Montreal-based developer Rosefellow says it is set to build its first industrial development on spec in the Greater Toronto Area.
Rosefellow co-CEO Mike Jager says the developer will finalize its acquisition this quarter of a site in Mississauga near Pearson International Airport that will be redeveloped into a distribution centre. Construction at the yet-to-be-named site is slated to begin by Q3 of this year, says co-CEO Sam Tsoumas.
The developer is also on the verge of acquiring another industrial site close to Pearson airport, but not in Mississauga.
Jager says the two sites “are the first of many to come” in the GTA. Rosefellow will continue to develop in Quebec but “we just think because the market is so large in Ontario, much larger than Quebec, we’re going to see significant growth in the Ontario market.”
Jager says he and Tsoumas are also exploring the U.S. market and intend to begin Rosefellow’s first development south of the border in 2025 or 2026. The two have traveled to markets such as Florida, New Jersey and Chicago.
“Huge opportunities” for industrial growth
“We just see huge opportunities. The potential for us to grow in the U.S. is there and we want to take advantage of it.”
The co-CEOs have been meeting with brokerage firms and property owners to learn more about the various markets and sub-markets in the U.S.
“We need to understand the data well. Once we understand those markets, like we do Quebec and Ontario, we’ll make a move,” Jager says.
He says Rosefellow has a mix of private and public investors “interested to grow with us in Ontario and others on the sidelines ready to deploy capital in the U.S.”
Back in Quebec, Rosefellow will be notarizing this quarter on a 3.5-million-square-foot site on the South Shore of Montreal near Brossard that will be slated for a distribution centre.
It comes on the heels of Rosefellow’s acquisition in December of 2.4 million square feet of the Le Versant golf course in Terrebonne, northeast of Montreal. The land is zoned industrial.
Golf course land to be redeveloped
Rosefellow plans to build on spec two net-zero distribution centre buildings of 350,000 and 400,000 square feet with 40 feet clearances at a cost of $160 million, including the land acquisition.
Construction of the 400,000-square-foot building is scheduled to begin in the fall for completion in 2025. The second building is to be completed in 2026.
Jager says some potential multinational tenants have reached out “because of the location (and) how limited the availability is for pure distribution sites” in Greater Montreal.
The initial plan had been to build the largest spec building in Quebec, a cross-docking facility of just under a million square feet.
The site, bordering Highway 640 and close to Metro, Sobeys and Rona distribution centres, is the last industrial-zoned piece of land in Terrebonne that will be granted distribution centre status by the city, Tsoumas says.
Future industrial development in Terrebonne will be limited to manufacturing and R&D.
Until Rosefellow acquired nine holes of Le Versant, the golf course was the largest in Canada.
4.3M sq. ft. of construction underway, set to begin
Tsoumas says Rosefellow has 4.3 million square feet of industrial construction underway or set to begin in the next three months, not including its latest acquisitions.
Sites include Beauharnois, Candiac, Coteau-du-Lac south of Montreal, Kirkland on the West Island of Montreal, Laval and in the west Ottawa community of Kanata.
The developer has also completed construction of its second multifamily apartment building, the 200-unit Le Novella in the Montreal borough of Anjou.
It’s now 50 per cent leased “but we know we’re going to be fully leased by June,” Jager says, since many Quebec leases start on July 1.
Rosefellow previously built the 412,000-square-foot Le 111 apartment building in the borough of Saint Laurent, which is fully leased.
However, “we have not actively pursued any new (residential) sites for development,” Jager says. “The rental rates are not where we would expect them to be or hope them to be, so we’re going to wait a little bit.”
Rentals are still strong on the industrial front, Tsoumas says, although rent growth won’t match the growth seen in recent years.
The number of calls from potential tenants has declined recently, he notes, but all are from serious renters.
“While everybody is pushing the brakes, we feel that the (industrial) market within the next 12 to 18 months is going to start going back to where it was just pre-COVID in 2019, which was on an upswing, just not at the rate that it was in the last two years,” Tsoumas says.
“We feel that if we get our properties ready in 24 months or so, we will be the only developers with actual class-A, brand-new product.”
