Fengate Real Estate has closed on two industrial land acquisitions to add to three projects already at various stages of development across the Greater Toronto and Hamilton Area (GTHA).
“All of these purchases were off-market purchases that we were able to acquire through Fengate’s partners’ and investors’ deep relationships with the brokerage community,” Fengate senior vice-president of leasing and asset management Scott Caverley told RENX. “This is new-generation, institutional-grade industrial space for the market.”
Fengate has approximately 900,000 square feet of existing income-producing industrial assets in its portfolio and that number will rise considerably over the next few years as projects are completed.
Fengate acquired 75 acres of land at 3054 Homestead Dr., adjacent to John C. Munro Hamilton International Airport. The site needs to undergo rezoning and Fengate will make a submission to the City of Hamilton in the third quarter of this year.
“The plan there is to roll out roughly one million square feet for an industrial business park,” said Caverley.
The other recent acquisition was a 20-acre parcel of land at Highway 50, just north of Langstaff Road, in Vaughan. Plans are for a two-phased development of two 225,000-square-foot buildings.
“We are hoping to break ground on the first building in Q1 of next year and in Q3 for the second phase of that development,” Fengate senior VP of development Andrew Konev told RENX.
Burlington and Oakville developments
Construction of a 230,000-square-foot building is underway at 1213 International Blvd. in Burlington’s Bronte Creek Corporate Centre.
“We have currently leased half of the building and the remaining 50 per cent is being marketed and getting some fantastic activity from the market there,” said Caverley, who couldn’t reveal the name of the tenant but said it is a company expanding its Burlington footprint.
Not far from that site, at the Oak West Corporate Centre on the border of Oakville and Burlington at the Queen Elizabeth Way and Burloak Road, Fengate is building a two-phased project.
The first phase consisted of 171,000 square feet in three buildings and has 99 per cent occupancy, according to Caverley. The second phase will be built across the street on a 26-acre site that will have approximately 450,000 square feet of space in four buildings.
“We are about to start the site-plan approval process and we’re hoping to be able to start construction on that property in Q3 of next year,” said Konev.
Vaughan site for Walmart, future expansion
Construction of a 550,000-square-foot distribution facility at Jane Street and Teston Road in Vaughan is underway. Walmart has signed a 30-year lease to occupy the building, which will be operational in 2024.
The 82-foot clear height facility will incorporate next-generation technology, with Walmart providing the internal automation systems.
It will handle the highest volume of any Canadian Walmart facility, with more than 70 million cases of products from more than 3,000 suppliers annually, providing omni-channel capability to supply both store and e-commerce networks.
There are 26.2 acres remaining on the site which will be divided into two blocks once the planning process is complete. A 100,000-square-foot building will occupy the first block while a 250,000-square-foot structure will be built on the second block.
Future industrial growth for Fengate
Caverley said Fengate has been “quietly active” in the market and is pursuing other acquisition opportunities in the GTHA.
“We like it for a number of reasons, especially for industrial, with strong occupancy numbers, rental rate growth, continuing population growth throughout the node and the growing trend towards e-commerce. That’s a great driver for us when we’re looking at locations.”
The landscape for acquiring industrial land in the region is very competitive. Fengate has adopted a strategy of using its broker network to access sites through off-market deals, instead of bidding on listed properties.
“We want to be able to put a shovel in the ground in two to five years,” said Konev.
Fengate was founded in Hamilton in 1974 and has built strong contacts in that market and the western part of the Greater Toronto Area (GTA), but it has now expanded its search zone into the eastern part of the GTA.
“We’ve seen some great success in a growing node there, both population-wise and with access to markets,” said Caverley.
Fengate is also open to purchasing income-producing properties in addition to land.
Fengate Real Estate is involved with more than 75 properties and investments. The completed value of its portfolio is more than $9 billion and it has more than $4 billion in value under development.
Fengate Real Estate has more than 40 people who manage transactions through the entire real estate life cycle, including land entitlement, development, stabilization and ongoing active asset management.
“We certainly see some really strong fundamentals around multifamily and industrial,” Caverley said of the current investment focus.
Fengate Real Estate is part of Fengate Asset Management, which has offices in Toronto, Oakville and Houston.
The parent company also invests in private equity and is involved with more than 40 infrastructure projects valued at more than $15 billion.