retail%20(mid-year%202006)

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

MARKET OUTLOOKBritish Columbia’s economy has continued to thrive into 2006, allowing the retail sector to prosper from increased spending habits. Retail trade jumped 2% nationally in the first quarter of 2006, achieving a record $32.1 billion in sales. In BC, retail sales were up 2.4% in January, relatively flat in February and increased slightly in April. The Bank of Montreal reports that despite the strength of the economy in BC, consumer prices will remain relatively contained and according to the BC Business Council, consumer spending in the retail sector has provided a minimal quarter-to-quarter lift on the economic index.

BC is currently experiencing the second largest investment in commercial construction across Canada with $679 million, second only to Alberta. This investment shows a 28.3% increase over last year’s statistics. BC’s economy has been growing at a healthy pace, fuelled by low interest rates, a high Canadian dollar, and a strong housing market.

INVESTMENT SALES

Retail property remains to be a very popular choice among investors in 2006. In the first half of the year there have been 193 transactions totaling just under $250 million. The largest retail transaction was for the London Village in Coquitlam, located on the east side of North Road, south of the Lougheed Highway. This shopping centre contains 67,407 sq.ft. of commercial space and sold in May for $21,900,000 ($325 per sq.ft.).

There will be a significant amount of new retail space coming to Vancouver with the development of the Southeast False Creek area. There are currently eight property owners in the area who are in the process of rezoning their land for residential and commercial mixed-uses. One parcel of land was recently purchased by the Millennium Group for a record setting $193 million dollars.

The 6.42 acres of land was sold by the city of Vancouver to become the Olympic Athletes Village, which will provide accommodation for athletes during the 2010 Olympic Games. The Village will contain a minimum of 30,000 sq.ft. of commercial space during the games which is anticipated to grow to 82,000 sq.ft. thereafter.

In late 2005, Costco purchased space in Concert Properties’ Spectrum development at Citadel Parkade for $13 million where it is developing the first multi-level Costco in Canada. Ackroyd Plaza, a 106,382 sq.ft. shopping centre at Ackroyd Road and No. 3 Road in Richmond sold in November 2005 to Dava Developments for $33 million.

HIGHLIGHTS OF RECENT MOVES & GRAND OPENINGS

VANCOUVER

Robson StreetRetail Area Net Lease Rates

(per square foot)Vacancy Rates

Robson Street $145-$210 Stable

Retailers and restaurant owners on Robson Street continue to experience some of the highest net rental rates in the country. The prime locations on Robson Street have retailers paying over $200 per square foot (psf) for ground floor space in an area with some of the highest tourist and pedestrian traffic in the nation. Robson Street continues to experience a vacancy rate close to 0% with some small vacancies at the eastern and western ends of the street. Even with these high rental rates, retailers continue to show interest in the area and some tenants have even expanded their current locations.

In the first half of 2006, there were a few retailers who vacated, relocated or expanded along Robson Street. Rogers Wireless has moved into 601 Robson Street at the corner of Seymour and

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Retail Sale Transactions Since January 2006

GVRD RETAIL REPORTM I D Y E A R H I G H L I G H T S 2 0 0 6

GVRD RETAIL REPORT M I D Y E A 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 • Saskatoon • Waterloo • Victoria

Robson, and is now open. Hitz Boutique at Robson and Granville has downsized their space by demising their store into three smaller units which have been leased to Diamond and Co. (720 Robson Street) and Ishtar Café (603 Robson Street). A new clothing company, OQOQO, has taken over the space next to Aritzia at 1100 Robson Street which was previously occupied by Pezzo Pizza and Purdy’s Chocolates. Lululemon has expanded its shop at 1148 Robson Street, and American Eagle Outfitters has decided to expand their current space at 1176 Robson Street to accommodate their undergarments division. Also expanding their operations is Tommy Hilfiger at 1092 Robson Street. They have taken over the adjacent space that once housed the $15 Boutique to open a Hilfiger denim shop. The Fila shop has moved out of 1053 Robson Street and an accessory store, Diva, has moved in.

The popular Korean grocery store H-mart has now opened at the corner of Robson and Seymour in the L’Aria mixed-use development, and Jimmy’s Steakhouse/Cold Beer and Wine Store has opened up at the corner of Homer and Robson at the base of the Westin Grand Hotel.

DowntownRetail Area Net Lease Rates


Yaletown $30-$40 DeclineGranville Street $35-$100 StableDenman Street $35-$55 Stable

The Downtown Core continues to see many new mixed-use residential development projects incorporating retail space along the bottom floors. Some notable projects that will add significant retail space to the city are:

The Shangri-La on West Georgia and Thurlow, which is under construction and will feature an Urban Fare grocery store

Concord Pacific’s Spectrum development at 651 Expo Boulevard, which will incorporate Costco’s first multi-level outlet

The Hudson, on Granville and Dunsmuir, which will provide up to 50,000 sq.ft. of retail space

The city’s plan to restore and improve retail along Granville Street has already seen some progress. Net rental rates are beginning to reflect the new improvements and the growing popularity amongst consumers as they are reaching $80 psf. Amacon has finished construction at 1026 Granville Street where a new restaurant/lounge, Sanafir, has taken occupancy. Adidas has gained much attention moving into 848 Granville

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Street while Puma Shoes is rumoured to be moving in on the 900 block of Granville Street. Champs Sports has opened a store at the corner of Smithe and Granville on the west side of the street, which was previously occupied by McDonalds. Megabites Pizza will open at the corner of Nelson and Granville, and on the 900 block of Granville new tenants have taken occupancy including: The Republic (restaurant/lounge), Telus, Soul2Soul Clothing, and Oh My Godard Gallery.

The corner of Burrard and Alberni has seen increased activity throughout the first half of 2006 as it continues to attract a number of luxury brand retailers. The success of this area can be attributed to the busy intersection of Robson and Burrard, which will likely continue to boost business north along Burrard and west down Alberni Street. Hermes has recently opened a location at the corner of Alberni and Burrard, and joins Gucci, Louis Vuitton, Betsy Johnson and Ports in this area. Tiffany & Co. will occupy the space across the street from Hermes at 1011 Alberni Street, which will be their second store in Canada. Coach closed for a portion of the winter to renovate and expand their operation on Burrard and has now reopened. A new restaurant called Saltlik opened in December 2005 at 1032 Alberni Street. In the coming year, the 40,000 sq.ft. duty-free shop known as Spirit of the North will close, and is currently available for lease.

In Pacific Centre, Cadillac Fairview has begun renovations for Holt Renfrew’s new flagship location at the north end of the mall. The future store will be on two floors, containing a total of 121,000 sq.ft. and is expected to complete in the spring of 2007.

South Granville StreetRetail Area Net Lease Rates


South Granville $40-$85 StableThere is a growing trend on South Granville Street that has seen an influx of home furnishing outfits with two new additions this past spring. The Bombay Company moved into the space just south of West Broadway at 2526 Granville Street, and Ei8teen Karat moved into the old Martha Sturdy space at 3039 Granville Street. Martha Sturdy has since relocated to 12 West 5th Street. American Apparel has moved into 3070 Granville Street, on the ground floor of the Shaughnessy Mansions development, making it their third new store in Vancouver this year. Williams-Sonoma, a luxury home furnishings store, will construct a 17,000 sq.ft. space at the corner of 13th Avenue and Granville Street and are in the process of obtaining development permits

Alberni and Burrard

848 Granville Street



West Broadway, Cambie and Kitsilano AreaRetail Area Net Lease Rates


West Broadway $20-$40 StableWest 4th Ave $30-$50 Stable

West Broadway is abundant with new construction; primarily residential/commercial mixed-use developments. An example is PCI Group’s construction of Crossroads, a mixed-use development at the corner of Broadway and Cambie. The project will include 140,000 sq.ft. of retail space and will provide access to TransLink’s new rapid transit system, the Canada Line. Upon completion in 2007, the retail space will feature Whole Foods and London Drugs as anchor tenants. As well, Joey’s recently finished construction and opened a new restaurant at 1424 West Broadway.

The South Cambie area continues to see a large increase in retail activity with some recent big-box additions such as Canadian Tire and Best Buy. Grosvenor has begun construction on The Rise, a development located at 8th and Cambie. It is a mixed-use project that will feature Save-on-Foods, Home Depot, and Winners. The Olive, a mixed-use development at the corner of 16th and Cambie, has completed construction and will accommodate a new location for Capers on the ground floor.

Since 2004, Vancouver has begun a public policy review process examining the future of the Oakridge Shopping Centre at Cambie Street and 41st Avenue. The policy will provide a basis for future re-zoning and development in the area. There is concern that with the introduction of the Canada Line, there will be a need for a more sustainable mixed-use neighborhood requiring additional retail, office and residential development.

The increase in property values, combined with strong demand for retail space on West 4th Avenue, has resulted in an overall increase in rental costs. The area which was once predominantly home to local businesses has gained the attention of national retailers who have since moved in and have started to push out local businesses. New tenants along West 4th Avenue include: American Apparel at 2244 West 4th Avenue, Adrenaline Tattoo at 1926 West 4th Avenue, and the Noodle Box at 1867 West 4th Avenue.

SUBURBAN - NEW DEVELOPMENT HIGHLIGHTS

Morgan Crossing, Surrey - This spring, Larco just announced that they will be developing a mixed-use urban development featuring: a 468,000 sq.ft. lifestyle centre, 400,000 sq.ft. of residential and 35,000 sq.ft. of office space. It will be located on the northwest quadrant of Highway 99 and 24th Avenue. This development will follow a similar design to the Park Royal Village in West Vancouver and will include large format retailers, specialty stores, services, restaurants and theatres.

South Point Exchange, Surrey - Grosvenor Canada is adding 220,000 sq.ft. to their existing development on the corner of 32nd Avenue and 152nd Street, anchored by Save-on-Foods, Staples Business Depot and Canadian Tire.

Pemberton Area, North Vancouver - Costco is looking to use the former BC Rail site consisting of 7.5 acres in Pemberton to house a new location. Currently, the land is zoned for light industrial use and would need to be re-zoned for retail use. Costco has delivered a preliminary application to the District of North Vancouver.

Cloverdale Crossing, Surrey - Richmond Holdings Ltd. is developing a 100,000 sq.ft. shopping centre at 64th Avenue and 176th Street in Cloverdale that will feature a PriceSmart Foods (Overwaitea Food Group’s newest concept), a TD Bank and a Tim Hortons. Construction has begun, and the project is expected to complete in the fall of 2006.

SUBURBAN - UPDATES ON CURRENT DEVELOPMENTS

Big Bend Crossing, Burnaby – Anthem Properties continues with construction at Marine Way and Byrne Road for the 330,000 sq.ft. specialty retail centre. Tenants will include: Winners, Staples, Linens N’ Things, Petcetera and Michael’s. The project is expected to complete in the fall of 2007.

Marine Way Market, South Burnaby – Westbank Projects is developing 250,000 sq.ft. of large format retail space at SW Marine Drive and Byrne Road Tenants include: Save on Foods, London Drugs and Canadian Tire. Completion is anticipated for the fall of 2006.

The Pier, North Vancouver – Pinnacle International has received development permits for Phase ll (parcels 1, 2 & 4) and has begun excavating the site. Pinnacle will be constructing approximately 50,000 sq.ft. of retail space and 60,000 sq.ft. of office space through four phases in the Lower Lonsdale area along Esplanade. Amenities in the area will include: a hotel, a conference centre, a gallery, several public parks, and a waterfront pier with SeaBus access to Downtown Vancouver.

Grandview Corner Shopping District - First Pro Shopping Centre/Loblaw Properties Ltd. have permits and rezoning applications in with the city of Surrey regarding the development of a shopping centre on a 25 acre site. The site comprises the four corners of 24th Avenue and 161th Street and will contain an estimated 800,000 sq.ft. of retail space. Wal-Mart, Home Depot and The Real Canadian Superstore are anticipated to be anchor tenants.

Seymour Creek Village, North Vancouver- Squamish Nation, Kingswood Capital and Progressive Properties will be developing 130 acres of First Nation’s land purchased in the Maplewood area. The development will include approximately 430,000 sq.ft. of commercial and retail space. Construction is set to begin in late 2006 and estimated to complete in 2008.

1424 West Broadway



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.

FOR MORE INFORMATION, PLEASE CONTACT:CONOR FINUCANE

DIRECTOR OF RESEARCH

(604) [email protected]

OR

MARK BLACKMORERESEARCH ANALYST

(604) [email protected]

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

SIGNIFICANT SALE TRANSACTIONS DECEMBER-JUNE 2006Street Name Municipality Building Size Total Price329 North Road Coquitlam 67,407 $21,900,000

272 East 7th Avenue Vancouver - $6,350,000

6250 Lougheed Highway Burnaby - $5,102,500

7300 King George Highway Surrey - $4,900,000

3150 Macdonald Street Vancouver 7,759 $4,550,000

1269-1271 & 1281 Howe Street Vancouver 13,100 $4,300,000

2189-2193 West 41st Avenue Vancouver 6,350 $4,300,000

12111 Bridgeport Road Richmond 40,000 $4,300,000

750-790 West 6th Avenue Vancouver 17,000 $4,175,000

Unit 1000 - 8181 Cambie Road Richmond 21,949 $4,082,000

3208-3244 Oak Street Vancouver 7,700 $3,808,000

8318 120th Street Surrey 27,287 $3,100,000

LOOKING AHEADThe retail market is expected to remain strong throughout the second half of 2006. According to the Bank of Montreal, the GDP is expected to grow at a rate of 3.8% over 2006 and Canadian interest rates are expected to rise another quarter percent in July. As lending rates increase, it is expected that there will be a small decline in consumer spending due to an overall decrease in disposable income. As the Canadian dollar continues to strengthen, the number of American tourists visiting BC is expected to decline. With the dollar sitting at $0.88 in July and expecting further increases, Stats BC has already recorded a decline in US visitors by 4.6%. The retail market is expected to remain relatively strong with continued interest in investment product and stable leasing demand. Vacancy rates are expected to remain low in the short term and investors will retain interest in the Vancouver market as they anticipate the 2010 Winter Olympics.

RETAIL TREND:BIG BOX RETAILERS ON THE RISE

There is a developing trend for big box retailers to open stores in the area just North of Broadway and Cambie. In addition to Canadian Tire and Best Buy, other new developments in the area include a Home Depot and Winners at The Rise mixed-use development. The Canada Line will be running along Cambie Street, and many of these big box retailers have opened up along the line with the expectation for a high volume of pedestrian traffic. In South Vancouver, the hot topic of a Wal-Mart and a Canadian Tire being developed on SW Marine Drive was initially denied by City Council. However with a new Mayor in place, the discussion is currently before council for the second time. City policy reports show the council’s consideration to re-zone the area, allowing for large format retail uses, as well as the possibility for other large format uses such as institutional, cultural and recreational.

Renderings of the Vancouver Olympic Village

retail%20(mid-year%202006)

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