800 - 475 WEST GEORGIA STREET, VANCOUVER, B.C. V6B 4M9 PHONE: (604) 684-7117 • FAX: (604) 684-1017

VISIT OUR WEBSITE: WWW.JJB.COM/VANCOUVER

Top Five Offi ce Sales of Q1 2007Address Municipality Price Size (sq.ft.) Price psf. Purchaser(s)

788 Harbourside Drive - Harbourside Centre Phases I & II North Vancouver $17,983,506 72,155 $255 TPP Investments & PSS Investments

1489 - 1497 West Broadway Vancouver $15,600,000 49,022 $318 Tonko Development PCI

369-379 Terminal Avenue - VanTech Centre II Vancouver $15,500,000 143,883 $108 369 Terminal Holdings Ltd.

Units 120, 130, 210, 220 & 230, 3591 Chatham Street Richmond $2,000,000 7,309 $274 J C Lu Holding Co. Ltd.

1462 West 8th Avenue Vancouver $1,675,000 5,164 4324 Verdos Investments Ltd

Major Lease Transactions of Q1 2007Address Municipality Type Tenant Size (sq.ft.)885 West Georgia Street - HSBC Building Vancouver Renewal HSBC Bank 115,015

10470 152nd Street Surrey Renewal Insurance Corporation of British Columbia 56,000

1333 West Broadway Vancouver Renewal Heath Employers Association of British Columbia 45,704

610 Granville Street - The Hudson Vancouver Lease Vancouver Bay Clubs Ltd. 38,598

4259 Canada Way - Canada Way 1 Burnaby Renewal Moneris 17,112

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GVRD OFFICE REPORTF I R S T Q U A R T E R H I G H L I G H T S

MARKETINDICATORS:

FIRST QUARTER

2007

VACANCY

NEW SUPPLY

ABSORPTION

* quarterly comparison

ECONOMIC OVERVIEW

Canada’s economy grew at an incredible pace throughout 2006 and the trend is forecasted to continue at a more stable rate well into 2007, with an average growth rate of 2.4%. The employment rate in Canada is forecasted to remain relatively stable throughout the year, resting at a low 6.3%. British Columbia will remain strong economically and will also maintain a low employment rate of 4.0% (February 2007). The intense labour shortage has caused a dramatic infl ux in BC’s population which has now surpassed the 4 million mark. The GVRD contributes over half of that fi gure with approximately 2 million people. BC’s economic strength coupled with a need for labour will maintain the province’s economic growth throughout 2007.

New construction, in all sectors, remained strong in 2006 as developers took out a record $11.5 billion worth of building permits. This accelerated pace of construction is predicted to continue throughout 2007. Building permits climbed 78.4% in January 2007 compared with January 2006, topping over $635 million. Due to greater profi t in residential construction, the majority of pure offi ce developments have been in suburban markets. Conversely, mixed-use developments have become more prominent Downtown as the City of Vancouver continues its attempt to increase the offi ce market supply.

DOWNTOWN CORE

Downtown Vancouver continued to have the most sought after offi ce space in the GVRD. In many cases tenants found themselves looking toward the suburban municipalities for additional space as a result of Downtown’s limited offi ce supply, a constant increase in lease rates, and the vacancy rate sitting at 4.0%. With lease rates reaching highs of $40 per square foot (psf) and above this quarter, leasing Downtown has become unaffordable for many tenants. Also, as there are no longer any large lots of offi ce space available, commercial builders have favoured development in the City’s suburbs due to cheaper land and superior site access in comparison to Downtown. In short, the limited supply forced many tenants to focus on their present space requirements, and not on their future space needs.

BROADWAY CORRIDOR

The Broadway Corridor showed increased activity in both the sales and leasing markets, however, a majority of transactions occurred on the leasing side. Potential tenants were interested in leasing primarily smaller units; 2,000 sq.ft. to 3,000 sq.ft. With limited supply in the market to satisfy consumer demand, tenants who remained in the area were forced to pay higher rates, while others chose to relocate to suburban markets.

GVRD’s offi ce vacancy rate is

6.0%

$11.5 billion worth of building

permits taken out in 2006

Rates for this quarter remained in the $20 psf and above range, and experienced a quarterly increase of several dollars in some cases. Looking ahead, rates are expected to continue their steady increase while vacancy rates are expected to drop and new offi ce supply remains minimal.

BURNABY

The fi rst quarter of 2007 brought many lease renewals as well as tenant relocations within the City of Burnaby. The majority of transactions this quarter occurred in the leasing market as opposed to the sales market. Burnaby

remained one of the few municipalities in the GVRD with fresh offi ce supply coming to the market this quarter including 71,326 sq.ft. at Centerpoint (4789 Kingsway). This new supply succeeded in attracting clientele from surrounding municipalities where inventory has remained scarce.

Offi ce lease rates for Burnaby averaged approximately $15 psf and the vacancy rate dropped to 6.7%. Burnaby continues to remain an attractive option for any business, large or small, looking to expand and control lease costs, while remaining centrally located in the GVRD.

RICHMOND

For the fi rst quarter of 2007, Richmond’s consumer activity was in both the sales and leasing areas of the offi ce market. Lease rates increased on average by $0.50 to $1.00 psf. but despite this increase, rates remained low in relation to the rest of the GVRD. These rates, as well as newly emerging supply, kept Richmond as an attractive offi ce destination. Assuming a healthy and sustainable economy continues into the foreseeable future, the market in the area is predicted to remain heated, the demand for offi ce space to remain strong, and supply to remain slightly more abundant than surrounding markets.

NORTH VANCOUVER

North Vancouver continued to have a tight offi ce market in the fi rst quarter of 2007. The most sought after spaces were those between 800 sq.ft. and 2,000 sq.ft.

The Lonsdale area continued to have the most desirable offi ce space, however, there was little product for lease and little reported opportunity for purchase. At 100 East Esplanade, 67,000 sq.ft. will come to market late this year, helping to replenish the exhausted offi ce supply. North Vancouver has been, and continues to remain an attractive market for those tenants who desire to be close to the Downtown Core, but don’t wish to pay the rising Downtown rates.

GVRD OFFICE REPORT F I R S T Q U A R T E R H I G H L I G H T S

VANCOUVER • Toronto • Calgary • Edmonton • Winnipeg • Montreal • Mississauga • Nanaimo • Burlington • Halifax • Kingston • London • Markham •

Niagara • Ottawa • Regina • Waterloo • Victoria

655,904 sq.ft.

195,191 sq.ft.

407,984 sq.ft.

286,328 sq.ft.

503,255 sq.ft.

51,046 sq.ft.

127,884 sq.ft.

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Square

Fee

t

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

GREATER VANCOUVER HISTORICAL ABSORPTION

0%

5%

10%

15%

20%

25%

Vancouve

r

Downtown C

ore

Broadway Corrid

or

Burnaby

North V

ancouve

r

Richmond

Surrey

New W

estm

inster

Q4 2006 Q1 2007

MUNICIPALITY VACANCY CHANGES

GVRD OFFICE REPORT F I R S T Q U A R T E R H I G H L I G H T S

VANCOUVER • Toronto • Calgary • Edmonton • Winnipeg • Montreal • Mississauga • Nanaimo • Burlington • Halifax • Kingston • London • Markham • Niagara • Ottawa • Regina • Waterloo • Victoria

Q1 2007 Number of Buildings

Total Offi ce Area (sq.ft.)

Total Occupied Area (sq.ft.)

Total Vacant Area (sq.ft.)

Total Vacancy (%)

Greater Vancouver Market 479 43,359,607 40,746,301 2,613,306 6.00

Vancouver District

All Classes 270 27,211,276 1,229,328 1,232,870 4.50

Downtown 195 22,498,499 21,600,526 897,973 4.00

Class A 51 12,489,761 12,118,001 371,760 3.00

Class B 74 6,609,629 6,340,438 269,191 4.10

Class C 70 3,399,109 3,142,087 257,022 7.56

Broadway Corridor 35 1,826,111 1,771,286 54,825 3.00

Class A 18 1,122,241 1,108,815 13,426 1.20

Class B 13 587,179 557,187 29,992 5.10

Class C 4 116,691 105,284 11,407 9.80

Surrey 25 2,318,653 1,979,963 338,690 14.60

Class A 12 1,817,505 1,493,505 324,000 17.20

Class B 5 255,356 249,510 5,846 2.30

Class C 8 245,792 236,948 8,844 3.60

Richmond 74 4,484,514 4,031,996 452,518 10.10

Class A 47 3,093,367 2,735,341 358,026 11.60

Class B 24 1,195,100 1,105,239 89,861 7.50

Class C 3 196,047 191,416 4,631 2.40

North Vancouver 22 1,268,652 1,163,105 105,547 8.30

Class A 6 430,640 406,506 24,134 5.60

Class B 13 725,547 649,418 76,129 10.50

Class C 3 112,465 107,181 5,284 4.70

New Westminster 14 725,135 578,385 146,750 20.20

Class A 4 197,899 189,073 8,826 4.50

Class B 10 527,236 389,312 13,7924 26.20

Class C 0 0 0 0 0.00

Burnaby 82 6,915,299 6,451,241 46,4058 6.70

Class A 46 4,653,516 4,397,861 255,655 5.50

Class B 28 1,913,881 1,710,274 203,607 10.60

Class C 8 347,902 343,106 4,796 1.40

SURREY

The Surrey offi ce market remained a viable option for tenants who wanted to remain in the GVRD. The fi rst quarter of 2007 witnessed demand predominately for leasable product between 1,000 sq.ft. and 2,500 sq.ft.

Lease rates over the fi rst quarter saw rising values and rose to an average of $21.00 psf. With new developments completing soon there will be ample opportunity for tenants to fi nd available space in business parks such as Benchmark Business Centre, with expected

completion within the year. This business park, when fi nished, will contain two high profi le class A buildings, providing 225,000 sq.ft. to the Panorama area of Surrey. This will be the fi rst major offi ce building completion in Surrey since the Central City Tower in 2003.

LOOKING AHEAD

BC’s economy started off on a strong note in 2007 and is forecasted to continue this steady growth at a slightly slower pace throughout the year. Vacancy rates have dropped all over the GVRD as tenants quickly consumed

any available space. As the rule of supply and demand expresses, lease rates and sale prices will continue to increase along with the shortage of available space. Capitalization (cap) rates have been dropping as there are currently more purchasers than sellers in the market. Pension funds own the majority of Downtown Vancouver’s offi ce supply as a handful of them control nearly 70% of the market. With material costs on the rise and a shortage of labour in BC, both sale and lease rates are expected to continually increase throughout the year and well into the future.

*Data sourced from Real InSite Ltd.

VANCOUVER • Toronto • Calgary • Edmonton • Winnipeg • Montreal • Mississauga • Nanaimo • Burlington • Halifax • Kingston • London • Markham • Niagara • Ottawa • Regina • Waterloo • Victoria

All information has been obtained from sources considered to be accurate but is not guaranteed and is subject to conditions at the time of any transaction taking place. Properties are submitted subject to prior sale or lease, withdrawal

or changes without notice.

800 - 475 WEST GEORGIA STREET, VANCOUVER, B.C. V6B 4M9 PHONE: (604) 684-7117 • FAX: (604) 684-1017

VISIT OUR WEBSITE: WWW.JJB.COM/VANCOUVER

GVRD OFFICE REPORTF I R S T Q U A R T E R H I G H L I G H T S

FOR MORE INFORMATION, PLEASE CONTACT:KASIA HAJDUK

DIRECTOR OF RESEARCH

(604) 630-3405 KASIA.HAJDUK@JJB.COM

CASEY BELLRESEARCH ANALYST

(604) 630-3404CASEY.BELL@JJB.COM

MIKE MEAKINRESEARCH ANALYST

(604) 630-3391MIKE.MEAKIN@JJB.COM

Notable New Offi ce InventoryDeveloper Municipality Civic Address Development Size Completion

PK Projects Richmond 13900 Wireless Way 3 storey commercial building 116,000 2007

BCIT Richmond 3700 Cessna Drive Aerospace Technology Campus 90,647 2007

Orr Development (1980) Corp. Burnaby 7465 Curtis Street Centerpoint 75,000 Jan 2007

Canada Lands Burnaby n/a Glenlyon 43,000 Jan 2007

Bentall (SITQ) Downtown 550 Burrard Street Bental V Phase II 243,121 Fall 2007

Bosa Ventures Burnaby 4555 Kingsway Cental Park Place II 60,000 Fall 2007

Bentall Capital Broadway 2925 Virtual Way Broadway Tech Center Building 1 113,000 2008

PCI/Tonko Broadway 525 West Broadway Cross Roads 85,000 2008

Canacemal Investment Inc. New Westminster n/a 4 storey offi ce building 54,000 2008

Westminster Management Burnaby 3292 Production Way Lake City Center 100,000 Jan 2008

Appia Group of Companies Burnaby 4411 Lougheed Highway Residential tower & offi ce space 107,000 Fall 2008

Jameson Development Downtown 848 West Hastings Street Jameson House 65,000 2009

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Q1 00

Q1 01

Q1 02

Q1 03

Q1 04

Q1 05

Q1 06

Q1 07

All A B C

GREATER VANCOUVER VACANCY RATES BY CLASS

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