Transportation, logistics and distribution company XTL has paid $72 million to purchase a 375,000-square-foot industrial building being developed in Salaberry-de-Valleyfield, Que., from a joint venture involving Divco, Brasswater and two minority owners.
Divco is developing the structure on a 17.6-acre property at 55 Rue Marie-Curie. The facility is scheduled for occupancy in the fourth quarter of 2024.
“The location is good,” Cushman & Wakefield senior vice-president Paul Fredette, who represented XTL in the transaction, told RENX. “There are no bells and whistles. It’s just a big box.”
The building will be used for third-party logistics operations and will have a 40-foot clear height, 34 loading docks, six drive-in doors and an early suppression fast response fire sprinkler system.
Fredette said XTL – a provider of transportation, logistics, warehousing and distribution services – needed the additional space to accommodate increased business. The company plans to retain its existing Quebec properties as well as those in the Toronto, Calgary and Vancouver areas.
Valleyfield is conveniently located
Valleyfield is a city of approximately 44,000 on Grande-Ile in the St. Lawrence River, at the southwest edge of Greater Montreal. Its population is projected to increase by 50 per cent within 10 years.
XTL’s new site is located near a CSX Intermodal Terminal, the Port of Valleyfield and Highways A20 and A30 in the Toronto-Montreal-New York transportation corridor.
Cascades, Petro-Canada, Divco, Broccolini, Montoni, Syscomax, Brasswater, GBH Depot, Valdev, Armid Group, Pelican and Diageo are among the companies that have invested in, built or become tenants of Valleyfield’s industrial parks in recent years.
They’ve been attracted by the city’s transportation access, affordability and land availability.
Activity in Beauharnois
JLL was also involved in another significant Montreal-area transaction recently, this one a leasing deal.
Keurig Dr Pepper Canada signed a long-term lease in September with developer OleaDev for a 602,000-square-foot, spec-built industrial property — close to a new Broccolini-developed, one-million-plus-square-foot IKEA distribution centre that opened around the same time — in nearby Beauharnois, which is closer to Montreal than Valleyfield.
“It was a brand new building that was vacant,” Fredette noted. “We negotiated a deal to expand the building by another 200,000 square feet to make it 600,000 square feet.
“They’ve started occupancy in the 400,000 and now the completion date for the balance is going to be April or May of 2024.”
Fredette said industrial lease renewals are being done for $17 to $18 per square foot on the Island of Montreal, while new buildings with 40-foot clear heights off the island are leasing in the $13.50 to $15 per square foot range.
Quebec industrial market is softening
Fredette said the Quebec industrial real estate market is showing signs of softening a bit, noting that buildings developed on a speculative basis by Claridge, Rosefellow and Broccolini are currently vacant.
He’s confident, however, that they’ll be full in a year or two once the economy rebounds.
Fredette is seeing some sublets come to market now from companies that aggressively acquired space in the earlier stages of the pandemic and are now right-sizing, but he expects these spaces to also be scooped up quickly.
Broccolini owns land in Coteau-du-Lac, not far from Valleyfield, but Fredette said there’s an overall shortage of industrial land in desirable Quebec locations.
Due to higher interest rates and other costs, Fredette said new industrial developments now need to be a minimum of 300,000 square feet and have a minimum clear height of 40 feet to be financially viable.
