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Pharma firm first tenant at Montreal's 40NetZERO industrial park

Billion-dollar investment will eventually see 3 million square feet of development

A pharmaceutical firm will lease this $120-million industrial building under construction at 40NetZERO's business park in Greater Montreal, near Highway 40 and Henri-Bourassa Blvd. and east of Highway 25/ (Courtesy 40NetZERO)
A pharmaceutical firm will lease this $120-million industrial building under construction at 40NetZERO's business park in Greater Montreal, near Highway 40 and Henri-Bourassa Boulevard and east of Highway 25. (Courtesy 40NetZERO)

A major pharmaceutical firm is the first tenant of the $1-billion 40NetZERO, a site in Montréal-Est its developers say will become the largest carbon-neutral industrial park in North America.

The seven-million-square-foot 40NetZERO site will include eight to 12 buildings with three million square feet of leasable industrial space when it’s completed in five or six years, says 40NetZERO co-founder and co-developer Peter Karambatsos. It will accommodate an estimated 2,500 to 3,000 employees.

“It’s the right thing to do,” Robert Soldera, 40NetZERO’s other co-founder and co-developer, says of the development, which will include buildings that operate solely by electricity. 

40NetZERO is located between Highway 40 and Henri-Bourassa Boulevard and east of Highway 25 and includes the former four-million-square-foot petrochemical facilities of Petromont, a division of Dow Chemical.

It also includes land from others, including Hydro Quebec and Canadian National Railway, in a land assembly conducted over about a six-year period.

The 40NetZERO developers did not divulge the purchase price for the land.

The development has been decontaminated and is shovel-ready.  

Pharma building a $120M investment

The first building, to be built at a cost of about $120 million and leased to a pharmaceutical firm which does not yet wish to be named, will be 400,000 square feet and have 40-foot clearances. It’s scheduled to be delivered in December 2024.

40NetZERO plans to attract a mix of manufacturing and distribution tenants but “we expect a good 70 per cent will be in manufacturing,” Karambatsos said. Tenants seeking between 70,000 and 500,000 square feet are being targeted.

There will be a combination of build-to-suit, multi-tenant and single-tenant buildings. Karambatsos says the second building will house a single tenant and the third building will be constructed on spec.

“Companies that will most appreciate this will not be your 3PLs with 100,000 feet and nine employees,” he said, noting companies 40NetZERO has negotiated with have 300 to 400 employees. 

Rents are currently set at about $18 to $18.50 per square foot net. 

“Cost-wise, we’re in the market and the types of tenants that are looking at this tend to be forward-thinking multinationals,” Karambatsos noted.

Although there is a lull in the market and an economic slowdown may add a year or two to the project’s completion, the demand for new industrial product is still there, he said. Companies are looking for efficiencies in terms of their operations and costs.

“We’re on the Island (of Montreal) and I think that’s a big plus.” 

Partners have long business relationship

Karambatsos and Soldera have known each other for over 30 years and have partnered on smaller projects.

Karambatsos, a real estate broker for 35 years, is a partner in Terrex, a brokerage that specializes in industrial and commercial real estate in the east end of Montreal.

“It was a perfect opportunity when Robert first approached me on this. You don’t find sites this size on the island.” 

Soldera is the principal at Loracon, a general contractor for more than 20 years that focuses on industrial development but also does residential and commercial real estate. Loracon is acting as contractor for 40NetZERO.

The 40NetZERO concept has received wide approval from tiny Montréal-Est, which has a population of only 4,394.

“It fit into the vision they had for the future,” Karambatsos said. He noted the city has long been associated with the petrochemical industry, much of which is gone, and is now seeking to transform itself.

“We’re not shaving a forest or using agricultural land,” Soldera said. “We’re taking sites that are already used and recycling it to build these industrial buildings.”

SITES, LEED, Fitwel, LEED certifications

40NetZERO has been approved for SITES certification, which evaluates a project’s sustainability in the planning, design, construction and management of outdoor spaces. It will also seek LEED, Fitwel and LEED Zero certifications.

Although construction costs for carbon-neutral buildings at 40NetZERO exceed those for conventional industrial buildings, total operating costs will be equal or lower, Karambatsos said. 

Public roadways, to be built by 40NetZERO, will be about 29 metres wide, instead of the traditional 20 or 21 metres, to incorporate walkways, bike paths and trees.

“It’s safer, it’s comfortable; it’s an environment that appeals more at a human level,” Karambatsos said.

A bike path will cover the entire industrial campus and Montreal-Est plans to add bike paths to connect to the industrial park. 40NetZERO will likely have its own private bike-sharing program.

The Pavilion, a 15,000-square-foot shared building for 40NetZERO employees, will be “the crown jewel that really distinguishes this park,” Karambatsos said. 

To be operational in 2-1/2 to three years, it will offer several amenities including a full-scale restaurant, exercise, yoga and training areas and conference facilities.

“Instead of companies individually having to build out conference rooms to accommodate 30, 40 people that they use once a month, they can come in and book one of these rooms,” Karambatsos said.

Outdoor amenities to offer "value proposition"

There will also be spaces for food trucks and outdoor facilities that could include basketball or pickleball courts. 

“Companies used to take a wood picnic table, slap it outside and that was your lunch area,” Karambatsos said, adding today’s manufacturing and warehousing employees are highly skilled, harder to attract and expect more from their employers. 

The aim is to provide an environment where employees want to work and companies “are going to see the value proposition.”

40NetZERO is being financed by conventional banks and self-financing. The aim is to build and hold.

“We want to keep the campus as a single ownership and a single management,” Karambatsos said.

He believes it’s only a matter of time before carbon-neutral industrial developments become commonplace. Not building them will be like building residential condos today that don’t have EV charging facilities.

“It’s just smart business. In 2023, if you’re not doing this, you’re doing a building that’s basically obsolete in about five years. We have to accept the fact that this is the future.”

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