Vicano Developments Limited has closed on the acquisition of a 67.75-acre development site across the road from the massive PowerCo SE and Volkswagen battery factory that's under construction in St. Thomas, Ont., and is already marketing it to potential industrial tenants.
The farm property at the corner of Highbury Avenue South and Ron McNeil Line was acquired from a private investment group for an undisclosed price, Vicano vice-president Paul Vicano told RENX.
The site is being marketed by Waterloo-headquartered commercial real estate brokerage Whitney & Company on behalf of Vicano.
The acquisition closed on Dec. 4.
The Brantford-based, family-owned company, one of southwestern Ontario’s most active industrial developers, was introduced to St. Thomas a few years ago through winning a bid to build the residential component of the St. Thomas-Elgin social services building.
That led to the purchase of five lots on 14 acres on Dennis Road, a short distance from the newly acquired site, from the City of St. Thomas. Vicano has already built and leased two 60,000-square-foot industrial buildings, is constructing a third, and is planning three more for the site.
St. Thomas’ advantages
St. Thomas is a city of more than 40,000 located less than 30 kilometres south of London that’s centrally situated between Detroit to the west and Toronto and Buffalo to the east. It offers quick access to multiple highways, including Highway 401.
St. Thomas is home to several manufacturers and an Amazon distribution facility. Vicano said its municipal representatives are committed to economic development and easy to work with.
“For industrial warehousing projects, there is no site plan approval,” said Vicano. “It allows us to be quicker into the ground relative to other communities in Ontario.”
PowerCo and Volkswagen announced this past spring they will build an electric vehicle battery plant covering more than six million square feet and occupying about 550 acres on a site directly adjacent to Vicano’s new property.
Plans are for the plant to be in production by 2027 and create 3,000 new jobs as well as thousands more indirectly.
A portion of Vicano’s new site is zoned for industrial use while the remainder is still zoned agricultural. The company will soon submit an application to enable the entire property to be used for industrial purposes.
Depending on how quickly the site is pre-leased and for what purpose, Vicano said construction could begin as early as this coming spring.
Different options for development
Vicano built the first two Dennis Road buildings in St. Thomas on spec and is doing the same for a project in Hamilton.
While it could do the same for the new St. Thomas site, more challenging recent market conditions have reduced the chances of that happening.
Vicano has created two development scenarios for the site, which is also serviced by a CPKC rail line:
- a 1.41-million-square-foot building with a 40-foot clear height, 322 loading spaces, 286 parking spaces and room for 186,050 square feet of future expansion space; or
- six buildings with 40-foot clear heights ranging in size from 77,714 to 500,550 square feet, totalling 1.34 million square feet, and including a combined 553 loading spaces and 633 parking spaces.
Automotive companies that may supply the PowerCo/Volkswagen plant are being initially targeted as potential tenants, but Vicano said the property should also appeal to warehouse users.
Still more room for growth in the market
While industrial leasing velocity has recently slowed along with the explosive rent increases of the past couple of years, land prices around St. Thomas have risen dramatically due to demand for industrial and residential uses.
Vicano believes there’s still room for industrial growth in southwestern Ontario and that the PowerCo/Volkswagen plant should attract more companies to the region.
“I think interest rates have had an impact on speculative development,” Vicano said. “People are more reluctant to move forward unless there's a secure tenant in place, but there’s still activity.”
Vicano’s Dennis Road developments in St. Thomas
Vicano’s third 60,000-square-foot Dennis Road facility in St. Thomas is partially pre-leased to an automotive parts dealer. The company is working on leasing the remainder of the building.
There are two more Dennis Road development blocks on which Vicano plans to construct three buildings.
“We're building this third building on spec and we'll see how the leasing goes,” Vicano said. “If we lease that up, we'll probably move into the next building relatively quickly.
“These are smaller-bay buildings that are a lot less risky to build-out and a little more conducive to that marketplace for smaller tenants who may be looking for 10,000 up to 60,000 square feet.”
Other current Vicano projects
Vicano is building a 440,000-square-foot class-A industrial building with a 42-foot clear height and 37 trailer docks on a 19.6-acre site at 151 Garden Ave. in Brantford. It's fully leased to two logistics companies and is to be completed and turned over by fall 2024.
The developer is also speculatively building a 212,000-square-foot industrial building on a 13-acre site on 20 Road in Hamilton that's close to a new IKEA distribution centre, a UPS facility and a Maple Leaf Foods plant.
The affiliated Vicano Construction Limited has also been busy working on projects for clients in southwestern Ontario, including a new manufacturing facility for Norbec in Strathroy and a manufacturing plant for Tigercat International in Paris.
Vicano is in growth mode and the development wing will split off physically and move into a new office in January so both companies have more room to add staff.
“Real estate is cyclical so we're used to experiencing ups and downs,” Vicano said. “So even if we go through a little blip, projects take multiple years to get through approvals and construction and tenanting.
“So by the time you’ve experienced that down cycle, you're back into an up cycle before you even realize it's happened.”