CT REIT building spec net-zero distribution centre in Calgary

IMAGE: CT REIT plans to build on spec a net-zero, 350,000-square-foot distribution centre in Calgary. (Courtesy CT REIT)

CT REIT plans to build on spec a net-zero, 350,000-square-foot distribution centre in Calgary. (Courtesy CT REIT)

CT Real Estate Investment Trust is building a net-zero distribution centre in Calgary – a state-of-the-art facility the scale of which president and COO Kevin Salsberg believes is a one-of-a-kind development in Canada.

Salsberg told RENX the distribution centre is the first of its kind for the REIT (CRT-UN-T) and will be 350,000 square feet built on a speculative basis.

“This is our first project (of this type). I can’t say for certain, but I haven’t heard of too many other net-zero industrial buildings being built in Canada at this point,” he said. “So we’re quite proud to be among the first to market with something like this and we’re hopeful it will resonate with prospective tenants, too, who have their own sustainability objectives and initiatives underway.”

The project featured prominently in CT REIT’s new development plans which were discussed in its 2021 earnings report released this week. In total, CT REIT committed to an additional $71 million in development at four Canadian sites, though the Calgary facility is by far the largest.

The REIT also reported strong annual and quarterly numbers, with net income for 2021 of $487 million compared to $183 million for 2020.

New Calgary spec distribution centre

The distribution centre will be built in the Dufferin area of Southeast Calgary, close to two other distribution centres owned by the REIT.

The existing distribution centres in Calgary include a 625,000-square-foot building leased to Canadian Tire and an adjacent 200,000-square-foot property leased to Sleep Country and to Sokil. 

The new building will offer nearby access to the Canadian Pacific Railway Intermodal Terminal. It will be built on 19 acres of land with 40-foot clear heights.

There will be an enhanced building envelope to increase air tightness, which includes greater wall and roof insulation, as well as the use of vertical dock levellers which seal the docks in a much more efficient manner than traditional systems. Other highlights include an in-ground geothermal heating system and solar panels on the roof to provide the required electrical load for the building.

All those features will lead to a net-zero building designed to produce as much energy as it consumes on an annual basis. There will be no on-site combustion and therefore zero reliance on fossil fuels.

“For a tenant, there’s no gas or electrical utility cost,” said Salsberg. “Soup to nuts, this building will be state of the art, it will be efficient and will provide actual operating cost savings to our tenants in the form of utility cost reductions. It will be great. We’re really excited about it.”

“Robust” industrial demand in Calgary, Canada

Construction on the distribution centre will start in Q2 2022 with completion in late Q3 2023.

“We’re building it on spec. The state of the industrial market is such that it’s quite a robust, healthy leasing market – lots of demand.” Salsberg explained. “We’ve seen vacancy rates across the country including Calgary decline in significant ways over the course of the pandemic.

“As well, rents going up . . . cap rates going down. So from an asset-class perspective, everything is sort of heading in the right direction.

“We obviously have a close relationship with Canadian Tire and we help facilitate their retail and logistics requirements. As of right now, they have not committed to the facility. They continue to review their requirements for supply-chain space in Western Canada but we really, really like the opportunity.

“We own the land. We’ve obtained a development permit at this point and so feel very comfortable building it without a tenant in place today and we’ll see how things come along from a market leasing perspective as we bring it to market.”

The Dufferin site is particularly appealing for CT REIT because it’s within the City of Calgary boundaries, good from labour and transportation points of view.

Salsberg said the access to talent certainly is an advantage. The access to the CP Intermodal yard is also a huge opportunity and benefit for CT REIT and tenants as operators of the facility. It also has quick access to the city’s highway system.

“All those benefits make this a world-class facility and location, in our opinion at least,” he said. 

ESG efforts “top of mind”

Salsberg said the project fits into CT REIT’s ESG efforts, which he said are “top of mind for a lot of developers, landlords, public companies.”

It also adds to CT REIT’s industrial exposure, which he said is about 15 per cent of its overall portfolio in Canada by gross leasable area. Its total portfolio is 29.1 million square feet of mainly retail space; industrial is about 3.9 million square feet.

“The industrial real estate market in Canada is very strong. We’ve obviously had to weather the pandemic and pandemic-related impacts and some asset classes have certainly fared better than others,” said Salsberg.

“For us at CT REIT, based on our relationship with Canadian Tire we have certainly had a strong, resilient, stable portfolio. Our rent collection and occupancy rates have stayed industry-best.

“From the investor perspective, there’s still so much money chasing the hard assets and we’ve continued to see cap rates decline over time, especially in industrial for grocery-anchored retail, for single-tenant retail with strong investment group covenants like our portfolio. The market is still frothy.”

CT REIT financial highlights

CT REIT also plans to redevelop a 69,000-square-foot Canadian Tire store in Sainte-Catherine-de-la-Jacques-Cartier, Que., and will expand two stores in Sydney and Bedford, N.S.

In its financials, the REIT reported a significant increase in year-over-year Q4 net income, $125.4 million compared to $14 million in 2020. The strong net income increases, for both the quarter and the year, CT REIT attributes to significant fair value gains in its investment properties, as well as operating revenue increases.

For the full year, CT REIT’s funds from operations were $287.6 million, up about six per cent from $270.7 million in 2020. Its property revenue rose from $502.3 million in 2020 to $514.5 million in 2021.

Diluted net income per unit was $1.63 compared up $0.77 a year ago.

CT REIT is an unincorporated, closed-end real estate investment trust formed to own income-producing commercial properties primarily located in Canada. Its portfolio is comprised of over 350 properties totalling approximately 29 million square feet of GLA, consisting primarily of net lease single-tenant retail properties located across Canada.

Canadian Tire Corporation, Limited is CT REIT’s most significant tenant.



Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime,…

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Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime,…

Read more



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