Immostar is investing $40 million near Quebec City to build what will become one of PepsiCo Canada’s main distribution centres – and it’s just a warm-up for bigger industrial projects to come for the developer.

Set for completion in October, the 122,700 square-foot building is located on a 450,000-square-foot site in the François-Leclerc Industrial Park in Saint-Augustin-de-Desmaures. 

“It’s rare for buildings of 100,000 to 125,00 square feet to become available in Quebec City,” says François Pelchat, partner and vice-president, development and marketing at Immostar.

With a 28-foot ceiling height, 34 garage doors and more than 100 dedicated truck bays, the building will be used primarily for the distribution of Frito-Lay products.

Immostar began construction of the building on spec at the end of 2021, but PepsiCo soon became interested in the site’s large size, which has plenty of parking space for tractor trailers and other trucks, Pelchat says.

The project positions Immostar as a key player in the Quebec City industrial market, Pelchat says, noting the company is also working on other projects of under 100,000 square feet in the Saint-Augustin-de-Desmaures industrial park, which is home to approximately 160 companies. 

Immostar's Quebec City airport property

Meanwhile, Immostar is working on plans to develop more than 12 million square feet of land (approximately 275 acres) just south of Quebec City’s Jean Lesage International Airport which it acquired recently from private family landowners.

Pelchat says the site has been “pre-zoned’” as industrial and will do much “to fill the great shortage of industrial land in Quebec City."

The industrial availability rate in the Greater Quebec City Area was 2.3 per cent as of Q2, slightly higher than the average national overall availability rate of 2.1 per cent, according to CBRE.

Quebec City remains the fastest-growing market in Canada in terms of asking rates, CBRE says. Average asking rental rates were $15.67 per square foot in Q2.

Aside from Immostar’s airport site, “there is no more land in Quebec City” for industrial development, Pelchat says. Although the city’s territory is large, much of the land is not available for industrial purposes, he says. 

Pelchat says Immostar has been working with Quebec City for the past year and a half to develop a plan for the airport site and that the developer hopes to finalize a project in the third quarter of 2024.

The site could see investments worth billions of dollars, he says, although it’s not yet known how many square feet will be available for development.

Although there are plenty of pieces in the puzzle, “the project is progressing well” and several potential tenants have demonstrated interest.

Property locations a key factor

He says the airport industrial site will likely attract distribution centres, logistics companies and tech firms, which will be attracted to its location in the heart of the city with easy access to highways, mass transit and the airport.

It compares favourably to Saint-Augustin-de-Desmaures, which is 25 kilometres from the provincial capital: “Saint-Augustin is a nice site, but it’s far from Quebec City.” 

Immostar is working with urban planners and architects to come up with a plan for the site and is looking at best examples of industrial parks from around the world.

The industrial development will be energy-efficient and carbon-neutral and there will be a mix of uses, including community services such as day cares, restaurants and bike paths.

“Despite it being an industrial park, people will be able to walk in it and not feel that it’s dangerous,” Pelchat says.

Immostar's other developments

Founded two decades ago, Immostar says it was the first developer in the Quebec City area to build LEED, WELL and transit-oriented-development residential projects. 

Immostar has residential projects underway in Cap Rouge, Saint-Nicolas and Trois-Rivières and a few others that should be launched next year.

In Trois-Rivières, Immostar is building the $72 million Le Florent. It will aim for LEED v4 certification for the six-storey, 218-apartment complex, which represents its first multiresidential project outside the greater Quebec City area. 

Despite rising construction costs, increasing rents and financing challenges, “we’re able to deliver exceptional (multires) products with reasonable rental costs,” Pelchat says.

The average per-square-foot price for an 850-square-foot Immostar apartment with appliances in Quebec City is around $2.10 or $2.15.

While Immostar will continue to develop multiresidential, it plans to concentrate on industrial in Quebec City, an asset class which should have a “rosy” outlook for years to come.

“Industrial is going well in Quebec City. We have to give our companies space so that they can grow and mature and find qualified labour,” Pelchat says.