While not universally true, CBDs have historically experienced larger declines in rent and have taken longer to hit their rental rate trough than suburban submarkets. Given the unprecedent size and timing of the labor market shock during COVID, Cushman & Wakefield forecasts more markets will reach the sweet spot sooner relatively to historical experience. This makes planning, strategy and action vital in 2021. Occupiers wanting to take advantage of a specific market’s “Sweet Spot”- the time period when 75%+ of the peak-to-trough decline has occurred- may need to move more quickly this time around than during the previous two recessions. Some are more volatile, both during expansions and contractions. The degree of the declines is even more market dependent. Given that, it is likely that many markets will fall more precipitously. The economic recession that commenced in Q1 2020 was unparalleled in its timing and the depth of the job losses. As an example, gateway markets-which also have higher asking rents than the national average-have historically experienced rent declines twice as sharp as those in secondary and tertiary markets. Strategically timing the market in more volatile locations can pay significantly higher dividends for occupiers. The variance among the top 10 most volatile North American markets has historically been nine times that of the 10 least volatile markets. However, the depth of the pattern can vary widely. While the timeline of rent declines varies by market, the pattern is consistent. The length of time to overall rent trough varies by market In fact, only a third of markets hit rent bottoms within the first three years (i.e., 12 quarters). markets hit their overall rent trough within a year. Following the conclusion of the past two recessions - the Dot Com and Great Financial Crisis (GFC) - no U.S. This delay means that office tenants, or occupiers, can be patient in their plans to optimize opportunities in many markets. The trend in Canada is similar, with average gross asking rents up 2.2% year- over- year while vacancy has increased by 270 bps over the same time period. National vacancy, on the other hand, ended the year 257 bps higher than Q4 2019 (273 bps for Class A product). office market as overall and Class A asking rents ended Q4 2020 at all-time highs, up 5.6% and 3.8% year- over- year, respectively. This is playing out again in the current U.S. Previous recessions have shown that national office asking rents historically don’t decline until four quarters after vacancy begins to increase. Economic Data Sheds Light on Lease Negotiations for Tenants

Timing light rental