450 and 460 Phillip St. in Waterloo. (Courtesy Lowland Properties)

Lowland Properties Group has wrapped up a “landmark” 2021 by closing on the acquisitions of two Waterloo office buildings, 450 and 460 Phillip St. in the Waterloo Idea Quarter.

Toronto-based Lowland acquired the properties with Roy-L Capital Corp., the same firm with which it partnered earlier this year to acquire a three-building industrial portfolio in neighbouring Kitchener.

Lowland principal and co-founder Tim Kennedy told RENX the firm has experienced a breakout type of year.

“It’s been the biggest by far in terms of square footage and dollar value. In a way it has sort of put us on people’s radar, which is great because opportunities come from that,” Kennedy said. “I think the future is bright and 2021 has been a landmark year for us, for sure.

“We’re very excited to expand our relationship with Roy-L Capital. They’ve been a great partner and it’s been great to purchase five buildings with them in 2021.”

Lowland and Roy-L have not released financial details about the latest transaction.

Former Blackberry office properties

The Phillip Street acquisitions are former Blackberry properties originally marketed as part of a larger portfolio about a year ago. At the time, the portfolio didn’t sell so some of the properties have been marketed individually.

“These were the two that were of the most interest to us, that fit our program the best,” Kennedy explained. “One thing Blackberry did very well was maintain their buildings, have great infrastructure, building systems, fibre, all that stuff that so many tenants care so much about and landlords, too.”

He said the buildings have been kept in excellent condition and the “infrastructure is quite high quality.”

The buildings are a combined 68,435 square feet and in both design and location are the type of office assets many investors are now seeking as the COVID-19 pandemic continues.

450 Phillip was built in 1989 and is a modernized 29,392-square-foot single-storey building occupied by business training and software firm Axonify.

The neighbouring 460 Phillip is a three-storey building constructed in 2001 which comprises 39,043 square feet. It is a multi-tenant building anchored by the Canadian office of data and document handling software firm Kofax, with what Kennedy referred to as a strong list of other tenants.

It also includes several private terraces and patios as the upper storeys step back from the ground-level floorplate.

Phillip Street buildings fully leased

Both buildings are fully leased and offer ample ground-level parking and excess land should Lowland and Roy-L consider future expansion.

“They’re low-rise, one and three storeys, so very manageable for most people. Lots of parking on site, which means two things, it’s parking and it’s also land, which is always nice to have,” Kennedy acknowledged.

The buildings are a short walk from the region’s new LRT system, offering an additional convenience for workers.

In addition to the Waterloo Idea Quarter, they’re essentially surrounded by the University of Waterloo and Wilfrid Laurier University, as well as the David Johnston Research and Technology Park.

They also have an interesting history. Both were built for Blackberry back when the company was flying high, competing internationally for cellphone business with the other giants of the era. When Blackberry fell on hard times, the buildings were sold in a major portfolio divestment to U.S.-based Spear Street Capital in 2014.

A year later, several of the former Blackberry properties were sold again to financier Michael Wekerle and his Waterloo Innovation Network firm.

Lowland familiar with Kitchener-Waterloo region

Kennedy says Lowland had been looking for office properties of this type since early in the pandemic. With the firm already owning several properties in the area, Lowland is well acquainted with the Kitchener-Waterloo region west of Toronto.

“We are fairly opportunistic, so we felt throughout COVID that people would be shying away from office in general,” he explained. “Not everyone, but there would be a lot of caution when it came to office and it provides an opportunity to buy well if you’re disciplined and you wait for the right opportunity.

“There’s been a lot of office that’s for sale, but it’s not been a good price or it’s not the right product.

“We felt this was good product and at least in our eyes still held a lot of value at that price point and a lot of potential value down the road.”

The Kitchener-Waterloo area is also very attractive, he noted, with its tech sector again booming and the population growing. Kennedy said the residential development pipeline is about 5,000 units right now, with more in the offing.

On the employment side, he said Google alone plans to have several thousand employees in the region during the next few years as it expands its Canadian operations.

“That’s a major statistic, so we see a lot of positive things happening. There is a lot of intensification happening,” he said. “We think this is a great place to be.”