Do your homework, be organized and plan. It’s a straightforward formula and one that is paying off for Ottawa-based developer Avenue31 as it begins its plan to deliver almost two million square feet of space into the National Capital Region.
In May, local media reported that Avenue31 had submitted a development proposal for a roughly 650,000-square-foot warehousing and logistics facility across from Amazon’s giant million-square-foot fulfillment centre on Boundary Road in Ottawa’s East End.
What those reports didn’t note was that Avenue31 had just put shovels in the ground at another major development site – its National Capital Business Park at Hunt Club Road and Highway 417.
Located in the southeast sector of the city, like the Boundary Road site it is also along the highway corridor to Montreal.
The developer is marketing more than 1.3 million square feet of class-A industrial space for lease. National Capital Business Park is the first project from Avenue31 to start construction.
The pandemic didn’t start this fire
Avenue31 and its investors see a huge opportunity in the growth of e-commerce, in hand with Ottawa’s growing importance as a centrally located warehousing and logistics hub between Montreal, Toronto and points of entry into the U.S.
It’s a dynamic that’s only accelerated with the pandemic. The Avenue31 team has been paying close attention to how these winds are blowing for some time. It all began in 2016 with the vision of founder and CEO Michel Pilon.
“Avenue31 came to be in response to the economic and social factors that are shifting our cities,” said Ryan Semple, Avenue31’s director of business development.
“The movement of goods and people and talking specifically about e-commerce, automation, climate change and urbanization.”
In pursuit of that end, Avenue31’s development focus spans Eastern Ontario in three verticals – warehousing and logistics, mixed-use multiresidential and infrastructure.
On the industrial front, Avenue31 has assembled a portfolio of logistics sites capable of accommodating up to eight million square feet of class-A industrial space.
Simple supply and demand
In addition to the National Capital Business Park site, Avenue31 has that other site across from Amazon – the 44-acre Boundary Road Industrial Area.
The site is being rezoned to allow for uses such as highway commercial, a truck transport terminal and a wide range of other rural industrial purposes. Construction is expected to start sometime in 2022.
A third development site lies on the 401 corridor near Cornwall – the Long Sault Logistics Village. This site straddles both the logistics and infrastructure verticals given its access to rail.
Avenue31 envisions Long Sault as “a 680-acre, master-planned, trans-modal logistics village to be anchored with a 50- to 100-acre railyard, bordered to the north by Highway 401, the busiest goods movement corridor for transport trucks in Canada, and a CN main cargo line to the south, the busiest cargo rail corridor in North America.”
A fourth warehousing and logistics site of 30 acres will soon be announced in the south end of Ottawa.
“It’s as simple as a supply-and-demand case for more logistics development,” Semple said. “When you look at the stats on e-commerce and business in general and what percentage of sales are now online, it’s been trending upward for a long time.
“COVID-19 has also really shown a few holes in our supply chains.”
“Bursting at the seams”
While he didn’t drop any names, Semple acknowledged that Avenue31 is fielding more and more calls from big brands in food distribution, retail and e-commerce.
The challenge and opportunity with Ottawa is that it still suffers from a shortage of available industrial space in the large footprints desired by these prospective tenants.
“Ottawa is increasingly being seen as a location for same-day delivery,” Semple said. “These organizations are bursting at the seams with their current locations.”
The key to having the right product at the right time all comes down to planning, organization and ensuring a strong network of investors and advisors.
“As a new developer, we are making sure to align ourselves with people who have the experience to help us make the right decisions and build a product that will stand the test of time,” Semple said.
If Semple’s name sounds familiar, it’s no surprise. A Canadian Alpine Ski Team member for 12 years, he competed at two Olympic Games. Prior to joining Avenue31, he spent five years in the real estate industry, founding and operating his own real estate firm.
Pilon, the firm’s president and CEO, has over 25 years of experience in the development industry. He started out as a market analyst at the Canada Mortgage and Housing Corporation, then moved up the ranks with several companies before also launching Simplicity Development in 2004.
He’s been involved in residential subdivisions, land assemblies, mixed-use transit-oriented developments, community retail plazas, infill residential, industrial buildings and business parks, and public/private partnerships.
Avenue31’s investor base includes representation from Montreal, Toronto, Halifax, Charlottetown and Saint John’s, as well as Ottawa.
Investors represent a wide range of economic sectors and professional services to ensure the company has solid advice it can trust. This extends to sustainability, to meet and even exceed standards such as LEED.
Those who fail to prepare . . .
“Of course, you want to provide a great product, but we want to push to provide a product that will also be sustainable with the challenges that we have in today’s world,” Semple said.
While the pandemic may have accelerated the growth and evolution of the warehousing and logistics business, it has also sparked supply chain disruptions that can derail new development.
The key to keeping timelines on schedule has been Avenue31’s approach from the outset to plan ahead. For example, to ensure a consistent flow of steel for construction, Avenue31 secured a supply deal with a Canadian manufacturing partner early on.
“You really have to lock in six months in advance, and I believe that wasn’t the standard in the past, but if you wait and the supply is not then available, you can’t build,” Semple said. “Once you finally put a shovel in the ground, you have likely done about 75 per cent of the work.”
But, what about that other market vertical – mixed-use multiresidential?
The 15-minute neighbourhood
While Avenue31 doesn’t have anything to announce yet on that front, there’s plenty of activity behind the scenes. Semple said the ideal opportunity will qualify as a “15-minute neighbourhood,” with amenities and mass transit access all within walking distance.
“It’s always about finding a future-proof site. The big picture is Ottawa is a great place to live. The city continues to grow and there will always be a place for new multires.”
For now, the focus is on delivering a strong industrial product to the market and firmly establishing the Avenue31 brand.
“As a new company, we have to demonstrate that we can deliver and that is what we are doing now,” Semple said. “We are a small but mighty team.”