs provides increased face revenue.
TENANT STABILITY
The recent insolvency of law firms Heenan Blaikie and Goodman & Carr have caused landlords to reevaluate the credit worthiness of limited liability
partnerships (LLP). We see landlords demanding stronger covenants from incoming LLPs and demonstrating reluctance to fund their leasehold
improvements. Law firms, many of which are LLPs, make up roughly 15.0 percent of Toronto’s financial core tenancies.
45 BAY STREET
Ivanhoe Cambridge recently announced a new proposed development at 45 Bay Street. If Ivanhoe builds, they have the benefit of being one of the least
affected landlords in a high-supply market and of pulling tenants primarily from competitors. 45 Bay is estimated to be around one million square feet, and
TD, with its 400,000 square feet requirement, could potentially fulfill the pre-leasing threshold Ivanhoe seeks before breaking ground.
WHY RELOCATE AND REVITALIZE? – 3 KEY REASONS
Observing tenants that have pre-leased, JLL has identified the major motives to relocate to be LEED certification, consolidation, and the attraction of
millennials.
All seven of Toronto’s under construction developments are pursuing LEED Gold/Platinum certifications allowing major cost savings for tenants through
lower additional rents. However, a more significant benefit has been the effective densification of the workplace allowing more workers and more
productivity within a smaller space. This has further encouraged a second major motive for relocation: consolidation, which enables enhanced footprint
reduction. These two changes can work together to lower occupied area. Looking at pre-leasing in new developments, total rentable area leased by the
committed tenants is at least 300,000 square feet less than the space(s) from which they are moving. This drives a decrease in occupancy costs and
further increases market vacancy upon development delivery. Our final major motive is the attraction of millennials, a key feature for companies looking
to stay ahead of their competition. Toronto’s new developments have achieved sleek, modern designs, excellent public transit access and environmental
sustainability, values that are held high by the next generations of workers. In doing so, they have achieved a new prestigious and attractive identity for
the millennials; separate than the identity established by the traditional bank towers for the Boomer generation.
Downtown Toronto's Confirmed and Proposed Developments
An analysis of new supply trends in the Downtown Class A office market
Occupied Floor Available Floor Retail Floor
Confirmed Projects Pre-Leasing Developments
1 RBC WaterPark Place III
88 Queen’s Quay West
2 Southcore Financial Tower
120 Bremner Boulvard
5 Bay Adelaide Centre East
22 Adelaide Street West
4 One York
1 York Street
3. Queen Richmond Centre
134 Peter Street
10 45 Bay Street
45 Bay Street
8 Union Centre
20 York Street
9 160 Front Street West
160 Front Street West
6 Richmond Adelaide Centre III
100 Adelaide Street West
7 Globe and Mail Centre
351 King Street East
30
35
40
45
50
55
5
10
15
20
25
Address
RBC WaterPark
Place III
88 Queen's Quay West
South Core
Financial Centre
120 Bremner Blvd.
Queen Richmond
Centre
134 Peter Street
Bay Adelaide
Centre East
22 Adelaide Street
West
One York
1 York Street
Ernst & Young
Tower
100 Adelaide Street
West
Globe and Mail Centre
351 King Street East
160 Front Street
West
160 Front Street West
45 Bay Street
45 Bay Street
Union Centre
20 York Street
Area 886,026 s.f. 674,320 s.f. 285,505 s.f. 1,012,388 s.f. 800,000 s.f. 899,064 s.f. 455,000 s.f. 1,200,000 s.f. 1,000,000 s.f. 1,070,000 s.f.
Floors 30 31 17 44 35 40 17 54 50 48
Typical Floor Plate 26,666 s.f. 24,600 s.f. 23,604 s.f. 23,000 s.f. 27,692 s.f. 23,500 s.f. 25,000 s.f. 26,000 s.f. 21,000 27,000 s.f.
Anchor Tenant(s) Royal Bank of Canada Marsh McLennan Sapient Deloitte HOOPP/Sunlife E&Y Globe and Mail N/A N/A N/A
Available Space 176,892 s.f. 296,527 s.f. 154,472 s.f. 438,092 s.f. 379,610 s.f. 486,241 s.f. 267,500 s.f. 1,200,000 s.f. 1,000,000 s.f. 1,070,000 s.f.
Landlord(s) Oxford BcIMC Allied Brookfield HOOPP/Menkes/Sun Life Oxford First Gulf Cadillac Fairview Ivanhoe Cambridge Allied
Est. Delivery Date Q3 2014 Q3 2014 Q3 2015 Q1 2016 Q2 2016 Q2 2017 2016 + 2018 + 2018 + 2018 +
1 2 4 5 6 7 8 9 103
New Market Dynamics
JLL has identified three new dynamics in the Toronto market: recent tenant insolvency; a trend of rising invest-
ment in leasehold improvements; and the entrance of Ivanhoe Cambridge.

3. 2
1
10
6 5
3
8
9
7
4
QUEEN STREET W. QUEEN STREET E.
DUNDAS STREET W.
COLLEGE STREET
DUNDAS STREET E.
KING STREET W.
GARDINER EXPRESSWAY
SPADINAAVENUE
BAYSTREET
BAYSTREET
YONGESTREET
UNIVERSITYAVENUE
KING STREET E.
WELLINGTON STREET W.
YORKSTREET
JARVISSTREET
PARLIMENTSTREET
BERKLEYSTREET
PETERSTREET
SIMCOESTREET
FRONT STREET W.
BREMNER BLVD
QUEEN’S QUAY W.
QUEEN’S QUAY E.
FRONT STREET E.
RICHMOND STREET W.
GERRARD STREET W. GERRARD STREET E.
RICHMOND STREET E.
ADELAIDE STREET W. ADELAIDE STREET E.
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
11.0%
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2004 2005 20006 2007 2008 2009 2010 2011 2012 2103 2014F 2015F 2016F 2017F 2018F
Forecast
Confirmed Supply Low Case Vacancy Medium Case Vacancy High Case Vacancy
SQUAREFEET
VACANCYRATEVacancy Graph
Downtown Class A Vacancy Forecast
Throughlate2014-2016,sevenunderconstructiondevelopmentswillbringanadditional5.0millionsquarefeettoDowntownToronto,raisingtheofficesupplyofCanada’slargest
business district to over 75 million square feet. Rising vacancy and slower leasing activity have taken over as tenants anticipate better leverage with the increased supply. In
these changing market conditions, the launch of another of the city’s seven currently proposed developments has become unclear. Should a landlord decide to venture forward
with another new development, the decision to do so relies largely on securing a large and dependable anchor tenant. The Toronto-Dominion Bank, with 400,000 square feet up
for lease in 2018, is the best available tenant with a requirement and for the moment, has become the key deciding element on whether or not another development launches.
Toronto Market Leverage
2014 2015 2016 2017
Landlord-favourable market
Neutral market
Tenant-favourable market
5 Million s.f.
Under Construction
DOWNTOWN CLASS A
56 Percent
Pre-Leased
JUNE 2014
5.7 Million s.f.
Proposed Development
Bay Adelaide Centre East