In one of the largest single industrial transactions in Toronto in recent years, Triovest Realty Advisors Inc. has acquired an Iron Street logistics centre in the west end from Mantella Corporation. The $125 million transaction was brokered by Colliers.
The two large “last-mile” facilities comprise just over 523,000 square feet of space and are located on 21.9 acres of property at 100-110 Iron St. Triovest made the acquisition on behalf of a client whose identity was not released.
Colliers executive VP Gord Cook, whose team brokered the sale, told RENX from listing to close was less than four months.
“We started this process in December and here we are with a closed transaction end of March,” he said, noting the property was marketed to about a dozen potential buyers and drew interest from a half-dozen of the prospects. “A very efficient process.”
The largest of the two buildings is 339,600 square feet, features clear ceiling heights of 22 to 23 feet and has 46 shipping doors. The second building is 183,760 square feet with 22-foot clear ceilings.
Both buildings were constructed in 1981 and Robert Mantella, now the president and CEO of Mantella Corp., remembers being on the sites much earlier in his career.
“Iron Street was one of several projects in the Etobicoke and Rexdale markets our family built. We would source land and construct buildings on a yearly basis,” he wrote in an email to RENX.
“Ironically, Iron Street was at the early stages of my involvement with the family business and (I) recall working first-hand on the job site.”
Selling points for the properties
Cook said there were numerous selling points for the structures, which are each fully occupied by a single tenant in the distribution sector (the headquarters for Thomson Terminals and retail distributor NLS).
“Highly functional design, very good level of maintenance and repair, and a near-term lease expire of approximately two years, which gives Triovest the opportunity, in the not too distant future, to look where rents will be in two years’ time.”
Iron Street is also located in the heart of one of the largest industrial areas in Toronto/Mississauga, just a few moments’ drive from Pearson International Airport. Situated along the Hwy. 409 corridor, it is just a few blocks from both Hwy. 401 and Hwy. 427.
Mantella Corporation, which was founded in 1946, is one of the largest privately held, family-owned real estate and land development companies in Canada.
“We continue to like and, most importantly, understand the industrial asset (class) and the marketplace,” Mantella wrote. “We want to leverage our knowledge and skill set to play an active roll in value-creation opportunities.
“Mantella Corporation has evolved significantly with its team to pursue projects across the Ontario market.”
Mantella sold the properties as part of its plans to diversify and grow through the repositioning of its portfolio and reinvestment into development and value-add opportunities.
The focus will remain industrial, Mantella said, but the company has also undertaken some infill residential projects between Toronto and Burlington.
“We are very excited about our development pipeline,” Mantella wrote. “We have two land parcels already in the GTA West and we are close to a third. This will give Mantella a pipeline in excess of 350,000 square feet of new class-A product in excellent submarkets.”
Triovest holds more than 430 properties across Canada, comprising 41 million square feet. The value of its assets under management is about $11 billion. It also has about $2 billion worth of property under development.
Headquartered in Toronto, it has seven offices across the country.
Mantella sold into active industrial market
The sales come at an opportune time for Mantella. Industrial properties are coveted by investors, with Colliers’ data showing the GTA industrial market is the tightest in North America. Colliers reports a 0.6 per cent vacancy rate, versus an average of 5.5 per cent in major U.S. markets.
“Investors are active toward this well-located, second-generational space because not only the thesis of rent growth, but the bigger issue is it remains very difficult to do greenfield development,” Cook explained.
“We have a shortage of land, often that land is not serviced, and often those lands are not as well-located as the more mature markets. So, there are a lot of constraints around new development, which is pushing price on existing properties.”
Cook said the industrial market is at “crisis levels” in terms of vacancy. Although some investment property is coming onto the market, he said demand remains very high and there is trepidation about a possible move on capital gains taxes in the upcoming federal budget.
“I would say deal volume is good, but it remains constrained,” Cook noted. “And I would say it might be further constrained depending on what our budget tells us on April 19.
“If there is a grab on capital gains inclusion rates, we could find ourselves with less net sellers.”
The Colliers team of Cook, Victor Cotic and Thomas Cattana brokered the transaction. Colliers says there have been five industrial sales exceeding $100 million in the GTA since 2016, two of them brokered by its staff.