Ottawa’s growth as a large- and mid-bay industrial market will continue, with the acquisition by CanFirst Capital Management and Colonnade BridgePort of a 50-acre site in the city’s southwest. They plan to construct up to 900,000 square feet of new space on the land starting in 2024.
While Colonnade BridgePort is a locally based developer and commercial real estate firm, the project marks a re-entry into the market for Toronto's CanFirst. Executive vice-president Mark Braun told RENX CanFirst has been looking to reinvest in the region’s growing industrial base.
“Honestly, it’s not for lack of trying,” Braun said. “We’ve been looking at opportunities for the past couple of years, industrial opportunities, and we just haven’t been able to transact on them for various reasons, mostly because we were not the highest bidder.
“We’ve been actively trying to re-enter the Ottawa market for some time.”
The industrial project brings CanFirst back into the market with a different strategy than with its previous investments in the region.
This site was acquired on behalf of its CanFirst Industrial Development Fund, a recently launched investment vehicle which targets industrial development sites.
“This is a land development obviously, we are developing new product where we previously invested in Ottawa as income-producing or value-add types of opportunities.”
The 50-acre property and development plan
The partners paid about $44 million for the property, at Strandherd Drive and Citygate roads near both a new 2.9-million square foot Amazon fulfillment centre and Hwy. 416 in the Barrhaven area.
Colonnade Bridgeport will be the development partner and lend its local knowledge to leasing and then property management.
“They are a great partner,” Braun said, “very knowledgeable and very well known in the Ottawa marketplace. So it gives us a lot of comfort and confidence going forward with this project having a partner like that with us.”
Braun said about 43 to 44 acres will be developable, and the partners are working through zoning and site plan requirements to begin construction in 2024.
It had been listed by Colliers. The acquisition closed on Sept. 22.
“We are targeting developing 850,000 to 900,000 square feet in two to four buildings,” Braun said. “The specifications are still a little bit in flux.
“Depending on the type of tenants that we see, it could be more of logistics, fulfillment types of uses, so larger-format buildings with outdoor trailer storage.
“But also I think there will be an allowance in the project for some mid-sized tenancies say in the 50,000- to 100,000-square-foot size range, so those would be more tenancies that are traditional to the Ottawa market, smaller tenants not requiring quite the same level of shipping and logistics.”
The buildings will also likely feature 40-foot clear heights.
Ottawa's expanding industrial sector
After languishing for many years, the city’s industrial market has picked up steam in the past three or four years. Vacancy in the 46-million-square-foot market (according to Colliers data) has steadily declined, Amazon has opened two huge warehouses comprising about 3.9 million square feet of space in total, and other new distribution and warehousing tenants have arrived.
Local firms are also expanding, as the city’s population officially topped one million people and continues to grow. Braun sees demand for new space continuing, and noted any competing projects in the ground today will be delivered well before this space comes on-stream in about three years.
“The size of the industrial market in Ottawa relative to the population is quite low. Depending on who you ask there is 35 to 45 million feet of industrial to a million people in the city.
“While Ottawa is not a manufacturing type of economy, there still is demand for industrial space and we are seeing there is continuing demand, mostly to meet current logistics needs and e-commerce needs. The product that is in place, a lot of it is older product and not built to the latest standards.”
Future demand for industrial space
He expects that demand to come from a variety of sectors.
“I do see continued growth in e-commerce. Amazon obviously has taken a huge position, but there are a huge amount of other retailers nationally and how they look to fulfill requirements in other major markets such as Ottawa, there is still a lot of potential space that they require to service that,” Braun noted. “
But also the existing tenancies in the Ottawa market looking to grow, or if not growing, looking to move to higher-quality, more efficient space to improve their operations. So we think there is a lot of demand on that side as well.”
The city is also one of Canada’s hottest high-tech hubs, a sector which has seen significant expansion over the past few years.
That premise was buoyed this week with the announcement international telecom giant Nokia will invest $340 million in a major expansion of its Canadian headquarters in Ottawa’s west-end Kanata district. It will expand all facets of its Ottawa operations, from offices to research and development, as well as planning retail and residential components to the 26-acre campus.
“Also underpinning everything, what we like about Ottawa, is that there is a tech-related element to this market,” Braun said. “There are tech-related users, warehousing uses, or perhaps if not straight-up warehousing there might be some types of fabrication or other types of light industrial uses related to tech users.
“Our primary focus is to build new, quality industrial warehousing that supports the demand that is existing, and we think, coming to the market.”