Anthem Properties has completed its acquisition of a five-building industrial property portfolio in Edmonton as it continues to seek investment opportunities in Alberta.
CBRE vice-president Edmonton Curtis Palmer said the Vancouver developer bought the 163,600-square-foot Emco building at 10930 184 St. NW and the 98,850-square-foot Brier Business Centre at 9404 39 Ave. NW.
The latest sale, which closed on Feb. 28, follows on the heels of the three-property first tranche of the portfolio’s acquisition in December. At that time Anthem picked up the 66,000-square-foot Loomis distribution facility and two other large-bay warehouse buildings in the Crossroads complex.
Anthem identified the vendor as Morguard and the Canada Post Pension Plan in a December interview with RENX.
Palmer said the total portfolio price was $64 million for the five buildings which comprise 544,372 square feet of space.
He added that Anthem sold the small-bay multi-tenant Brier Business Centre immediately.
“They really wanted to focus on the larger-bay business so they hired us to flip out the Brier Business Centre. We traded that to York Realty and that closed on the same day as Tranche 2 of the larger portfolio,” Curtis explained. “The Brier Business Centre, while it’s a good quality property, just didn’t fit what they were trying to shop for.
“They had to buy the entire portfolio so we were able to find a buyer for the one asset that didn’t fit their particular appetite.”
Rare large-scale transaction
The Emco building is a single-tenant warehouse, office and showroom building housing a plumbing and heating supply firm. All the buildings in the portfolio were fully leased at time of sale, Palmer said.
The purchases are Anthem’s first venture into Edmonton’s industrial market. The developer is already active in the city region on the residential side and has holdings in the Calgary region, B.C. and California.
Palmer said the size of the deal is unusual in the Edmonton market right now, so it’s hard to identify whether the $118-per-square-foot portfolio selling price is indicative of a price trend.
The Anthem acquisition may turn out to be CBRE’s biggest deal of the year in the market, he said.
“There’s been very little (in terms of portfolios this size) that have traded. Other listings in the market have failed to trade, which speaks to a larger trend across the country that large deals are difficult to do right now,” said Palmer.
Institutional investors are pens down, he said, so it’s a private market right now.
“If I had to choose between a $100 million listing and three $30 million listings, I’d pick the $30 million listings all day long, even though they are more work. They have a higher chance of success.”
Northwest Edmonton facing a space shortage
The four large-bay buildings acquired by Anthem are in Edmonton’s northwest industrial property area, close to the Yellowhead Highway and Anthony Henday ring road.
The area hosts a number of distribution businesses, said Palmer, but the northwest doesn’t have a lot of development land left.
“Over the medium to longer term, we’re forecasting a shortage of large-bay space in the market. That’s going to lead to outsized rental rate growth and increased tenant renewal probabilities. I think it’s going to be a very good story for landlords who have existing properties.”
Supply is also being affected by other factors including high construction and financing costs, he said.
“We’re seeing a supply crunch because we’re still seeing positive absorption in the market.”
Industrial vacancy is running at 2.9 per cent with availability at 5.2 per cent, Palmer said.
In a previous interview with RENX, Anthem’s vice-president of industrial Sean Day said the company will continue to target Alberta for both industrial land development and acquisitions.
“As long as there’s opportunity and the returns keep making sense we’ve got a lot of confidence in the Alberta market,” he said. “We think on the industrial side of our business . . . there’s a lot of room to run here and there’s going to be continued growth and that’s both from a land development perspective, the development sites that we’ve purchased and we’re going to be building on.”