Lowland Properties Group spent almost three years “pretty quietly” acquiring a few properties in the Kitchener-Waterloo-Cambridge region west of Toronto. During the past year, the Toronto-based firm has made a lot more noise, with several acquisitions including its latest and largest: three adjacent light industrial properties in Kitchener.
“About 18 months ago it became a lot more real and a lot more active,” Lowland principal Tim Kennedy told RENX. “Especially over the last 12 months it’s become very busy, we’ve had four acquisitions totalling just over 300,000 square feet of space across office and industrial mainly, and we bought a small infill townhome site as well.”
Based in Toronto, Kennedy said Lowland started out looking mainly for properties in downtown cores in mid-sized cities which ring the Greater Toronto Area. While much of the core philosophy remains, the focus is on Waterloo Region and the surrounding area for now and the searches have widened within those communities.
“The mantra has remained and our goal is to buy, reposition and hold quality real estate and have properties that add to the communities they are in. That’s quite important to us; we try to avoid quick fixes. We make decisions on what’s right for the property, what’s right for the community and what’s right for the tenants,” Kennedy explained.
“We’re able to do that because we have a longer-term focus for our assets.”
Lowland expands property parameters
Lowland has also expanded the types of properties it is seeking.
“Buying ignored properties in these cores on main streets like King in Waterloo and Kitchener, and Main Street in Cambridge, that sort of evolved as our understanding of those markets evolved,” he said. Areas just outside the downtowns, but with strong potential for growth, are also now on the radar.
“Because we’re private and entrepreneurial, it also allows us to be opportunistic.”
From commercial and mixed-use type properties, Lowland expanded into industrial last year with the acquisition of a 114,000-square-foot building at 607 Kumpf Dr. in Waterloo. Considering that acquisition a success, they’ve now acquired three more adjacent buildings on 9.36 acres of land from 259 to 335 Gage Ave. in Kitchener.
The acquisition price was $19.9 million.
“We’re just really pleased with the acquisition as a whole. It’s an interesting one,” Kennedy said. “One is newer, around 2002 it was built, and the other ones are about 40 years old.”
About the Kitchener industrial acquisitions
The small- and mid-bay properties are just a few blocks from the downtown area and offer good transit access and excellent zoning. With unit sizes ranging from just under 3,000 square feet to 32,000 square feet, they’re also fully occupied.
“You have three buildings with various qualities to them and unit sizes so you get some diversification,“ Kennedy noted. “We were also really attracted to the very flexible zoning which allows a wide variety of uses, which is rare. It has a site-specific exception for a lot of that, so it really allows you to be creative in what you put in there.”
Being just two full blocks from the King Street area downtown is another key point.
“You’re pretty close to the heart of Kitchener. It’s a pretty big piece of land. That doesn’t mean it’s a massive residential tower in 20 years, but you’ve just got a lot of flexibility with that in a great location,” said Kennedy, though the current plan is to hold the property as a longer-term investment.
The recent acquisitions have more than doubled Lowland’s overall holdings. Kennedy said that is a result of success with its initial smaller acquisitions, getting Lowland’s brand out to the market, and working with a series of partners to build the portfolio.
Partner with Toronto’s Roy-L Capital
In the Kitchener acquisitions, Toronto-based private investment company Roy-L Capital Corporation is its partner. Roy-L executive vice-president Matthew Fishman said Roy-L likes Lowland’s “impressive depth of knowledge of the Kitchener-Waterloo market.”
“Together, we saw an opportunity to acquire a 160,000-square-foot portfolio across three industrial buildings on more than nine acres close to downtown Kitchener – a dynamic market with strong demographic and economic drivers,” Fishman told RENX in an email exchange.
“The diverse tenant base is comprised of last-mile logistics, medical diagnostic and commercial recreational uses, among others, all of which will benefit as we look to a post-pandemic world.”
Kennedy has over a decade of varied experience in the commercial real estate business, working as a sales representative at Ashlar Urban Realty (before it was acquired by Cushman & Wakefield), then moving over to First National Financial where he rose to director of commercial financing.
He also spent some time as director of real estate at KPMG Canada before focusing exclusively on the Lowland venture.
Establishing a presence in Waterloo Region
The initial attraction to Waterloo Region and its surrounding environs came largely as a result of the communities’ strong growth and the willingness of those municipalities to support that growth.
“What really drew us into Waterloo Region was just how focused the municipal governments were on improving their downtowns and investing in their downtowns. That is naturally going to attract private capital and give opportunity to larger-scale projects whether it’s us or someone else,” he said.
“If groups like Perimeter and Momentum and Allied and all these groups are building in Kitchener-Waterloo, it is good for everyone,” he noted.
After several years of involvement in the region, Lowland is also becoming more well-known, which he expects to lead to more growth for the firm.
“We had to build trust, too, and that doesn’t happen overnight. I think (within) the broker community, the seller community, our partners, that trust has grown a lot.”