This 10-acre site and industrial building at 2105 Bantree Rd., in Ottawa have been acquired by a Manulife Investment Management fund. (Google Maps)

Manulife Investment Management has acquired a 10-acre industrial parcel of land and a 108,500-square-foot building in an Ottawa industrial park on behalf of its Canadian Pooled Real Estate Fund.

The property has been acquired with an eye to future redevelopment, considering the city’s rapidly growing industrial sector and very low industrial vacancy rate of about 3.4 per cent.

Financial details were not disclosed.

“Acquiring strategic infill redevelopment sites in established industrial nodes is an important part of our build-to-core program to grow our industrial portfolio,” said Gregory Sweeney, Manulife Investment Management’s head of Canadian real estate investments, in the announcement Friday.

The property at 2105 Bantree Rd. is adjacent to the Innes Business Park, in the city’s largest centrally located industrial submarket, and is currently zoned for heavy industrial uses.

Manulife also manages the business park.

Manulife’s second recent Ottawa-Gatineau acquisition

Ottawa’s Belfast-Sheffield industrial submarket offers excellent highway access, which provides connectivity to major shipping routes and downtown is just a few moments away. Manulife considers the property an “attractive redevelopment opportunity.”

It is the second real estate purchase for Manulife in the region this week. The firm acquired Le Vibe, a two-building, 181-unit luxury apartment complex in neighbouring Gatineau, across the Ottawa River in Quebec, for $63 million.

Le Vibe is Manulife’s first multifamily acquisition in the region.

During the recent Ottawa Real Estate Forum, Sweeney was a member of the industrial panel and made reference to the pending acquisition. Noting the city’s strong fundamentals, and its strategic location between Montreal (about a two-hour drive) and Toronto (about 3.5 hours via major highways), he suggested its small but growing industrial sector should continue to flourish.

“It’s an infill redevelopment opportunity where we’ll likely build a couple of hundred thousand square feet over time,” he said of the Bantree site.

Ottawa’s changing industrial sector

Manulife owns more than 20 properties in Ottawa and Gatineau and its industrial tenants are bursting at the seams.

“When we look at the tenants for our portfolio, we are 100 per cent occupied,” Sweeney said during the forum. “Those tenants, they need room to grow and to expand.

“We need room for new entrants to come into the market. So the possibility of this, for lack of a better word, ‘repositioning’ of the Ottawa market, to being more than it once was, is all positive.”

Although not traditionally a major industrial city in addition to being land-constrained and a difficult market to break into, Sweeney said Manulife has a strong interest in Ottawa.

The arrival of e-commerce giant Amazon in a big way during the past 18 months – Montreal-based Broccolini has already built a million-square-foot warehouse in the East End for Amazon and is now building a 2.88-million-square-foot, multi-level distribution centre in suburban Barrhaven – has elevated that interest.

“Broccolini, Amazon they are clearly trailblazing a path here,” Sweeney noted. “We are seeing the National Capital Business Park being rumoured for 100 acres of additional development. I actually think it’s all positive for the market.”

In total, CBRE senior vice-president Nico Zentil recently reported about four million square feet of new space (including Amazon’s warehouses) — or about 12.5 per cent of total inventory — is coming into the market.

Average asking rates are at $10.41 per square foot, the third-highest rate in Canada, and the market saw 120,000 square feet of net absorption in Q3 2020 alone.

Manulife sees good results from Ottawa

“Ottawa has actually performed, within our portfolio, on par with Toronto, Montreal and Vancouver over the past 10 years,” Sweeney noted. “Ottawa has always been that stable market and will continue to be a very very stable market.

“We continue to be bullish on Ottawa. This year alone, it will probably be the biggest net investment market for us.”

All of this is leading Manulife and others to re-evaluate their development options.

“(We’re) also looking inward at our own portfolio where we’ve got some buildings that are older-vintage, less functional, maybe have some excess land on them as well,” he said.

“Absolutely I think we’ll be undertaking development in the next couple of years in Ottawa and I think we’d even look at doing it on a speculative basis.

“I think the fundamentals in this market are pretty tremendous.”