Saying the area is ripe for resurgence, RoseFellow has partnered with two other Montreal-based firms to acquire a portfolio of industrial buildings in the city’s centrally located Garment District.
The recent acquisition includes two adjoined two-storey industrial buildings at 9755 and 9775 Meilleur St. totalling 96,538 square feet, and a pair of one-storey buildings of 3,567 and 5,068 square feet at 9780 and 9800 Jeanne Mance St.
The 1950s-era buildings were owned by family-run textile firm Doubletex and were sold by Ernst & Young.
“We picked it up at a very aggressive purchase price (of about $50 a foot or about $5.25 million),” says Mike Jager, one of RoseFellow’s principals. “To pick up anything that has industrial zoning at that kind of price is incredible.”
Several groups bid on the properties which went through several rounds before being finalized, Jager says.
RoseFellow teamed up with HS Properties and the Drazin family, which controls Rester Management, on the deal.
Different kind of acquisition for RoseFellow
Jager says the three partners will acquire the balance of the Doubletex portfolio, which includes a parcel of land of about 400,000 square feet, after an environmental assessment is completed.
The properties differ from RoseFellow’s previous acquisitions which have consisted of vacant land or sites that will be redeveloped, he notes.
The reasoning behind the acquisition is simple, Jager says, explaining there will always be smaller businesses that require warehouse, industrial or flex space but cannot pay high rental rates and don’t require 32- to 40-foot clear ceiling heights.
“Sometimes that means buying properties where we can offer more aggressive rental rates.”
Depending on requirements, rents will “go anywhere from a $10 gross to a $15 gross rental rate. It’s significantly less than what we’re charging for brand new industrial class-A.”
The partners will spend “a few million dollars” on improvements at the currently vacant buildings, including roof and brick work, as well as tenant improvements once tenants are found.
Ahuntsic-Cartierville and the Garment District
9755 Meilleur is a concrete structure while 9775 Meilleur is a steel structure with concrete slabs. Clear heights average 15 feet in the warehouse spaces. There are two drive-in shipping and receiving docks and two exterior dock-level shipping and receiving doors.
Although the Jeanne Mance buildings are small, “we thought they’re real unique in the sense that trying to find a 3,000- to 4,000-square-foot freestanding building with its own parking area and shipping doors is extremely rare.”
Located in the borough of Ahuntsic-Cartierville, the area, which is also known as Chabanel or Cité de la Mode, is bounded by Autoroute 15 to the west, St. Laurent Boulevard to the east, Autoroute 40 (Metropolitain) to the south and Sauvé Street to the north.
This area remains the third-largest employment centre in Greater Montreal after downtown and St. Laurent. With the garment industry on the decline, start-ups and tech companies have rented vacated spaces in the area,
“For a long time, many companies moved out of the Chabanel district,” Jager says. “I think we’re going to see a resurgence of the area.
“We’re betting on the Garment District. I think people will come back due to the on-island location that people look for.”
Buildings offer central location, reasonable rates
The buildings would be ideal for tenants looking for central locations or last-mile delivery who do not require more lofty ceiling heights.
“We think there’s huge opportunity there. It goes back to industrial space users who don’t require the ceiling heights, who want to be on island, who are not willing to pay the $15, $16 gross rental rates. I think the Garment District is a great opportunity for that.”
Jager says RoseFellow is in talks with HS Properties and the Drazin family to buy additional properties: “The partnership is working out really, really well. There’s a great synergy.”
Family-run HS Properties (which stands for Howard Szalavetz) has been involved in real estate management in the Montreal area since 1965. The company entered the multiresidential industry in 1992 and recently entered the commercial and industrial market.
It has more than 1,000 units in its portfolio, plus an additional 809 senior home units under the Résidences Six Étoiles banner.
Szalavetz owns several buildings totalling several million square feet in the area and has been dubbed “the king of Chabanel” or “the king of the Garment District.”
“He has a good hold on and knowledge of who is in the area, who’s looking for space,” Jager says.
The Drazin family’s Rester Management owns, develops and manages several million square feet of office, retail and residential properties in the Greater Montreal area, across Canada and the Eastern U.S.