Retail Battle on the Hardware Front

Transcription

1 Q NATIONAL Research & Forecast Report australian retail Retail Battle on the Hardware Front Soul, Surfers Paradise Beach, Gold Coast Soul is redefining Surfers Paradise as one of Queensland s premier fashion and dining destinations. The 7,600m² retail complex will become a targeted tenancy mix of designer labels, cult fashion and international brands, plus stylish restaurants and alfresco dining outlets. Market Indicators Forecast - 6 months RETAIL TURNOVER INTEREST RATES / UNEMPLOYMENT RETAIL CENTRE INVESTMENT YIELDS / Over the past few years the hardware sector has emerged as a category within its own right, separate from bulky goods retailing. The hardware warehouse format is now a mature and popular retailing concept, both with consumers and investors. At present the industry appears to be polarising, moving away from independents and buying groups, towards big box stores and specialists. Size has become the main consideration for retailers in the hardware market, in terms of the size of each individual retail outlet, and the size of store networks. At present the home improvement and hardware market in Australia is highly fragmented. Despite the market dominance of Bunnings, more than half of annual hardware sales still come from smallformat independent stores. It is anticipated that Woolworths entry to the market will in fact both grow the market, and take share from smaller independent players. Market Size and Turnover Australian s love of property and our high levels of home ownership mean that improving and maintaining homes has been a major driver of the hardware sector, which many believe is underserviced at present. A softer housing market of late has also meant that home owners are now focusing on renovating and improving their current properties. Despite posting a solid monthly gain of 0.7 per cent during April 2011 (probably reflecting the ongoing refurbishment of homes after the floods), household goods retailing has been relatively flat over the past year. While annual growth is currently running at per cent, the sector is the second largest contributor to retail turnover, with $42.86 billion spent during the year to April 2011, accounting for 18 per cent of total retail sales. The hardware, building and garden supplies sector turned over $12.83 billion dollars in the year to April 2011, showing annual growth of 1.9 per cent, and contributing 5 per cent to total retail sales. Key Highlights The hardware sector has emerged as a category in its own right, separate from bulky goods retailing. With Woolworths entering the market to challenge the dominance of Bunnings, the sector is set to undergo some radical changes; Retail continues to face a number of challenges including a strong Australian dollar, sales moving to online channels and weaker consumer sentiment; The collapse of several household names in Australian retailing has dented consumer confidence. While in the short-term retail property owners will be impacted by these retail chains going into administration, the outlook for the traditional shopping centre model remains solid. Hardware, Building and Garden Supplies vs. Total Retail Sales Annual (%) Change Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Source: ABS/Colliers International Research Hardware, Garden & Building Supplies Total Retail Turnover

2 As seen in the graph above, growth in the hardware sector was particularly strong between September 2010 and March 2011, reaching an annual growth rate of 8.4 per cent for the year to February 2011, levels not seen since late The big box format is less prevalent in Australia than in other countries, meaning that there is potential to increase the number of stores per head of population. There is also the scope for growth in the sector through expanding the types of products and services offered. Bunnings and Woolworths have both adopted a broad based big box style of store, with an increased focus on lifestyle products, moving away from traditional hardware retailing. The new store format typically provides retail, nursery, trade and cafe space in a more upmarket environment than the current industrial style hardware stores. Here Comes Masters Woolworths entered the hardware market in August 2009 with the acquisition of Danks for $88 million, the wholesaler behind the Home Timber & Hardware and Thrifty-Link Chains. Danks gave Woolworths an entry into the market and enabled it to build a multi-channel hardware offer. While at present Woolworth s supplies independent outlets, it is not considered a long-term player in this market as its own big box stores will ultimately compete with independently owned stores. Woolworths and their US partner Lowe s recently announced that Masters will be the moniker of their Australian hardware business. Artist Impression Woolworths have reportedly secured 80 sites so far, with about 14 stores currently under construction, and between 10 and 20 stores anticipated to be operating by Most stores will cost between $20 million and $25 million to establish, depending on whether they are purchased or leased. The first Masters store will be located in Braybrook in Melbourne s west and is scheduled to open in September/ October Woolworths have been targeting urban fringe locations in Victoria and Queensland for stores, while Bunnings has been expanding into inner city and suburban markets (focusing on New South Wales), traditionally the domain of independent operators. The Masters model comprises stores with an average size of 13,500m². They will stock not only traditional hardware items, but also kitchen appliances, whitegoods, light fittings, floor coverings, window treatments, outdoor furniture and children s play equipment. The Competitor Response Bunnings has stepped up its new store program in response to Woolworths entry into the market. Across Australia and New Zealand, Bunnings currently operates about 290 hardware outlets, including big box stores, smaller format Bunnings stores, and trade centres. They plan to open 18 new stores in New South Wales over the next three years, and will spend about $600 million. These new stores will be twice as large as its traditional outlets. So far 12 sites have been secured, including Alexandria, Balgowlah, Batemans Bay, Castle Hill, West Gosford, Greenacre, Rouse Hill, Tamworth, Marsden Park, Wallsend, Smithfield, and East Gardens. The Alexandria store will have an area of approx 20,000m², the largest in Australia, and is scheduled to open mid The first multi-level Bunnings store was opened in Hawthorn in late 2008, with a second store opened in Chatswood earlier this year. This new store format allows the hardware retailer to take its full product range into suburbs that previously would have not been suitable due to site size restrictions. The multi-level warehouse stores typically require about 1.2 hectares of land, compared with around three hectares normally needed for a full-format warehouse. Mitre 10 has been testing a new concept that combines a supermarket and hardware store under the one roof. It plans to open 40 of these types of stores, including new stores and conversions, in primarily regional areas over the next few years. The format of these outlets has two-thirds of the store stocked with food and liquor, with the remainder containing hardware. Foot traffic from the new hardware sections has also boosted sales of food and liquor in the stores, a bonus for the store s owners and their suppliers, Metcash s IGA Distribution. Bunnings has a large lead on Woolworths at present, operating about 191 large format or big box stores. It has taken Bunnings more than a decade to secure the sites and open stores, having also benefited from the takeover of Howard Smith in 2001, which owned the BBC Hardware chain. Woolworths have a target of opening 150 stores over the next five years, which may prove difficult considering the shortage of large development sites available. Companies such as Costco have found it challenging in recent years to find suitable sites for large scale retail developments. Colliers International p. 2

3 Will Consumers Benefit? The entry of Woolworths into the already competitive hardware sector is expected to trigger fierce price competition, with independent retailers the first to feel the impact. Similar to the situation that exists in the supermarket sector with strong competition between Wesfarmers (Coles) and Woolworths, we could end up with a duopoly situation, where 70 per cent to 80 per cent of all hardware transactions go through two companies. Industry margins are also expected to come under pressure as the two major competitors force prices down. As competition in the sector increases, margins for Australian hardware retailers are also expected to come under pressure. Margins for Australian retailers in this sector are typically higher than those achieved by leading hardware retailers overseas. The price war between the two retailers will benefit consumers in the short term, but in the long run they will ultimately control prices. Impact on Property Markets Woolworths entry into the hardware market validates the strength of the warehouse style home improvement model. It also provides recognition of standalone hardware warehouse retailing as a separate investment asset class, distinct from bulky goods centres. The entry of Woolworths is likely to be a positive for property markets and investors in this type of asset, as it broadens the pool of potential tenants and provides a strong lease covenant. The presence and activity of two large players in the market should also improve the depth of the market, and evidence for rental and property values. Property and land prices may face some upwards pressure as part of the battle for sites, as retailers search for large warehouse sized blocks. The Masters chain will compete not only with Bunnings and Mitre 10, but also with traditional homewares, appliance and specialist retailers such as Harvey Norman, The Good Guys, Reece, Tradelink and even IKEA. As a result, the wider range of stock now being carried in stores will put increased pressure on traditional bulky goods centres, as they aim to provide a one-stop-shop for household goods retailing. Property and land prices may face some upwards pressure as part of the battle for sites, as retailers search for large warehouse sized blocks. There has been fierce competition between market participants, often paying premiums for sites, to ensure they lock their competitors out of certain locations. The competition from residential developers has declined over the past few years as funding became increasingly difficult. This has benefited players in the hardware sector as it enabled them to target these sites. Bunnings and Masters will not only be in competition with each other for these sites, but also with the likes of IKEA, Harvey Norman, and Costco. Over the medium term we expect to see a trend towards increased rental and values associated with these developments. This strong expansion in the hardware sector will also benefit the industrial property sector as retailers commit to large distribution facilities to supply product to these new stores. Late last year Metcash committed to a new 82,000m² facility for its hardware business at the Bungarribee Industrial Estate, Huntingwood in Western Sydney. Danks also recently announced the relocation of its Victorian distribution centre to a new facility at Hoppers Crossing. The new 50,000m² facility more than doubles its previous capacity and will supply Danks hardware network. Logistics requirements from retailers have been a major driver of the industrial market of late. Retailers that have committed to new facilities recently include Woolworths, Metcash, Kmart, Aldi and Coles. Woolworths recently purchased an industrial warehouse at Marrickville in Sydney s inner west, which it is understood they intend to use for a Masters home improvement store. We expect to see a trend of redundant industrial properties in built up areas being purchased for use as home improvement/hardware stores due to their favourable locations, and flexible zoning. Private developers are being engaged by Woolworths to assist in the store rollout. Woolworths has indicated that they are not long-term holders of property, implying that the sites could be put up for sale soon after development. How the entry of Masters ultimately effects the property market will depend on the structure of their leases and rents, and sales evidence of the completed properties. There does appear to be room for two major home improvement retail brands in Australia, meaning that Bunnings market share isn t necessarily under threat. Woolworths entry is more likely to accelerate the decline of the smaller independent hardware stores and banner groups. Colliers International p. 3

4 Economic Indicators While the floods and cyclones over the summer reduced output in some key sectors, domestic demand remains solid. Despite recording a sharp decline in real GDP during the March quarter (-1.2 per cent), spending on new housing and business investment has been accelerating. There has also been strong growth in wages and household disposable incomes, which are being underwritten by high commodity prices and the mining boom. Even with volatile monthly readings, consumer spending has been rising, this has occurred despite the household saving ratio increasing to a 25-year high. This demonstrates that Australian households have been able to increase both spending and saving at the same time, indicating a relatively buoyant economy. Graph Heading INTEREST RATES At their June meeting the Reserve Bank board decided to keep the official cash rate steady at 4.75 per cent. Official rates have remained on hold for seven consecutive months, and lending rates continue to sit a little above average. The Reserve Bank maintains its position that the current mildly restrictive stance on monetary policy remains appropriate. In their statement they noted that growth in employment has moderated over recent months, and that while CPI inflation has risen over the past year, it expects temporary price shocks to dissipate over the coming quarters, and inflation to be closer to target over the next 12 months. While good news for households and consumers, we expect the Reserve Bank to maintain a tightening bias. Unemployment The unemployment rate held steady at 4.9 per cent during the month of May, with increases in total employment subdued. Despite the soft result for the month, an unemployment rate below 5 per cent is still considered indicative of a stable, relatively tight labour market. The overall state trends reflect an economy transitioning from fiscal/monetary stimulus to mining and investment growth. Jobs growth has been considerably stronger in Queensland and Western Australia, and softening in New South Wales and Victoria. Looking ahead, most leading indicators (job ads and business surveys) suggest that jobs growth will remain steady over the second half of 2011, which could see the unemployment rate fall slightly further by the end of the year. Official Cash Rate 8 7 National Unemployment Rate % 6.0 Official Cash Rate (%) % Unemployment Rate (%) Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 May-02 Nov-02 May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Official Cash Rate 10-year Average Source: RBA / Colliers International Research Source: ABS / Colliers International Research Colliers International p. 4

5 Consumer Sentiment The Westpac-Melbourne Institute of Consumer Sentiment fell by 2.6 per cent in June to 101.2, down from recorded in May. The Index is currently at its lowest level since June 2009, reflecting consumer concerns of rising interest rates over the next 12 months. While the survey found that consumers were confident of the near term outlook for the economy, they were still concerned about their own financial position. Concerns about the carbon tax also appear to be undermining confidence. The latest sentiment reading suggests that consumers are still focused on paying down debt, and increasing their household savings. The outlook for family finances over the next 12 months was the only component of the index to increase during the month, rising by 1.1 per cent. Index of Consumer Sentiment Index Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Consumer Sentiment Index 10-year Average Source: Westpac-Melbourne Institute / Colliers International Research Colliers International p. 5

6 Retail Indicators Although its share of GDP has fallen in recent years as a result of the strength of business investment, consumer spending still accounts for over half of total economic output. Retail turnover is a key driver of profits, business investment, employment and incomes. As the investment boom accelerates, and drives further gains in employment and wages, the recent tendency of consumers to save rather than spend is expected to diminish, and pressure on prices will build. As the household savings starts to flatten, we expect to see spending growth occurring at the same pace as income growth. The National Trend Following a rebound of 1.1 per cent recorded during the month of April, retail trade is currently running at an annual pace of 3.3 per cent. This is well below the recent annual peak of 8.1 per cent achieved in June 2009 on the back of Government fiscal stimulus. Although, retail sales data measures only a proportion a household expenditure, and there is other evidence that consumers are spending comparatively more than is captured in those figures. The jump in sales for the month confirms that while consumers are somewhat cautious at present, the sector is in much better shape than previously indicated. This is evidenced by upward revisions to the previous two month s figures. March s originally reported 0.5 per cent drop was revised up to a more moderate 0.3 per cent fall. The figures for February were also revised higher to a 1 per cent increase (from 0.8 per cent), as the ABS further ironed out flood related distortions to the series. Consumer demand is rising more healthily, but still at a somewhat disappointing pace given the strength of employment, incomes and population growth, as compared to previous cycles. Sector Trends The increase recorded in April was broad based, with all segments (except cafes, restaurant and takeaway food services) posting a rise in sales. A large rebound occurred in department store sales (+3.4 per cent), and there were strong gains for clothing (+1.2 per cent) and other retailing (+2 per cent) consisting mainly of a rise in discretionary goods turnover. Food retailing saw a solid rise of 0.9 per cent, as did household goods retailing which grew by 0.7 per cent during the month. There was a surge in furniture floor coverings, house wear and textile good sales, reflecting the ongoing refurbishment of homes in Queensland. Both large and small retailers made solid gains in turnover during April. Nominal sales growth for the larger retailers and chain stores is currently growing at its fastest pace since the start of 2010, when much of the retail sector was still benefiting from the stimulus payment boost. Small retailers have had their best three month stretch since the start of 2009, but many are still finding conditions tough. National Retail turnover (Seasonally Adjusted) Retail Turnover by Sector (Seasonally Adjusted) Annual (%) Change Annual (%) Change Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Total Retail Turnover 10-year Average Food Household Goods Department Stores Clothing & Soft Goods Source: ABS / Colliers International Research Source: ABS / Colliers International Research Colliers International p. 6

7 State Trends Retail trade performance was mixed across regions. By state, Victoria was the standout performer, with sales increasing by 2.8 per cent in April, the second largest monthly gain in the last decade, only bettered by the stimulus payment boosted 4 per cent jump in December This result follows a strong 1.2 per cent gain in March. The sector detail for Victoria shows broad strength, but with some interesting category outperformance footwear was up 21 per cent for the month. Queensland continues its stop-start recovery, also recording a strong result for the month, increasing by 1.8 per cent. Weather events are still having an impact on spending patterns in Queensland, causing volatility in monthly results, with sales increasing by 3.5 per cent in February, then only to fall by 2.7 per cent in March, before increasing again in April. Overall, other state results were mixed and rather subdued. New South Wales saw an increase of 0.1 per cent, South Australia recorded a decline of 0.4 per cent, and Western Australia a rise of 0.6 per cent. By state, Victoria was the 2.8% standout performer in April with sales increasing by Colliers International p. 7

8 Impact on Property Markets of the Recent Retailer Closures The collapse of several household names in Australian retailing has dented consumer confidence and cast a shadow over the recovery of retail sales in The recent downfall of clothing retailer Colorado, which occurred not long after the closure of the Borders and Angus & Robertson bookstores, is more negative news for a sector already under pressure. The receivers of the Colorado Group announced that all 109 Colorado branded stores will close, along with 31 stores under the Jag, Diana Ferrari, Mathers and Williams banners (brands also owned by the group). Retailer collapses have occurred across a variety of categories, other high profile closures of late include Krispy Kreme, Baskin and Robbins, Clive Peeters, Perfume Empire and Ed Harry. Borders Store, Westfield Bondi Junction, 500 Oxford Street, Bondi Junction The tough retail environment during 2010 contributed to the recent failure of a number of private equity backed retailers. Conditions have been challenging for private equity owners that bought at the peak of the buyout boom in 2006 and 2007, and employed high levels of gearing. Private equity-owned retail groups currently face a testing market, resulting in a number of planned initial public offerings (IPOs) being postponed. The Rebel Sports chain, owned by Archer Capital, had planned an IPO last year, but deferred its plans, and cinema chain Hoyts, owned by Pacific Equity Partners, also recently postponed a potential IPO or sale. Other smaller private-equity owned retail firms that have been looking for a buyer in recent months include Bras n Things, clothing chain Witchery and vacuum cleaner retailer Godfreys. It is important to differentiate between retailers that are undergoing a structural change in their industry such as book retailers, from those that are struggling due to funding issues and external factors. Similar to the shift that occurred in the music industry, consumers are changing not only the way they purchase books, but the way in which they read them too. The shift from purchasing music in-store to online mirrored the move away from listen to CDs, to using ipods and MP3 players. This is now occurring in the book industry as consumers increasingly use other mediums to read books. While online retailing is estimated to account for only about 5 per cent of total retail turnover, the figure for music and book sales made online is considerably higher. The fact that the REDgroup is Westfield s second largest specialty tenant (including Borders and Angus & Robertson) has received much publicity. The key question is whether this marks a turning point in the balance of power in specialty retail? Landlords have up until now held the upper hand in many lease negotiations as demand has exceeded supply, with the rent/sales ratio for specialty retail constantly increasing. If the pool of tenants diminishes or stops growing, will there be pressure to lower rents in order to fill shopping centres? Occupancy costs are an ongoing issue for retailers, with rents increasing faster than sales turnover. If retailer margins weaken and we don t see a sustained recovery in sales growth, future capacity for rental increases may come under some pressure. It is important to differentiate between retailers that are undergoing a structural change in their industry such as book retailers, from those that are struggling due to funding issues and external factors. Colliers International p. 8

9 The outlook for the traditional shopping centre model remains solid, and the fundamentals of the Australian economy sound. While overall retail vacancies are estimated to be sub-5 per cent, and less than 2 per cent in many of the larger shopping centres, the recent retailer collapses combined with leakages to online sales, will ultimately have some impact on traditional retail outlets. While current vacancy rates in the retail sector are the lowest of all commercial property types, store closures will primarily have an impact on tenancy mix. Many retail property owners have been aware for some time that these companies were in trouble, so leasing negotiations are well advanced on most of the tenancies being vacated. Major landlords are expected to use these store closures as an opportunity to introduce new concepts, refurbish and undertake centre upgrades, as well as adjusting the tenancy mix across their centres. Shopping centre owners need to focus on future proofing their centres. Developers and landlords will have to look at the mix of types and sizes of stores available for rent, as in the future retailers may start looking for smaller physical footprints. This is in line with the shift for retailers to hold lower stock levels and in some cases the in store experience shifting towards browsing. As the bricks-and-mortar retailer revenue model is challenged, so too may be the current occupancy and rental cost model. The greatest challenges facing retailers are changing consumer spending habits, and actually getting consumers spending again. The volatility of monthly retail trade figures, a strong Australian dollar and the growth of online shopping have combined with increases in interest rates, to make conditions difficult for retailers. Most at risk are retailers with poor balance sheets, outdated business models and product lines. The impact on retail property will be more subdued than on retailing itself, as market rents will continue to be driven primarily by vacancies. While in the short-term retail property owners will be impacted by these major retail chains going into administration, the outlook for the traditional shopping centre model remains solid, and the fundamentals of the Australian economy sound. In the current environment, shopping centres that can maintain or expand their market share will outperform. Yields and capital values will continue to be influenced by broader financial market trends, including the availability of finance, shifts in risk tolerance and asset sector allocation. Colliers International p. 9

10 Outlook Despite the strong rise in retail turnover reported during April 2011, broader market commentary and statements from retailers indicate an ongoing lacklustre retail environment. Initial reports suggest that the start of the traditional mid-year sales period has been disappointing. The sector continues to face a number of challenges including a strong Australian dollar, sales moving to online channels and weaker consumer sentiment. Price deflation also continues to be an industry wide issue. While the high Australian dollar is pushing down the price of some goods (which benefits the consumer), because retailers are not selling greater volumes of product, and margins are the same, it is impacting their earnings and profits. The collapse of several household names in Australian retailing has also cast a shadow over the recovery of retail sales in The current levels of discounting that consumers have become accustom to will prove challenging for retailers to unwind. In the near term margin expansion will be hard to achieve in the absence of sustained sales growth. This is reflected in the performance of the retail sector on the ASX, which has underperformed the wider index over the past year. The most recent Federal Budget was the first in eight years which hasn t delivered a personal income tax cut. Disposable incomes will be impacted by the introduction of a one-off levy to help fund the reconstruction effort in Queensland. The levy will be a progressive tax applied to those making in excess of $50,000 (and not receiving disaster recovery payments). While it represents only a small proportion of household incomes, the psychological effect is likely to weigh down on consumer s perceived capacity to spend. Paying down debt and increasing savings has become the main priority for most Australian households. With the Reserve Bank widely expected to raise rates further, this trend looks set to continue in the short-term. Retail sales levels are expected to normalise over the next 12 months, supported by strengthening disposable incomes available for spending. While a number of shortterm negatives remain for retail, spending is anticipated to pick-up in the medium-term buoyed by a resources boom that will lift employment further and underpin wages growth across the economy. Australia s largest retail landlord Westfield recently reported continued growth in rents across its portfolio, high occupancy rates, and low arrears. Other major shopping centre owners have also reported stronger than expected centre performance. While good news for investors, occupancy costs are an ongoing issue for retailers, with rents increasing faster than sales turnover. If retailer margins weaken and we don t see a sustained recovery in sales growth, future capacity for rental increases may come under some pressure. The recent sale of Gandel s 50 per cent interest in Northland shopping centre to the Canada Pension Plan Investment Board for $455 million is the largest direct property transaction to occur in Australia this year. This is a strong vote of confidence for retail property markets and demonstrates that Australian retail assets are firmly back on the radar of foreign investors. Demand for prime retail assets remains strong from both domestic and increasingly offshore investors, despite the stronger Australian dollar. The gap between vendor expectations and market interest is expected to narrow further over the next six to twelve months, resulting in increased transaction activity. 512 offices in 61 countries on 6 continents United States: 125 Canada: 36 Latin America: 18 Asia Pacific: 194 EMEA: 117 $1.5 billion in annual revenue million square feet under management Over 12,500 professionals COLLIERS INTERNATIONAL Level 12, Grosvenor Place 225 George Street Sydney, NSW, 2000 tel FAX researcher Nora Farren Director/Research tel MOB Colliers International does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the accuracy of such information, figures and projections. Colliers International will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. COPYRIGHT - Colliers International Accelerating success. Colliers International p. 10