Blackwood Partners and Nicola Wealth Real Estate have acquired their second tract of industrial development land in the ring around the Greater Toronto Area (GTA), buying 34 acres in the Town of Grimsby.
The partners plan to develop over 700,000 squad feet of space in two buildings at the site, along the South Service Road adjacent to the Queen Elizabeth Way highway.
The land is already zoned for industrial uses.
“We anticipate commencing development in about two years,” Blackwood’s managing partner John Hayes said in an interview with RENX. “We do not have tenants lined up at the moment and we are going to proceed on spec. What we find is . . . if you start building it then they come.”
The transaction closed on July 26. Blackwood/Nicola did not release financial details of the acquisition. However, Hayes said “we got it at a price we’re happy with. Land is already trading significantly higher than this so we are pretty pleased with our outcome.”
Hayes said proposed development will be suitable for both single- and multi-tenant buildings, providing a variety of tenant options. The proposed development will accommodate mid- to large-bay users.
A key selling point for the site is its access to the QEW, which provides a direct route to the GTA and Hamilton as well as to the U.S. border.
Industrial boom moves outside GTA
Given the scarcity of leasing options for large users and escalating land prices in the GTA where the industrial vacancy rate however around one per cent, the Greater Golden Horseshoe Area (GGHA) offers a value proposition and its industrial base is expanding rapidly.
The Hamilton, Stoney Creek and Grimsby submarkets are among a number of areas at, or just beyond the edge of the GTA, which are capitalizing on the strong demand as users seek significant blocks of space with strong regional transportation connectivity.
These Western Ontario markets also have easy access to the Hamilton airport, one of Canada’s prime cargo hubs.
“We continue to look for other opportunities and we are expanding our looking,” Hayes said. “We are looking in Hamilton, we are looking in Grimsby, the east end (of the Greater Toronto Area) . . . it’s the entire Golden Horseshoe at this time that Blackwood is looking at.”
The project is the second venture between the Nicola Value Add Real Estate LP (NVARE LP) fund and Blackwood Partners. The first joint project, an acquisition of 105 acres of industrial land in King Township, north of Toronto, closed in January.
Nicola and Blackwood are working through site plan amendments at that property, planning to construct up to 1.8 million square feet. Hayes said they’re working with the owner of a neighbouring subdivision development on a number of shared issues, including shared transportation networks and elevations.
Hayes said the area is zoned to accommodate industrial up to just over 30 feet in height, but they will seek a variance for a moderate increase to the 40-foot range to accommodate large, contemporary tenants.
“We anticipate that by mid- to third quarter of 2022 we’ll be commencing construction. We’ll also start that on spec,” Hayes explained. “We are responding to RFPs at the moment, there’ve been a couple. That would speed things ups if we landed a tenant, because it might get us through the entitlements process faster.”
Hayes said so far there’s been great co-operation from the municipality to keep the process moving forward.
Nicola Wealth busy in Ontario
“The strategy of developing modern industrial projects creates great alignment between Blackwood and NWRE,” Nicola Wealth Real Estate managing director Mark Hannah said in the release. “Our partnership with Blackwood will continue to grow as NWRE expands its footprint in the Ontario market.”
Nicola has been very busy in Ontario during 2021, both in partnership with Blackwood and in separate transactions.
The Vancouver-based investor has closed several significant transactions this year after earlier announcing plans to expand in Ontario and hiring longtime CRE professional Ron Bastin to head up those efforts.
Its most recent acquisition was in April, a 21-acre industrial site in East Toronto on which it plans to construct a 350,000-square-foot distribution facility.
In March, Nicola partnered with First Gulf to acquire two portfolios, comprising 10 buildings (550,000 square feet) and 17 acres of excess land, spread across Oakville, Stoney Creek, Hamilton and Burlington west of Toronto.
It is also partnering with First Gulf on an industrial development at 880 Avonhead Rd. in Mississauga and 50 acres of industrial land at 10538 Coleraine Dr. in Brampton.
About Nicola Wealth Real Estate
NWRE is the in-house real estate team of Nicola Wealth, a financial planning and investment firm with over $9 billion of assets under management.
NWRE sources and asset manages a growing portfolio of properties in major markets across North America spanning asset classes which include industrial, rental apartment, office, self-storage, retail and seniors housing.
With the acquisition of Blackwood Partners to help with its Eastern Canada expansion, the current real estate portfolio exceeds $6 billion gross asset value.
DITOR’S NOTE: This article was significantly updated with new information and quotes, following an interview with Blackwood’s John Hayes.