INDEPENDENT MARKET REPORT By JLL as at 31 December 2024 EXECUTIVE SUMMARY MUST’S MARKET PERFORMANCE RELATIVE TO U.S. AVERAGE Rental rates 2020 2019 2021 2022 2023 2024 Base and net effective rental rates (NERs) Sublease availability QoQ change U.S. U.S. U.S. MUST’s markets MUST’s markets MUST’s markets MUST’s markets base rents MUST's markets NERs U.S. MUST’s markets U.S. base rents U.S. NERs • For three consecutive quarters, office leasing volume has established a new post-pandemic high—Q4 leasing volume reflected over 92% of typical pre-pandemic averages. • The market experienced its first quarter of positive net absorption since Q4 2021, and just the second time since the pandemic began. • Availability has declined for two consecutive quarters, pointing towards notable declines in vacancy in 2025, especially as absorption is anticipated to stabilize and new deliveries decline. • Despite lagging against inflation, same-store asking rents continue to grow; face rates and effective rates on leases signed in 2024 saw an improvement from softening economics in 2023. • Groundbreakings for the past six quarters have averaged 10% lower than the previous historical low, and deliveries will begin to decline sharply after the first half of 2025. • Record volume of inventory continues to be removed for conversion and redevelopment, leading to net inventory loss in many major markets. • Momentum continues for return-to-office, with several major employers establishing or increasing requirements, or announcing new mechanisms of enforcement in Q4. • Manulife US REIT's (MUST) markets are experiencing a recovery in line with the U.S. at large, but recovery has been uneven across submarkets due to industry composition and submarket characterizations (e.g. CBD, urban, suburban). Average lease term Average lease term (months) U.S. MUST's markets 80.0 70.0 60.0 50.0 20% 10% 0% -10% $50 $40 $30 $20 2019 2020 2019 2019 2022 2021 2021 2021 2020 2020 2023 2022 2022 2023 2023 2024 2024 2024 Average months of free rent Leasing concessions Leasing volume Average rent abatement (months free) Average T.I. allowance Leasing activity (m.s.f.) 6.0 4.0 2.0 0.0 $70 $65 $60 $55 $50 $45 $40 100.0 80.0 60.0 40.0 20.0 0.0 6.0 4.0 2.0 0.0 2019 2019 2021 2021 2020 2020 2022 2022 2023 2023 2024 2024 ANNUAL REPORT 2024 | 39
RkJQdWJsaXNoZXIy NTkwNzg=