Rosefellow has leased a 248,498-square-foot distribution centre in a two-building development at the Kanata West Business Park to AutoShack, making it the biggest speculative industrial lease deal in the Ottawa market.
Colliers associate vice-president Daniel Niedra and his team brokered the signing, which Niedra told RENX took less than 60 days from AutoShack’s first visit to the class-A property at 115 Journeyman St.
“It was really just a testament to having two motivated parties on both sides, and dealing with a very entrepreneurial tenant and a very skilled landlord who’s committed to getting a transaction across the line,” Niedra said.
Terms of the lease are bound by a confidentiality agreement, but Rosefellow vice-president of sales and business development David Salomon-Lima told RENX that AutoShack has made a long-term commitment to the building.
Rosefellow expects to turn the building over to AutoShack on Nov. 1 and for the automotive parts company to be fully operational in the facility during Q1 of next year.
Slightly smaller building also draws interest
The deal for 115 Journeyman could soon be joined by another spec-built location at Rosefellow’s neighbouring 230,247-square-foot building at 405 Huntmar Dr., which is available for demising options from 40,000 square feet up to the full facility. Colliers is also representing Rosefellow for that property, which Niedra said is ready for tenant fixturing and receiving major interest.
“Leasing rates were still where they needed to be and vacancy was low,” Salomon-Lima said of the risk of introducing almost 480,000 square feet of industrial space to the Ottawa market – without confirmed tenants – now that the post-COVID-19 fervour for the asset class has somewhat subsided.
“The demand was very much in line with how much product is available. And frankly, we’re the only new game in town.”
Building on spec is nothing new for Montreal-based Rosefellow, which generally likes to get shovels into the ground as soon as possible after acquiring a piece of well-located land.
“We make sure that our buildings are competitively priced and that they bring certain attributes that you would expect from new construction,” Salomon-Lima said. “We have higher ceiling heights than you would find in a mature building. Our buildings are, from an ESG (environmental, social and governance) perspective, very high-performing.”
Each of the two buildings have 32-foot clear heights, 28 loading docks and two ground-level doors.
Tenant appetite is there
“It really proves to the market that the tenant appetite is there, but you need to build,” Niedra said. “With accessibility to the 417, access to amenities and a deep labour pool, it makes it a very attractive site.
“That’s why AutoShack made that move, because it’s going to help them be more efficient, be able to attract labour and support the growth that they’re seeing.”
There’s nothing else of scale under construction in the Ottawa industrial market at this point, according to Niedra, who noted there are a couple of recently completed buildings in the east end that still have a few available pockets that are expected to soon be filled.
“There are a lot of tenants sitting in older second- and third-generation space that are finding it hard to function, so there’s a need for new-generation space,” Niedra said.
Other sites that could be brought to market
Rosefellow has a site in the Ottawa suburb of Barrhaven, not far from Kanata, where it can build approximately 300,000 square feet of industrial space.
While CanFirst Capital Management can deliver 900,000 square feet adjacent to Rosefellow’s Barrhaven property, and has another site for about 300,000 square feet of industrial development in the Ottawa market, Niedra noted that no moves have been made on them yet.
Avenue 31 also has land to build a large facility, but Niedra said there’s been no indication that it intends to do it on spec.
“In markets like Ottawa and Montreal there’s a genuine opportunity to build new product because, if you look at those cities versus the rest of North America, they have some of the lowest percentages when it comes to building new product versus the existing inventory,” Salomon-Lima said.
Rosefellow has a substantial presence in the Greater Montreal Area and ambitions to create a larger footprint around Ottawa and into the rest of Ontario and, eventually, the United States.