Panattoni Development Canada, in partnership with Manulife Investment Management, has pre-leased 100 per cent of the new Apex Business Park Building 3, a 548,124-square-foot facility and Edmonton’s largest speculative industrial development.
Mark Edwards, development manager at Panattoni, confirmed to RENX that MTE Logistix, an Alberta-based logistics and supply chain management company, will occupy the LEED-certified industrial facility, which will be completed by the end of August.
The company plans to move into the building in September.
“This best-in-class building was designed with large-scale logistics and warehouse tenants in mind and has garnered strong interest across Canada. . . . This is the largest speculative building of its type in the Edmonton market and this transaction demonstrates the strong demand for industrial space, while reinforcing that users are identifying Edmonton as a premier logistics and warehouse hub,” Edwards said.
“This is significant. The biggest building that’s been built speculatively in Edmonton up until this point has typically been 200,000 to 250,000 square feet and Panattoni and Manulife built this building at 550,000 square feet expecting the warehouse and logistics market to be able to absorb that much square footage.
“MTE has recognized it’s a good-quality building in a good location and it strategically supports their business growth.”
Panattoni and Apex Business Park
Edwards said strong demand for industrial development in the Edmonton area has fuelled the company’s plans to continue building product.
“There’s a lot of leasing being done in the 100,000-square-foot-and-above range in the Edmonton market over the last two or three years and it’s really pushed the market to grow into these larger buildings,” he said.
“This transaction reinforces the growing demand for high-quality, well-located warehouse space.”
The building is the third and final phase of the Apex Business Park, just off the Anthony Henday Drive corridor near 170 St. NW.
It is already the site of a build-to-suit 320,000-square-foot single-tenant distribution centre, solely occupied by McKesson Canada, and a 216,000-square-foot multi-tenant spec building which has 63,000 square feet remaining vacant.
That building is occupied by Automann Heavy Duty Canada and Fastenal Canada.
“We are just acquiring the land directly north of the Apex Business Park and that land will form Phase 2 of the Apex Business Park,” said Edwards.
Apex Phase 2 and Fulton Creek
About 1.4 million square feet of industrial real estate with up to five more buildings is planned for that second phase. If all goes well, construction could begin in late 2023.
Phase 2 of Apex is planned for spec development and/or build to suit.
“That site is located close to all of the major transportation networks in and out of the northwest area of Edmonton . . . (which) has developed over time as one of the main hubs for logistics, warehouse users. There’s a significant density on 184th Street and 178th Street and those areas are now predominantly built out. So it pushes development a little bit further.”
He said the site has “very easy” access to main routes such as 170th Street, 137th Avenue and 156th Street which connect to the TransCanada Highway and Anthony Henday.
“The other piece is they have good access to services. You’re close to services for employees, . . . (There’s) certainly plenty of access to amenities to attract employees and easy access for product coming in and out.”
The company is also starting construction this year of two other buildings – 148,000 square feet and 265,000 square feet, respectively – in the Fulton Creek Business Park. The Fulton Creek buildings will be on spec. Currently the Fulton Creek site is a large pipe yard that will be redeveloped into a logistics park.
Both Phase 2 of Apex and Fulton Creek are also in partnership with Manulife.
Thomas Ashcroft and Rob Iwaschuk, principals at Avison Young, represented MTE Logistix in the Apex transaction.
“Closing such a sizeable deal before a facility is even built sends a strong signal that growth is coming from within the Edmonton market as well as from groups outside,” said Iwaschuk in a statement sent to RENX. “As one of the last remaining large blocks of available space in the entire market, this puts added pressure on the greater Edmonton industrial sector and points to a need for further speculative developments.”
Industrial demand strong in Edmonton
According to Avison Young’s Q1 2022 industrial real estate report, the Edmonton market had an overall vacancy rate of 4.7 per cent, down 0.1 per cent from the previous quarter.
Absorption in the quarter was 386,863 square feet, and there was 4.9 million square feet under construction.
“Specifically, there is currently an appetite for larger spaces with sizes of approximately 30,000 square feet and up, both for large bays and freestanding buildings,” the report states. “For the past couple quarters this trend has been growing and is a complete reversal of the 2019 industrial market when the biggest impact on the market was a lack of demand.
“Small bay buildings have been struggling more than the larger formats, as the usual occupiers of those locations tend to be smaller, local companies who themselves have felt the impact of the pandemic.
“However, it does seem even that category of product is seeing increased interest as groups currently have more freedom to operate their businesses with reduced health restrictions along with having more confidence in the market itself.”
The report also notes Edmonton’s situation is part of a wider industrial space shortage across the country. The city might actually be benefiting from some of that demand.
“This current situation isn’t entirely unique to Edmonton, as other major markets such as Toronto and Vancouver continue to experience sub-one-per-cent vacancy rates,” it states. “The difference with Edmonton’s situation is that there is a relative abundance of land helping to usher in a development boom.
“We do anticipate some resistance to ‘overbuilding’ as construction has been kept in check with continued supply chain issues, global economic events, employment challenges, and overall increased cost of materials.
“Still, it is clear that there is very real interest in industrial product within the greater Edmonton area and we project vacancy rates to continue to compress throughout the year, particularly as more eyes turn toward Alberta as an alternate location to set up shop and take advantage of more beneficial deals.”