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A Greater Toronto Area manufacturer has beaten the odds in the city's industrial market, acquiring a 281,265-square-foot building in Oxford Properties' Vaughan Industrial Park for $81.5 million.
The two-tenant building at 81 Royal Group Cres. in Concord, north of Toronto, was acquired via an off-market transaction. The Vaughan Industrial Park encompasses three million square feet in eight facilities.
“They (Oxford) are selling a few assets in that business park,” Lennard Commercial Realty broker Jonathan Gorenstein, who brokered the deal, told RENX. “We just showed up at the right time with the right offer and they decided to transact.”
Gorenstein said he is not able to identify the buyer due to confidentiality restrictions, but Alpa Lumber Group is listed as the buyer on publicly registered sale documents.
The transaction is significant because Gorenstein said there are no industrial buildings over about 130,000 square feet which are for sale in the market.
Gorenstein had developed a relationship with one of the company's principals over the past few years and knew the company could be in the market for more space to expand one of its businesses.
Lennard also listed the company's current facility in Brampton, which is about half the size of the new facility.
The 81 Royal Group property
The approximately six-acre Brampton site includes a 138,000-square-foot building with 800-amp service and a 28-foot clear height.
The 81 Royal Group building has 18,579 square feet of office space, 4,000-amp power, a 24-foot clear height, 12 truck-level loading dock doors, two drive-in doors and 299 parking spaces.
The facility was built in the late 1990s and fronts on Highway 427. It is within close driving distance of Highways 7, 27, 50, 400, 407 and 410. It’s also not far from two intermodal rail hubs and Toronto Pearson Airport.
Gorenstein said Cutler Modern Living, the tenant of the larger 197,150-square foot space at 81 Royal Group, went out of business earlier this year so that space is available immediately.
He said automotive supplier Martinrea has a lease with five years remaining for the rest of the building.
Lack of available industrial space
As for the Greater Toronto Area industrial market, the building offered a rare opportunity for any company seeking to own its industrial space.
Gorenstein said industrial leasing has slowed over the past few months and noted it will be interesting to see if that trend continues over the next 12 to 18 weeks. However, the transaction market remains relatively strong for quality properties that are properly priced.
“I wouldn’t say high interest rates have been a huge obstacle, but they’ve definitely shrunk the buyer pool,” Gorenstein said. “I think everyone’s kind of waiting to see what happens and get more clarity on the economy as a whole.”
Tenants facing large rent increases as their long-term leases expire have become more open to purchasing real estate so they have more control over their costs, Gorenstein added.
EDITOR'S NOTE: Information in the original version of this article was edited to respect a confidentiality agreement involving the purchaser and broker.
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