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Based on a semi-annual review by CB Richard Ellis of office market rents across major cities worldwide, 90% reported flat or rising rents over the past 12 months (March 2007 versus March 2006). Canada was fortunate to have four markets represented in the global top 50 for highest growth in office market rents (on a percentage basis), over the past 12 months.

Western Canada sharply outperforms rest of Canada. Buoyed by robust energy industry fundamentals, both Edmonton and Calgary made the top 50 global list in terms of highest rent growth: +60% Y/Y growth for Edmonton, +29% for Suburban Calgary, and +12% for Calgary's CBD. Edmonton's meteoric rise placed it as the fourth highest rent growth city in the global survey. Not surprisingly, Western Canadian cities sharply outperformed Eastern Canadian cities.

Canadian office markets still offer less expensive rental rates versus other developed countries. Only two Canadian cities rank in the top 50 in terms of the most expensive rental rates. Calgary (CBD) ranked #33 and Toronto (CBD) ranked #37. Interestingly, rents in Calgary and Toronto are less than 25% of those in the #1 city (London-West End) and less than 60% of the #10 city (Hong Kong).

Calgary Market: Over the past few years, Calgary's economy has witnessed continual improvement due to economic diversification. With increased emphasis on natural gas production, high tech industry growth, tourism increases, diversity in manufacturing, and Calgary's move to a distribution center, the economic base has broadened dramatically.

Considering these growth factors and low interest rates, low inflation, reduced unemployment, and a steady increase in population, Calgary should experience solid economic growth in the coming years and, therefore, continual demand for office space.

Calgary continues to show a steady population growth. City census figures for 1998 show a population of 819,334, which is 28,836 more people than one year earlier. This is the second highest annual increase since the high growth period of the early 1980's. Based on conservative growth predictions, the City of Calgary is projecting a population of over one million by 2006.

Manufacturing had not been a major factor in Calgary's economy. It previously focused on agricultural and the oil and gas industries. Now we see a broad diversification into food processing, furniture, clothing, and high technology. Today, export taxes on manufactured goods exceed oil and gas royalties earned. Calgary is now considered to have a strong diverse manufacturing base. This fits in well with our prominence as a distribution center for Western Canada, U.S.A., and the Asian countries. New major distribution facilities are established to service companies such as Northern Telecom, Canada Safeway, Shoppers Drug Mart, Wal-Mart, and Snap on Tools.

Calgary is now recognized as having the largest concentration of research facilities in Western Canada. Over 2/3 of Alberta's advanced technology companies reside in Calgary.

Calgary has emerged as the administration, financial, and head office center for the Canadian energy industry. Of the total firms in Canada, 647, or 83% are located in the City. Servicing this industry is a large number of service and supply companies; oil well drilling, contractors, and pipeline companies, in addition to refining and marketing operations.

Calgary is now ranked second as the major Canadian head office city, with 103 head offices, an increase from 61 in 1993. Only Toronto ranks ahead of Calgary.

The oil industry and its need for capital has resulted in Calgary becoming a major financial center. In addition to the Canadian major chartered banks, 16 foreign banks serve Calgary. These banks handle the financing of major projects worldwide, all from offices in Calgary.

The Alberta Provincial Government has been a major contributor to Calgary's success, by creating a pro-business climate. Alberta has no provincial sales tax, lower personal tax rates, and a good tax regime for business. In 1997 the provinces GDP growth was 4.25%. Projected GDP growth for 1998 is 3.9%

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