The first of two buildings at Halifax’s 400,680-square-foot Bayers Lake Industrial Centre is complete and the second will follow before the end of the year, as Skyline Industrial REIT nears completion of several major projects in its current development cycle.
Spaces ranging from 7,980 to 230,000 square feet are available at the 265 Julius Blvd. property. It is part of the 582-acre Bayers Lake Business Park located 11 kilometres from downtown Halifax and within a short driving distance of two container terminals and Halifax Stanfield International Airport.
Skyline Industrial REIT is the majority partner in the project, with Secure Capital, Nicola Institutional Realty Advisors and Lindsay Construction having smaller stakes. Secure initially tied up the land and the other partners followed, Skyline Industrial REIT president Mike Bonneveld told RENX.
Construction began in the spring of 2023 and Bonneveld told RENX the zero-carbon project is running slightly behind schedule due to weather issues.
“On the east coast, whether it’s rainy or snowy, you can’t pour concrete floors,” said Bonneveld. “Rain and snow, which you get from early December until March, can be a factor and slow things down a little bit.”
Bayers Lake Industrial Centre will be zero-carbon
Bayers Lake Industrial Centre will be in compliance with the Canada Green Building Council Zero Carbon Building Design Standard. It will feature: a thermally efficient load-bearing tilt-up building system with increased roof insulation and vertical loading docks; a solar photovoltaic system; centralized in-floor heating; heat recovery ventilation; provision for natural light; and sensor-controlled LED lighting.
“For Skyline, it’s important where we can, but it obviously has got to make economic sense for our investors to be able to go zero-carbon,” said Bonneveld.
Some tenants now require zero-carbon, largely global companies or those driven by institutional investors. It plays a role in the decision-making process for other groups, though some aren’t willing to pay more in rents to have it.
“We’ve got a couple of tenants right now that we’re in discussions with on space at the buildings, and being in a zero-carbon building is very important to them,” said Bonneveld.
No leases signed yet
While no leases have yet been signed for Bayers Lake Industrial Centre, Bonneveld said interest has picked up over the last quarter and he’s optimistic about making leasing announcements before the end of the year. The goal is to be fully leased by the end of 2025.
The larger of Bayers Lake Industrial Centre’s two buildings is 230,235 square feet. It has a 40-foot clear height and 18 loading dock doors. The smaller building, where construction is complete, is 170,445 square feet. It has a 32-foot clear height and 17 loading dock doors.
“There’s nothing really to the scale of the larger building in terms of clear height and overall cube space in Halifax or Dartmouth,” said Bonneveld, who believes multiple tenants will be in both buildings.
Bayers Lake Industrial Centre is the only asset in Bayers Lake Business Park that Guelph, Ont.-based Skyline Industrial REIT is involved with, though that could change.
“We want to grow a bigger footprint around this asset and we have looked at other potential acquisitions out there,” Bonneveld said.
Other developments and leasing
Skyline Industrial REIT’s 96,726-square-foot Rampart III in Edmonton’s Rampart Business Park is fully operational and Bonneveld said there are ongoing talks with two potential tenants that could occupy the entire building.
“Leasing velocity has definitely been slower in the last nine months,” Bonneveld said. “But I would say in the last 60 days, with the recent (overnight interest) rate cuts, we’ve seen a small uptick in interest level from tenants and incoming calls from leasing brokers.”
Leasing by existing and new tenants has been strong for small and mid-bay spaces in Calgary and Bonneveld said things are also picking up with larger spaces.
Approximately 300,000 square feet of the 494,000-square-foot building owned by RF Limited Partnership II (a joint venture with Skyline, Rosefellow and F.I.T. Ventures) at 131 Montcalm Blvd. N. in Candiac, Que. was recently leased.
Ottawa area developments
Two buildings encompassing 478,745 square feet at 405 Huntman Dr. in Stittsville, near the Ottawa suburb of Kanata, is also owned by RF Limited Partnership II. They should be substantially completed by November and one building is fully leased.
“By the end of ’24 we’ll have completed substantial construction on all of our development projects, save one,” Bonneveld said. “When we look at the impact of being through that big chunk of construction, and hopefully as that leasing starts to develop, we see ’25 and ’26 as good value and income growth for our investors.”
Two proposed buildings with 36-foot clear heights and totalling 319,550 square feet at 575 Dealership Dr. in the Ottawa suburb of Nepean are also owned by RF Limited Partnership II.
Bonneveld wants the Huntman Drive buildings to be completed and leasing well before starting construction in Nepean. He’d like to see it launch in Q2 or Q3 of 2025.
Acquisitions and dispositions
Skyline Industrial REIT and Rosefellow previously each held a half interest in two recently constructed distribution centres totalling 373,360 square feet in Montreal and Pointe-Claire, but the trust acquired total ownership earlier this year.
The REIT sold a 96,495-square-foot industrial space at 549 Conestoga Blvd. in Cambridge, Ont. to tenant Innovative Steam Technologies for an undisclosed price earlier this month.
The company’s lease was expiring next year and it wanted more control of the building and its costs. Bonneveld said Skyline Industrial REIT achieved the full value of the asset, based on potential market value.
Capital from the sale will be used to pay down debt and for future acquisitions.
“The investment market, even in industrial, is still a little more subdued than it was 18 months ago,” said Bonneveld, who believes transaction activity will pick up in the first half of 2025.
