The partners recently purchased the 148-acre parcel in Fulton Creek Business Park at 6010 30th St. N.W.
“This acquisition represents a build-to-suit and/or multi-phase spec development potential in excess of one-and-a-half-million square feet with unique opportunities to incorporate natural aspects of Fulton Creek Ravine into this comprehensive business park project,” Manulife said in a written statement to RENX.
“The only large infill industrial property available in southeast Edmonton, Fulton Creek is situated amongst a variety of modern, industrial projects developed and owned by notable institutional owners.
“The site has exceptional access to nearby highways, including the Whitemud Freeway and Anthony Henday Drive and the potential for rail service via an existing rail spur. The development of the project will extend critical City of Edmonton infrastructure through the site including full municipal services, the extension of Roper Road arterial roadway and upgrades to 34th Street for unparalleled connectivity for businesses to efficiently move goods and people in Edmonton’s large southeast industrial sub-market.”
Financial details of the transaction were not disclosed.
Former Shawcor property
Rob Iwaschuk and Thomas Ashcroft, both principals at Avison Young in Edmonton, brokered the deal. Iwaschuk said the property, which has two buildings on it, was formerly owned by Shawcor.
“That was a pipe storage and distribution facility,” said Iwaschuk.
This is Manulife Investment Management’s second industrial development deal with Panattoni Development Company in Edmonton. It comes less than one year following their first acquisition of a 61.5-acre site in northwest Edmonton.
The partners are currently constructing more than 500,000 square feet of new industrial buildings on half of the site.
“Fulton Creek Business Park represents an exciting built-to-suit opportunity for Manulife Investment Management,” said Michael McNamara, Global Head of Real Estate Investments, Manulife Investment Management, in a statement.
“The prime location of this new industrial development along with the expertise of our partner, Panattoni, have created the ideal platform for success.”
Fulton Creek a “home-plate” location: Panattoni
Brad Hoffman, executive vice-president Western Canada, Panattoni Development Company, said the company is excited and proud to be working on a second project with Manulife Investment Management in Edmonton.
“We believe Fulton Creek Business Park is the home-plate location in southeast Edmonton for us to collectively showcase our A-class industrial buildings and we look forward to welcoming new tenants and businesses to the park in the future,” he said.
Panattoni is a U.S.-based company which also operates in Canada and Europe. Formed in 1986 in Sacramento, it expanded to Canada in 2004 and now has offices in Toronto and Edmonton.
Worldwide, the company has 24 offices, has developed 32 million square feet of property and has worked with 2,500 clients.
Its current development pipeline in Canada consists of more than 400 acres in Alberta, plus a half-dozen properties in the Greater Toronto Area and one in Hamilton. The GTA properties can accommodate about 3.5 million square feet of development.
Long-term strategy for the site
Iwaschuk said Manulife and Panattoni will create a long-term strategy which will allow for “significant vertical construction” on the site and the potential for the sale of some service subdivided lots for owner/users. He said the space will primarily be industrial but there may be some office space included.
“The primary use will be medium to light industrial with the potential for a mix of some office and quasi retail,” he said.
A report by commercial real estate firm CBRE says Edmonton’s industrial availability rate has remained relatively stable over the past two years, fluctuating within a narrow 60 basis points range between 7.6 and 8.2 per cent. Due to a large amount of new supply and a quiet quarter of leasing activity, the availability rate increased by 50 bps to 8.2 per cent in Q2 2019.
The report said a “wait-and-see” attitude is pervasive throughout Edmonton’s industrial real estate market. Tenants in the market for industrial space are awaiting the construction of new product when planning out their future requirements.
Edmonton has 138.5 million square feet of industrial space. Year-to-date absorption is a positive 298,301 square feet and new supply on the market in the first two quarters of 2019 is 826,447 square feet.
The Edmonton industrial market has 1.9 million square feet under construction, according to the CBRE report.
Edmonton market shows some resilience
“We’ve been at the bottom of the trough in the cycle for a period of time,” said Iwaschuk. “There have been signs of optimism at times over the last call it 12 months. I think there’s optimism going forward with a new provincial political party in power.”
He cited a recent million-square-foot leasing deal for Amazon in the south end of the city as a catalyst for the sector.
“I would say the market is cautiously optimistic. I think we’re waiting to see what happens federally (in the October election). . . . People are now recognizing that this is the new norm for Edmonton.
“We had a boom from 2002 to 2008 and the one from 2009-2010 to 2014. Those booms were incredible. There was incredible growth.
“I don’t know if we’ll see that again, to be honest. The market got super-heated and you couldn’t keep up with the market. It was increasing rapidly. The corrections have come.
“Manulife investing in this project and another with Panattoni in Edmonton shows some resilience in the market. I think there’s some confidence that Edmonton’s still on the map.”