In a purchase that single-handedly surpasses many quarters of investment activity in the Hamilton region, Panattoni Development Co. Canada has acquired a 423-acre tract of Brantford industrial development land for $290 million.
The land is bisected by Oak Park Road and bordered on the north by Powerline Road and on the south by Highway 403. The vendor was James Dick Ltd., which acquired the land out of bankruptcy several years ago and shepherded it through the zoning process.
The location is near the existing Oak Park Road-Hardy Road industrial area at the northwestern edge of Brantford, which is about 20 kilometres east of Hamilton and 90 kilometres east of Toronto.
Even in an area that has seen intense investment and development activity in the past couple of years, the sale is a significant transaction. The purchase price represents a per-acre price of $684,980.
“Very unique offering” for Panattoni
A spokesperson for Panattoni told RENX the firm is not commenting on the acquisition at this time.
Kitchener-based JLL executive vice-president Mitchell Blaine, who has over two decades of experience in the Southern and Southwestern Ontario market, told RENX this is a “big deal” considering the location, size of the site and current market conditions.
“What I found interesting about the deal . . . the scale of it is unusual. Where are you finding 400 acres of zoned land, anywhere, these days?” he said in an interview. “I would argue it is a very unique offering for tenants because of the scale it could potentially accommodate.”
In Brantford, which has seen a spate of major industrial developments, leases and transactions during the past couple of years, scale is a major attraction.
“If you look at activity levels in Brantford, the average lease size in Brantford is 170,000 square feet over the last three years. That is massive. So there is no doubt a big-box movement toward markets like Brantford.”
The land complements another parcel of industrial development property which was acquired by Panattoni in 2021, approximately 100 acres along Rest Acres Road just west of the Oak Park site.
It is also adjacent to a 92-acre property acquired by Granite REIT along the Hardy Road-Oak Park Road corridor for $62.2 million in August 2021.
Industrial leasing, property rates skyrocket
From a vendor’s perspective, Blaine called it a “brilliant” transaction for James Dick Ltd. He said it acquired the land “for next to nothing” before industrial property came back into demand.
“That is their business, restoring old gravel pits. They acquired the land over the course of the last couple of years, they’ve gone through the zoning exercise, they’ve gone through the site servicing studies, they’ve gone through all of the background stuff,” Blaine explained.
“And they bought it at a time when industrial was not in vogue, especially in the Brantford area.
“Now you have a situation where industrial land prices in Brant hit price point that it started to hit a level of feasibility to get the land shovel-ready.”
Leasing and transaction rates have increased between 25 to 30 per cent during the past year in and around Brantford and the forecast is for similar increases in 2022.
Blaine said based on recent pricing, the $685,000-per-acre cost might actually seem inexpensive. However, he noted portions of the site still require significant prep work to get ready for development, as well as internal roads and servicing depending on how Panattoni decides to proceed.
“The turnkey cost might be significantly higher,” he agreed.
More transactions likely to follow
Blaine said activity in the region is likely to continue. He expects other deals to come to market in coming weeks and months and prices to continue to escalate due to global uncertainty and a rapid move to onshore production and warehousing of many products.
Brantford is well-positioned to capitalize, considering its location, attributes and the industrial supply crunch across both Southern Ontario and Canada as a whole.
“Its proximity to the GTA (Greater Toronto Area), U.S. border crossings, I’d say it’s also relative value. Even compared to Cambridge, it’s relatively well-priced, but catching up quick,” he observed.
“When you are buying land at $600,000 an acre and you go 20 minutes to the north in Cambridge and you are over a million bucks, or you go to Hamilton and you are $1.2 million, you kind of think, ‘Half-price land that I could arguably get into quickly.’
“I think that relative value thing is big.”
The area is also seeing residential growth and can provide an educated labour force with a more modest cost of living than in centres like Toronto or even Hamilton.
“So it’s the combination of relative value, labour pool access and population growth projections that is driving the quick surge.”
Panattoni specializes in industrial and office developments completed both through speculative construction and build-to-suit projects. With local offices in Toronto and Edmonton, the firm has experience across Central and Western Canada.
It has completed projects throughout the Greater Toronto Area and Southern Ontario, Montreal, Calgary and Edmonton regions.