One of Ottawa’s newest industrial developers, Avenue 31, has completed two significant leases in recent months at its National Capital Business Park where it has constructed three spec buildings and plans about 1.3 million square feet of development.

The two new tenants, local commercial cleaning firm Dustbane and international transportation firm FedEx, illustrate the increased activity in the National Capital Region these days, according to Avenue 31’s director of business development Ryan Semple. The first is a growing local company seeking more modern space, the second an international operator which is either expanding or moving into the market.

Building on spec has allowed Avenue 31 to accommodate the needs of both these types of firms.

“The intention was always to build on spec,” Semple said in an interview with RENX. “The economics make sense, the vacancy rate is sub-two per cent, there is no new supply in Ottawa, we have a great location that provides the access, ceiling height, visibility, that the typical industrial users require.

“The general activity in the market has never really slowed down for us. It’s been consistent since we started and momentum has continued to build. The last two quarters for us have been our busiest quarters to date.”

The National Capital Business Park

Avenue 31 was founded in 2016 by CEO Michel Pilon and acts on behalf of over 100 investors from across Canada.

It began building at the east end National Capital Business Park along Hwy. 417 about two years ago. 

Building C is complete and fully tenanted, with Dustbane leasing the final 68,000 square feet in the 32-foot clear, 145,000-square-foot facility.

“It was executed not too long ago and we are working on the design process with them as we speak,” Semple said. “Their intentions are to occupy mid-summer of 2023.”

Dustbane is moving from a smaller location which sold to another local developer, Colonnade BridgePort, as a future redevelopment property about a year ago.

The second and third buildings at the park – Building A2 and B, are now also ready for occupancy. This is in line with Avenue 31’s plan to complete a building approximately every year.

“We submitted a site plan on spec for Phase 2,” Semple explained. “Phase 2 included three buildings, A2, A1 and B. We have moved ahead and built on spec, A2 and B. A2 is 131,000 square feet, approximately, and B is 162,000 square feet.

"So those are complete now.”

FedEx has just moved into Building A2, occupying 68,000 feet. Semple is working to lease-up the rest of the space.

“General activity has been consistent,” he said. “Not all the deals happen, but there’s a lot of inquiries, we do have a couple of other deals we are currently working on. We’re busy.”

Future industrial development

As for Building A1, it would be the crown jewel of the site if it goes ahead as planned

“The third building, A1, is site-plan approved but it is roughly 600,000 square feet, so we aren’t going to build a building of that size on spec," Semple said. “We have the ability to wait to see if there is a large tenant who shows up who wants to enter the Ottawa market.

"We have a building ready to go. If no one shows up, if we don’t have a lead tenant to kick off the building, we will revisit what we do here in about a year’s time.”

To keep the construction momentum rolling, Avenue 31 has just submitted its site plan for the next building, E2. This will be a 200,000-square-foot, 32-foot clear height facility for which construction is slated to start in 2023.

Based on that timeline, it could be coming to market at a time when Avenue 31 might face more competition.

All but dormant for many years, the city’s light industrial and distribution sector has exploded in the past few years, with Amazon moving in to over four million square feet of space in several facilities, including book-ends of a million square feet on the city’s eastern boundary and a massive multi-level 2.9-million-square-foot facility in the southwest sector.

The “Amazon factor,” the overall rise of e-commerce, last-mile deliveries and on-shoring of both production and product storage, has meant a boom that shows no signs of slowing.

Ottawa industrial development land

Amazon’s developer in the region, Montreal-based Broccolini, still has property in Ottawa for new industrial space. Colonnade BridgePort partnered with Toronto’s CanFirst Capital Mgmt. to acquire a south-end development property earlier in 2022 and Montreal-based RoseFellow has made two land acquisitions. To name a few.

Semple's own company also holds development properties near both major Amazon facilities.

“There is absolutely competition coming,” he said, noting Avenue 31’s current advantage is space available right now. “I’d say the difference is seeing a building that is built, that you can touch and feel, versus, when are these buildings going to come to market?”

However, Semple knows it won’t be long before more companies have space ready to lease. 

“We know that all of these groups that are buying are going to be building and they are going to come to market as quickly as they can because they are all following a similar logic to us,” he noted. “All of the sites that were acquired this year, nothing will be ready in 2023, so I think it’s more 2024 where the conversation may change a little bit.”

Major property along Hwy. 401 at Long Sault

Avenue 31, meanwhile, has another significant Eastern Ontario property in the Long Sault area, just outside Cornwall.

The 680-acre property has extensive frontage along both Hwy. 401 and the CN rail line, and the firm is currently working with the township to make it available for development.

Without offering any specifics, Semple said he hopes 2023 will be a “big year” for that site. Among the options would be an “inbound intermodal hub.”

He noted the Cornwall area has also experienced a major increase in industrial development thanks to its proximity to the Quebec and U.S. borders.

Both the highway and rail line connect the Toronto and Montreal urban areas.

“We’re a development company that understands warehousing, so when we bought it, it was for that purpose,” Semple said. “It just happened to have rail here (also), so we’ve been going through the process of educating ourselves of the value and the significance of what this site could become.”