Eight properties with 12 small-bay industrial, flex and office buildings totalling 337,004 square feet on 21.2 acres adjacent to McMaster Innovation Park (MIP) in Hamilton are on the sale block.

The portfolio, branded as The Annex, is located between downtown and McMaster University, providing immediate access to, and exposure from, Highway 403. It’s 2.3 kilometres from a GO Transit station and 2.7 kilometres from a future light rail transit station.

Forge & Foster Holding Inc. is the lead vendor among multiple owners of the portfolio. Colliers Macaulay Nicolls Inc. and RBC Capital Markets Realty Inc. have been retained to arrange the sale of a 100 per cent interest in The Annex.

The Annex’s eight properties, which were acquired separately and assembled, are:

    •    45 Frid St., a two-acre flex-industrial site with one 17,704-square-foot building;
    •    55 Frid St., a 1.1-acre flex-industrial site with one 19,326-square-foot building;
    •    67 Frid St., a 3.3-acre flex-industrial site with one 32,498-square-foot building;
    •    70-100 Frid St., a 7.4-acre mixed-use site with four buildings totalling 69,121 square feet;
    •    75 Frid St., a 1.7-acre industrial site with one 20,000-square-foot building;
    •    104 Frid St., a two-acre mixed-use site with one 87,424-square-foot building;
    •    144-150 Chatham St., a 2.8-acre mixed-use site with two buildings totalling 77,281 square feet;
    •    and 180 Chatham St., a 0.9-acre industrial site with one 13,650-square-foot building.

The Annex’s selling points

The current owners have repositioned the buildings, bringing in new tenants, increasing rents and branding the location where 77,070 people lived within a three-kilometre radius in 2022. That number is projected to increase to more than 88,000 by 2032.

The Annex is 93.4 per cent leased to 36 corporate and recreational tenants. No single tenant represents more than 9.2 per cent of its minimum rent, providing a diversified income stream.

Tenants include a Canada Post distribution centre, Alchemy CrossFit, Soccer World, Mabel’s Labels, Gravity Climbing Gym, Skip Express Lane, The Sleep Disorders Clinic and other light industrial, recreational and office uses.

In-place rents for The Annex are 31 per cent below market value with a remaining weighted average lease term of 4.7 years. No more than 27 per cent of the portfolio’s leases are scheduled to roll over in any one year.

“It's (a) very well-diversified, spread-out portfolio that has an advantage as far as risk mitigation and growth,” Jeremiah Shamess, senior vice-president of Colliers’ Private Capital Investment Group, told RENX.

Future redevelopment opportunities

Presently, the site boasts 37 per cent coverage and offers the opportunity to develop up to 50,000 additional square feet in the near term without touching any existing buildings.

The Annex is also a prime location for future redevelopment into a mixed-use, master-planned community. This would complement the planned transformation of the adjacent MIP into a 3.5-million-square-foot hub for research, science and advanced technology uses.

The 58-acre MIP site is home to more than 100 companies in the life sciences, engineering, advanced manufacturing and high-tech sectors.

Shamess said there’s been interest in The Annex from private and institutional investors attracted by the short-term cash flow, the ability to add value by raising rents to the existing portfolio and the future development potential.

“MIP has bought the old Hamilton Spectator building, which is directly across the street and adjacent to The Annex,” Shamess said. "They're extending MIP and adding in a new road through Frid (Street), and this extension is going to create kind of a collaborative feel between both.”

Through conversations with MIP representatives, Shamess has been told there’s been strong interest from a number of larger potential tenants wanting to be part of MIP long-term.

“The zoning here is attractive because the city is looking to create additional uses,” Shamess said.

There are plans for MIP to add mixed-use multiresidential buildings, community amenities and a potential YWCA and hotel to its innovation ecosystem.

“Where else as a tenant would you want to be if not next to the most innovative lab space, arguably, in the country, with a research hub that is world-class, on top of the fact that you can actually live here, too?” Shamess said. 

No bid deadline has been set for The Annex.