Triovest is demonstrating its continuing belief in the industrial leasing sector by breaking ground on a 46-acre site in Markham, Ont., in what is expected to be one of this year’s largest spec development launches.
But considering the population is continuing to grow at a time when developers are circumspect about launching projects in some other real estate sectors, Triovest sees an opportunity with its Cathedraltown Business Park in the community just north of Toronto.
“Canada has been conservative and we haven’t overbuilt, but I think there’s been a need, as the population booms in urban centres, for warehousing, distribution and manufacturing to support local infrastructure,” Jamie Kitchen, national VP of development leasing at Triovest, told RENX.
“The more people you bring in, the more goods and services you need, the more T-shirts people need, the more backpacks for kids, shoes, coffeemakers — you name it — and it all has to be housed in warehousing and distributed from somewhere.”
The firm had acquired the property in conjunction with institutional partners for $106.5 million in 2021.
The Cathedraltown Business Park
The Cathedraltown Business Park is comprised of three buildings — 479,000, 207,000 and 204,000 square feet, respectively — to be built one after the other, with no set number of tenants at the moment.
Kitchen said the market will determine that as the properties are leased.
The project, he added, should be delivered during the first quarter of 2025 and is designed to capitalize on what Kitchen called the market’s bifurcation.
That’s because leasing has decelerated as interest rates have increased, and as companies’ revenues shrink, they will alleviate pressure on their overheads.
However, Kitchen noted there’s a flight to quality because it’s worth paying more per square foot for a class-A building than moving into a cheaper class-B- or -C building, especially when the gap in asking rents for the three classes of facilities is shrinking.
“Tenants are saying, ‘Well, if I can go to a 40-foot clear height in a best-in-class building with less operating costs for $20 a (square) foot, I’m going to scale my business and ensure business continuity and growth and efficiency by going into those buildings,’ ” Kitchen said.
“I think what you’re going to see is a kind of bifurcation in rental rates that’s not based on a lack of supply; you’re going to see a bit of separation between A-, B- and C-class product.”
Future-proofing is key
Indeed, Cathedraltown Business Park is designed to meet today’s highest standards in order to compete for tenants seeking high-quality, efficient space.
The buildings are designed to meet Zero Carbon Building Design Certification standards.
With 40-foot clear heights, LED lighting, enhanced thermal building envelope design, an R40 roof, R28 walls, high-efficiency energy recovery ventilators, integrated cold climate heat pumps and a roof fitted for future solar panel installations, Kitchen believes it should have no problem attracting growing businesses.
Moreover, with the electrical service and infrastructure also being upsized to accommodate becoming fully electrified buildings later, the development is well-positioned to become even more efficient in the future.
“As we move to a more green model and fully electrified industry, we want you to have those components in your building — we’re future-proofing them,” he said.
“You’re going to be able to pursue annual zero-carbon performance certifications and you’re going to be able to attract best-in-class tenants to the building.
“A lot of Fortune 100 companies have ESG at the top of their list, in terms of corporate objectives, and we want to make sure that we’re creating buildings which are going to attract best-in-class talents and tenancies.”
Cathedraltown Business Park is also close to Highway 404, which means it offers easy access to all major highways, including the Trans-Canada Highway, in the Greater Toronto Area.
This ties back to what Kitchen said about Canada’s expanding population and being able to service surging growth.
But this is also good news for tenants who will eventually move into Cathedraltown Business Park because they will have access to a deeper labour pool.
Triovest charts next 3 years
Triovest has projects on the go across Canada’s major markets, Kitchen said.
Closer to Toronto, there are developments underway in Cambridge, Bolton, Brampton, Ajax and Pickering; outside of Montreal, Triovest is busy in Laval and Vaudreuil-Dorion; and it has also has a project in Calgary.
“They’re projects of various sizes and a lot of those projects have either been underway or the land was secured over the last two years,” Kitchen said.
“Those will all be coming online or being delivered over the next, call it, 36 months.”