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The industrial real estate market in Southwestern Ontario is nearly full, a new report finds, with some of the country’s most in-demand places found along Highway 401.
Real eState
Demand for industrial real estate high across London, Windsor regions: CBRE – Windsor Star
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The report Another Year, Another Record, from commercial real estate brokerage CBRE, outlines the fourth quarter industrial real estate market in Windsor and surrounding area. It found that the availability rate in Southwestern Ontario — from Waterloo to Windsor — was far below national averages.
Waterloo reported the lowest industrial real estate availability rate in the county at 0.6 per cent — beating out major markets like Vancouver and Toronto — while London reported an availability rate of 0.8 per cent. Windsor clocked in at 1.4 per cent availability, following Montreal, Vancouver and Toronto tied at 0.9 per cent. The current national average is 1.8 per cent availability.
It’s definitely a challenging market
“The industrial market today has never been stronger,” said Brook Handysides, vice-president for CBRE in Windsor.
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The CBRE report finds that in Windsor, asking prices for industrial real estate rose 35 per cent year-over-year in 2021 to a record-high $123 per square foot, while rents for industrial space rose about six per cent, to a new high of $8.22 per square foot.
The low availability rate can be a mixed bag, depending on whether you’re buying or renting as opposed to selling, said Brad Collins, a senior associate with CBRE.
“When we talk about 1.4 per cent availability, that is almost a fully occupied market,” Collins said. “I don’t know that you can call it good or bad — it depends what side of the coin you’re on. It’s definitely a challenging market.”
It does mean the Windsor and Essex County region is a desirable — and still relatively affordable — market for businesses to set up shop when compared to other hotspots in the province, mirroring a similar trend in residential real estate.
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“We work with clients that are looking to grow here because of the price,” Collins said. “Markets like Toronto, where they’ve had to compete and either been priced out or just beat, and they’ve worked their way down to Windsor and see value.
“We’ve got unprecedented demand coming in from users looking to come to Windsor and obviously bring jobs … unless that demand tapers, or we get a substantial influx of new construction buildings, there’s really no end in sight.”
The trend is driven by high prices in the Greater Toronto Area trickling out to elsewhere in the province.
“Even though we’ve seen unprecedented growth in Windsor, you look at that in terms of what’s going on up the highway,” Handysides said. “Relatively speaking we still have a very well-priced market, even irrespective of the fact that sale prices and lease rates continue to accelerate in price.”
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But an availability rate of just 1.4 per cent represents a market that is essentially full, Collins said, whereas a more balanced market might have a six to eight per cent availability rate.
The CBRE report also found there are 92,000 square feet of new industrial space in construction, all of which is pre-sold or leased, meaning it offers little relief on the supply side of the equation.
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Windsor’s industrial availability has been trending down since about 2012, the report found. In the second quarter of 2012 availability for industrial real estate was 15 per cent, dropping to four per cent in 2017.
There aren’t any quick fixes, Handysides said. It’s about supply, and building more industrial real estate can be expensive and time-consuming — so low availability and growing prices for industrial real estate are likely to stick around, at least in the near future.
“Timelines for construction still may not go at the speed of business,” he said. “Our expectation is going forward is that these numbers will continue to tighten and become more aggressive.”
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The City of Calgary has recruited three people from the commercial real-estate sector in an effort to get a new event centre to replace the aging Scotiabank Saddledome.
CBRE executive vice-president John Fisher, director of strategic initiatives with NAIOP Calgary Guy Huntingford and Ayrshire Group executive chairman Phil Swift have been retained to engage both the city and the and Calgary Sports and Entertainment Corporation (CSEC) to reach a new deal.
At Wednesday’s meeting, the city’s planning and development manager Stuart Dalgleish told committee members the group has already begun their work.
“We are at a stage where our third party is having discussions with both the Calgary Sports and Entertainment Corporation and the City of Calgary, with a view to determining whether there is interest in discussions toward a new event centre, and a new deal towards the new event centre,” Dalgleish said.
Mayor Jyoti Gondek is optimistic the team will be able to break the impasse between the city and CSEC.
“Today’s news is good news, and we need to be patient with what comes following this,” she said.
Ward 1 Coun. Sonya Sharp, who chairs the event centre committee, says naming a third party to assist in negotiations is a big step to seeing a new arena rise from the ashes of the failed deal.
“I’m very satisfied. There’s been a lot of work been put into this to get to where we are today,” she said. “Everybody wants an event centre built.”
However, sports economist Moshe Lander says it might not be such a great deal for most Calgary taxpayers.
“The issue about who should pay for it is something that goes on in every city, more or less, anytime there’s an arena or stadium discussion,” he said.
“In almost every single case, the public sector blinks first and ends up throwing money at a project that’s not going to recoup its costs.”
“Really, it’s just an issue at this point of how much money does the City of Calgary want to throw at this project, understanding that it’s not going to get it back? How much does it want to sell to the taxpayers that this is what you’re going to be on the hook for, even though the vast majority of residents in the city are not going to use that arena in any capacity?”
CTV reached out to CSEC on Wednesday to ask if the owners still had any interest in reviving the deal. There was no response by publishing deadline.
The original agreement was signed in December 2019. In it, the city and CSEC agreed to split the cost of the $550 million project. When the price tag jumped to over $630 million, the Flames ownership group balked and cancelled the deal. It officially expired New Year’s Eve 2021.
Earlier this month, NHL commissioner Gary Bettman met with CSEC to discuss the arena, among other topics. At the time, he told reporters he remained hopeful a deal could be struck.
“I’m always optimistic,” said Bettman. “There’s nothing going on right this second to report that would indicate there is going to be a solution immediately, but my hope is that everybody can figure this out.”
Bettman also warned without a new arena or an updated Saddledome, Calgary would miss out on significant NHL events such as All-Star games.
The Saddledome is the second-oldest NHL arena behind only New York’s Madison Square Garden.
Public Relations & Content Manager | RE/MAX Canada
Lydia McNutt is an award-winning writer, editor and public relations professional, with a focus on all things real estate. At RE/MAX Canada, Lydia translates market data and trends into educational and entertaining content for homebuyers and sellers, while furthering the RE/MAX brand reach, nationally and globally. Explore timely news articles, market trend reports and thought-leadership on blog.remax.ca. Lydia has been published nationally on topics ranging from real estate to architecture, design and decor, finance, business, technology, entertainment and lifestyle topics. Email Lydia at lmcnutt@remax.ca
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CALGARY — The city of Calgary has recruited citizens from the commercial real-estate sector to help get a new event centre and home for the Calgary Flames back on track.
When an agreement between the city and Calgary Sports and Entertainment Corporation, which owns the Flames, collapsed late last year, city council voted in January to get a third party involved.
John Fisher, Guy Huntingford and Phil Swift are tasked with determining whether the Flames still want to build an arena with the city, or if the city will have to look for other potential partners to build an event centre.
Fisher is executive vice-president of CBRE, Huntingford is director of strategic initiatives with NAIOP Calgary, and Swift is executive chairman of the Ayrshire Group investment firm.
“This team brings considerable expertise from the commercial real-estate industry including experience in larger development,” the city’s planning and development manager Stuart Dalgleish said Wednesday in an event centre committee meeting.
“The third party has spent considerable time understanding the items and interests behind the terminated agreement and the current landscape. These items have become clarified.
“Based on a meeting with both the city and CSEC, the next step is for the third party to make recommendations on a possible path forward.”
Dalgleish said there is no definitive commitment or timeline for a new agreement.
The city and the Flames agreed on an arena deal over two years ago with the initial estimate of $550 million split between the two.
Shovels were scheduled to hit the ground in 2022 for a 19,000-seat arena and concert venue replacing the Saddledome, which has been the home of the Flames for 39 years.
The cost estimate for the project rose to $634 million, however.
Since the two sides agreed to an amended deal last July, the city added an additional $19 million in roadwork and climate mitigation to the project, and wanted the Flames to pay for $10 million of that.
CSEC president John Bean said in December that the Flames were withdrawing from the agreement because of an accumulation of issues and increased financial risk.
“While CSEC was prepared to move forward in the face of escalating construction costs, and assume the unknown future construction cost risk, CSEC was not prepared to fund the infrastructure and climate costs that were introduced by the city following our July agreement … and are not included in the current cost estimate of $634 million,” Bean said then.
So the Flames remain in the Saddledome, which is the second-oldest NHL arena behind New York’s Madison Square Garden.
CSEC also owns the Western Hockey League’s Hitmen, Canadian Football League’s Stampeders and National Lacrosse League’s Roughnecks.
The Flames recently announced they will move their American Hockey League affiliate from Stockton, Calif., to Calgary for the 2022-23 season.
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