Montreal developer RoseFellow and its financial partners will invest about $160 million to acquire and develop three industrial sites in Pointe-Claire in Montreal’s West Island; in Montréal-Est; and in Casselman, Ont., near Ottawa.
RoseFellow principals Mike Jager and Sam Tsoumas say they have no concerns about developing the industrial projects on spec. The former rivals at developers Montoni and Broccolini in Montreal formed RoseFellow earlier this year.
“Mike and I have always been very strong proponents of building on spec,” Tsoumas says. “Even when the demand wasn’t as high as it is now, every time we built in the past, we always got leased-up at higher-than-average rental rates. (Tenants) will come.”
The Montreal projects are being financed by a limited partnership of RoseFellow and Fit Ventures LP, a group of local investors. In Casselman, the project will be a joint venture with RoseFellow and landowner Bertone Development Corp.
The Pointe-Claire development
The Pointe-Claire project, on Reverchon Avenue near Sources Boulevard, will be developed at a cost of $62 million. That amount includes the purchase price of $21.25 million for the 650,436-square-foot site from previous owner LionsGate Industries Inc.
Plans call for the roughly 50,000-square-foot building currently at the site to be demolished soon after the current tenant’s lease expires at the end of December 2021. In its place, RoseFellow will build a 325,000-square-foot building that would be well-suited for e-commerce or other tenants.
Construction of the building, which would have a clearance of 40 feet and between five and 10 per cent office space, would likely start in May 2022, with completion about eight months later.
The West Island’s proximity to major thoroughfares, Montreal-Trudeau International Airport and Canada Post and FedEx facilities makes it “a very in-demand region with very limited large-scale tracts of land,” Tsoumas says.
“The ability to build 300,000 to 325,000 square feet in the West Island is almost unheard of.”
Jager says RoseFellow has received several calls from industrial real estate brokers who have clients seeking large industrial spaces in the West Island for e-commerce, food and beverage distribution and distribution and logistics uses.
He adds vacancy rates for industrial space in the West Island “are at an all-time low” at three per cent and under two per cent in Pointe-Claire.
Montréal-Est plan flexible
In Montréal-Est, where the vacancy rate for industrial space is below two per cent, RoseFellow will spend $38 million, including the land purchase, to develop an industrial project on 510,253 square feet of vacant land at the corner of Marien Avenue and Highway 40.
RoseFellow purchased the land, which is not far from the Port of Montreal, from two numbered companies for $8.811 million.
Plans call for the construction of two 120,000-square-foot buildings with 32-feet clearance, about 10 per cent office space and communal loading facilities. Construction of the first building would begin in May 2021.
While the intent is to build two buildings, “if we do have a request for a 300,000-square-foot tenant, we will alter that plan and build with one phase, one building,” Jager says.
He predicts there will be a rebirth of new development in the area, given Government of Quebec and City of Montreal plans to invest $100 million to decontaminate and enhance industrial areas in the city’s east end.
The RoseFellow site is free of contamination.
Casselman site between Ottawa, Montreal
In Casselman, RoseFellow and JV partner Bertone – which owns the vacant 931,395-square-foot site off Highway 417 and St-Albert Road – plan to invest $60 million to build either a 560,000-square-foot distribution centre or three 130,000-square-foot buildings for multiple tenants. Construction is scheduled to start in the spring or summer of 2021.
Casselman, about 55 kilometres from downtown Ottawa, is off the main highway linking the nation’s capital and Montreal. The area between the two cities is in high demand from all types of industrial users, Tsoumas says.
“There’s a significant interest and demand from clients who are not interested or looking to build in the province (of Quebec) but want to stay close to the ‘invisible border’ (between Quebec and Ontario),” Jager says.
“We’ve received requests from e-commerce-type clients who have asked us if we have properties in Ontario, so we started our search and created the JV with the Bertone Group.”
Buildings at all three sites will have a similar concrete look RoseFellow plans to use for all of its future industrial projects.
“You’ll be able to notice what is a RoseFellow building. It’s something we’ve spent a lot of time working on,” Jager says.
RoseFellow’s other projects
Meanwhile, RoseFellow plans to begin construction at the end of August of its first project, the $90-million Le 111, an 11-storey, 270-unit luxury multiresidential building in the Montreal borough of Saint-Laurent.
RoseFellow plans to increase its multires portfolio to a few thousand units over the next five years.
In addition, an office redevelopment project in the Mile-End area of Montreal should be announced in a few months, Jager says.