Northbridge Capital has acquired this industrial property on Doney Crescent in Vaughan, just north of Toronto. (Courtesy Vanguard Realty)

Northbridge Capital has acquired an “extremely rare” 30-acre industrial property with redevelopment potential in a prime area of the Greater Toronto Area city of Vaughan for $110 million.

The off-market transaction involves three parcels at 101/189/205 Doney Crescent. It’s situated along Highway 407 near Keele Street, bordering the CN MacMillan railyard, and just a short distance from Highway 7 and the rapidly intensifying Vaughan Metropolitan Centre.

Brokered by John Ursini and Paul Miceli of Vanguard Realty, the property was owned by a private family company and currently contains about 147,000 square feet of buildings with tenants mainly focused on trucking and distribution.

“To have that much acreage in one spot, in one package, in one deal, is extremely rare,” Ursini told RENX.

Northbridge partner Adam Lazier agreed, noting it took several years of contact between Vanguard, Northbridge and the vendor to acquire the site via an off-market arrangement.

“It’s really unique. It’s not often you can buy a 30-acre piece of land in Vaughan, and a great infill location,” Lazier said in a separate interview.

Northbridge’s plans for the property

While the per-acre price of $3.67 million might seem high for some investors, Lazier said his firm sees it as a great investment. With industrial vacancy in the GTA below one per cent, and leasing rates rapidly rising, he believes land values will also continue to rise.

“We personally think it’s undervalued,” Lazier said. “I think we paid a fair price for it today, but our view is, if you look at other land-constrained markets that have a lot of growth in them, I don’t think the price we paid per acre for this land is going to seem that expensive.”

He said depending on how Northbridge decides to redevelop the site, it could end up accommodating from 500,000 to about 700,000 square feet of space.

“From our point of view we are really focused . . . on infill employment land,” Lazier explained. “We see this Vaughan opportunity as a potential opportunity on that basis.

“Its close proximity to population and infrastructure are key things for us. At some point we definitely are looking at different alternatives from the point of view of redevelopment.

“I think our base case is to redevelop over the mid-term into a modern-format, last-mile distribution facility.”

Ursini said based on current demand, there are many options for a property such as Doney Crescent. Businesses and logistics firms of all sizes are seeking space.

“There is a wide spectrum, there are the end-users who would love to have their own space, even small, vis-a-vis an industrial condo which is also incredibly rare,” Ursini said.

“Let’s say from 1,500 to 3,000 square feet, there’s very high demand. That demand extends all the way to over 100,000 square feet, or 150,000, or 200,000-plus for logistics.”

Lazier family operates Northbridge

Lazier said Northbridge’s industrial and retail experience indicates there are classes of tenants which covet these prime locations, and state-of-the-art facilities, enough to pay the higher leasing rates which go along with such properties.

In particular are companies at the nexus of distribution, e-commerce and retail.

“The whole idea of industrial being a business model, obviously that has changed significantly,” he said.

“When we look at these really unique infill sites that can provide scale, there are so few of them certain tenants are going to be there, and they are going to pay, because they can’t deliver to their customers from Milton.”

Northbridge is operated by Adam and Michael Lazier, who with father Stuart (the board chair), all have extensive backgrounds in investment and commercial real estate. Based in Toronto, it owns a portfolio of commercial and multiresidential properties in Canada and the U.S.

“We started in 2016 to focus on value-add investing,” Adam Lazier said. “Typically we’ll partner; we have a number of private LPs which invest with us, and we also invest alongside with institutional partners.”

In this acquisition, Vancouver-based Nicola Wealth is a partner. Northbridge and Nicola have been involved in several previous acquisitions and projects, including a nearby 16-acre industrial development property along York Mills Road.

“We’re an equal-opportunity investor, in anything that has value opportunities,” Lazier said. “We own retail, office, industrial, industrial development land and multifamily.

“This year we’ve done about $300 million in Toronto in acquisitions, so it’s been a pretty good year.”

Although he said it’s too early to release any details, Northbridge has three other properties under contract.