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Dramatic revival in Ottawa's industrial real estate sector – Real Estate News EXchange

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IMAGE: A tract of vacant land, owned by the National Capital Commissin in east Ottawa, is being turned into a new industrial business park by local developer Avenue31. (Courtesy Avenue31)

A tract of vacant land, owned by the National Capital Commission in east Ottawa, is being turned into a new industrial business park by local developer Avenue31. (Courtesy Avenue31)

For decades, Ottawa and the National Capital Region were afterthoughts in the industrial real estate market. No more.

A dramatic change in thinking about commerce and supply chains has thrust the city of just over a million people onto the radars of companies which – quite justifiably considering conditions at the time – would barely have given it a passing glance five or 10 years ago.

Though it’s still a relatively small player with an inventory of just over 46 million square feet, Ottawa is becoming a significant distribution hub for e-commerce giant Amazon. Major developers and owners such as Broccolini, PROREIT, Manulife Investment Management, newcomer Avenue31 and others are becoming more and more active.

“While Ottawa certainly isn’t as large as some of the other markets, we are in lockstep with every other market in Canada,” said Warren Wilkinson, the managing director of Colliers’ Ottawa office, while introducing an industrial panel at the recent virtual Ottawa Real Estate Forum.

Availability is at 2.3 per cent and declining. Leasing rates are among the highest in Canada at $11.50 per square foot (up six per cent year-over-year) and rising.

Major new industrial developments

There’s well over three million square feet of new space currently under construction (much of it in a new 2.88-million-square-foot Amazon warehouse) and several other major projects in pre-development. 

Just east of the city, in Casselman, Ford just announced a long-term lease for a 531,000-square-foot distribution centre being built by Montreal’s RoseFellow and Bertone Development Corp. to service Eastern Canada.

All this is occurring in a market which has traditionally been dominated by small- and medium-bay product for firms servicing local clients only. Only 23 per cent of the city’s existing industrial inventory involves spaces larger than 50,000 square feet.

“Quite frankly for groups looking to occupy or purchase space in Ottawa, larger than 50,000 square feet, the opportunity is limited,” Wilkinson noted. Actually, it’s almost non-existent.

So the market is racing to catch up with two suddenly red-hot trends – the e-commerce explosion and the realization that international supply chains are vulnerable to events such as pandemics and other potential disruptions.

Supply chain woes add to industrial demands

“Why is there so much development going on?” Wilkinson asked, then proceeded to answer his own question.

“The one real reason is, I think during the pandemic what we’ve all noticed is what real demand looks like. We also had some champions in the industry step forward and start building new industrial supply.”

Glen D’Silva, managing director, portfolio manager for Manulife Investment Management, took that a step further, noting companies are now facing serious product and raw materials delays.

“If they are supplying a manufacturer, they can’t afford to have delays,” he said. “The just-in-time delivery system has failed us. Everybody is going to want those components closer to home.

“I think you’re going to see a lot more manufacturing of those components within North America so you can have more distribution of those within North America and not from overseas.

“We appeared not to learn from SARS and didn’t have supplies on hand when COVID hit, and I don’t think any government is going to let this happen again. People will remember this very clearly.”

Hidden advantage for Ottawa industrial

Industrial and warehousing expansion is happening across Canada, but Ottawa has one advantage which, perhaps, had not been readily apparent in the past.

“Ottawa has the greatest access to people within one working day,” said Ryan Semple, director of business development for Avenue31.

The Ottawa-base firm has amassed several development sites in the area and is constructing Phase 1 of a new industrial park on land leased from the federal National Capital Commission along Highway 417 in the East End.

It has plans to build almost two million square feet of industrial during the next few years.

Semple cited a 2020 CBRE Ottawa Industrial Update report which examined how many people live within one day’s driving access from major Canadian cities (roughly 400 kilometres in one direction). Ottawa is within one day of about 15 million people – a larger reach than either Montreal or Toronto.

“So businesses that want to provide product to their consumers within one day are now looking at Ottawa as a place to relocate or consolidate,” he said.

IMAGE: Rendering from a concept plan submitted by Broccolini to permit a light industrial property of up to 65,000 square metres, and 30M in height, in a south Ottawa location along Highway 416. (Courtesy Broccolini)

A concept plan submitted by Broccolini calls for a building of up to 700,000 square feet, and almost 100 feet in height, in a south Ottawa location along Highway 416. (Courtesy Broccolini)

Broccolini is currently leading that charge. The Montreal-based firm built a million-square-foot East End distribution centre for Amazon two years ago and is developing the massive five-level Amazon facility in South-End Barrhaven.

Among its other holdings is a plot of land just outside the urban boundary where it plans a 700,000-square-foot distribution centre which would tower almost 100 feet high.

Challenges to find entitled, serviced land

The firm’s vice-president of real estate, James Beach, noted that despite these huge projects there are significant development challenges in the city, both inside and outside the Capital Greenbelt.

“Challenges within the Greenbelt (are) land availability, there is not a lot of it available,” Beach said. “If land is available, use of the entitlement process to render it appropriate for these new-style, e-commerce developments can be onerous and sometimes a very long process.

“Outside the urban boundary? Lots of land, but we kind of come back to the same point, zoning. Does the zoning exist? And even if it does, does the infrastructure exist to support the zoning?”

Yet the demand remains. Both for development and to acquire completed assets. Broccolini sold a 90 per cent interest in the first Amazon distribution centre to Concert.

PROREIT sees strong Ottawa industrial fundamentals

Acquisitions are where PROREIT has been active in the city. As the trust has increased its industrial portfolio weighting, it acquired three additional Ottawa properties comprising 283,000 square feet earlier this year and is looking for more.

“We’ve pivoted recently quite significantly to industrial,” said Mark O’Brien, PROREIT’s managing director of operations. He lauded the region as: “Very stable, good demographics, good household income and good population growth, so certainly it’s a market we want to grow in.”

He also said the tight vacancy is good news for firms holding existing product. The restrictions “just help our assets grow in value. 

“Take a bandwith of between four and 10 per cent annual growth on rental rates. You can close your eyes and run industrial product and get a 20 per cent cash IRR without having to do anything, and you add cap rate compression on top of that.

“I mean, you realize how many people are trying to chase these assets. It’s all to our benefit.”

Relieving these pressures can only come from one source. Semple cited the letters ASWL: “It all starts with land. 

“It all starts with shovel-ready land, It all starts with zoned land. . . . That’s going to be the biggest challenge, shovel-ready zoned land.”

Beach said there is land available, much of it controlled by government, or NGO-type agencies. However, that doesn’t mean it will be easy to build on. The South-End Ottawa airport authority property is one example.

“They have several hundred acres of industrial airside land available and relatively ready to go, however we go back to the discussion about entitlement, you go back to the discussion about servicing, transportation.

“Those lands need a little bit more work and really it will take a catalyst tenant and a large-scale development to warrant a first phase and for those infrastructure dollars to be implemented.” 

He said it will happen. The only question is, when?

EDITOR’S NOTE: This article was updated to indicate that RoseFellow and Bertone are developing the Ford facility in Casselman. RENX apologizes for the error.

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A Large Canadian Real Estate Brokerage Has Forecast Prices Will Rise Up To 20% – Better Dwelling

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  1. A Large Canadian Real Estate Brokerage Has Forecast Prices Will Rise Up To 20%  Better Dwelling
  2. House prices in Canada will rise higher in 2022, real-estate report says  CTV News
  3. Canada’s Real Estate Prices are Expected to Rise 9.2% in 2022: RE/MAX  Storeys
  4. Housing prices in Ottawa will rise five per cent in 2022, Remax estimates  CTV News Ottawa
  5. 2 Factors That May Impact the Real Estate Market in 2022  Real Simple
  6. View Full coverage on Google News



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Why real estate agents are urging Canadians not to wait for spring to sell their house – Ottawa Sun

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Rising mortgage rates could mean a spring slowdown for Canada’s housing market

Article content

The pandemic-triggered housing boom has shredded a number of long-standing assumptions Canadians have about real estate.

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Article content

Distance from, not nearness to, downtown cores is now a key buyer desire. Communities that were unpopular with buyers two years ago because of a lack of jobs or amenities are some of today’s most active markets. Even taking out a gargantuan mortgage in the midst of a crushing global recession went from “undeniably risky” to “par for the course” seemingly overnight.

And this Great Real Estate Rethink continues: A new survey by real estate brokerage Royal LePage finds that 79 per cent of real estate professionals think sellers should list their homes this winter rather than waiting until spring 2022.

Winter is traditionally the slowest season for home sales in Canada. But buyers have already tossed aside so many real estate traditions. What’s one more?

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Survey says…

The pro-winter listing sentiment is strong across all regions.

Realtors in British Columbia led the way, with 93 per cent of respondents in the province saying they would advise their clients to sell this winter; 87 per cent of agents in Quebec and 85 per cent of those in Atlantic Canada shared the same view.

The proportion of agents in favour of winter listings were lower in Ontario (72 per cent), Alberta (73 per cent) and the remaining prairie provinces, Manitoba and Saskatchewan (75 per cent).

While those numbers are all high, many of the real estate agents surveyed — at least half in every area of the country — were advising their clients to list in the winter even before the pandemic. The reason then is the same as it is today: A painfully low number of homes for sale has created a seller’s market so rabid that weather is the last thing desperate buyers are worried about.

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“Typically we see a seasonal adjustment in real estate activity,” says Adil Dinani of Royal LePage West Real Estate Services in Vancouver. “However, last year, we saw one of the busiest winter markets in our history. Even if there are fewer buyers in the winter, it is unlikely there will be enough inventory on the market to satisfy demand.”

That could be especially true in Toronto, where there were only 7,750 homes left on the market at the end of October.

“That’s versus 17,000 last year,” says Cameron Forbes, general manager and broker at RE/MAX Realtron Realty in Toronto.

But Forbes still believes that a spring listing is better for sellers, pointing out that since 1999 there have, on average, been more homes on the market in the winter in the GTA than in the spring. If selling in a low-supply market is the goal, why not wait until the spring, when the market will be even more depleted?

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“All things being equal, that’s a better time to sell your home,” he says. “That’s why agents will generally recommend that you wait to list in the spring market, when your home shows well and, frankly, when buyers are out looking to buy.”

Low supply vs. the harsh Canadian winter

You may have noticed that the areas where the preference for winter listings were lowest are in parts of the country where winter can be especially brutal. (Ontario’s placement in this category may have more to do with fears around what an extra three or four months might do to the province’s already sky-high prices.)

And this one could be particularly messy. Both The Weather Network and the Farmer’s Almanac are preparing Canadians for a potentially long, storm-filled winter.

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Article content

Can sellers in hard-hit markets really plan on buyers being hungry enough to brave the elements and view properties when winter’s at its most miserable?

Regina-based Royal LePage agent Shayla Ackerman, no stranger to extreme winter weather, says listing in the winter is not something she would recommend unless a seller has no other choice.

“Our winter market slows right down,” she says.

But in Montreal, which also receives its fair share of colossal snow-dumps, Century 21 Immo-Plus agent Angela Langtry expects buyers to be out in droves.

“We are still in a low-inventory market, especially for houses,” Langtry says. “I always say that the serious buyers come out in the snow storms.”

A spring housing slowdown?

Capitalizing on raging buyer demand is not the only reason to list your home this winter.

Advertisement

Article content

The Bank of Canada announced in late October that it is ending a key pandemic emergency measure: buying billions of dollars in bonds to keep interest rates low, including those attached to mortgages.

If mortgage rates begin rising, and mortgage amounts begin shrinking, buyers may have less buying power in the spring. Listing now may give sellers one last shot at enticing buyers while they have more money to play with.

But Paul Taylor, president and CEO of trade association Mortgage Professionals Canada, isn’t sure a rise in interest rates will impact buyers’ budgets in the next few months.

“Almost everyone is qualifying at a 5.25 per cent stress test rate today,” Taylor says, referring to the benchmark interest rate lenders use to evaluate mortgage applicants’ ability to repay their loans.

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Article content

Even if the Bank of Canada were to raise interest rates by 100 basis points, or one per cent, over the next 12 months, Taylor says buyers who qualified at 5.25 per cent would still have at least 200 basis points worth of breathing room, meaning their mortgage budget “will be effectively unchanged.”

Taylor expects a 0.25 per cent increase in the BoC’s overnight rate, which should trigger a rise in variable mortgage rates, in the spring. He says two additional increases could occur before the end of 2022.

“I expect the media coverage of the tiny rate increases will scare many and slow the market, which is likely very good for everyone, but I don’t think we’ll see enough of a slowdown to erode prices,” Taylor says.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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Why real estate agents are urging Canadians not to wait for spring to sell their house – Financial Post

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 on


Rising mortgage rates could mean a spring slowdown for Canada’s housing market

Article content

The pandemic-triggered housing boom has shredded a number of long-standing assumptions Canadians have about real estate.

Advertisement

Article content

Distance from, not nearness to, downtown cores is now a key buyer desire. Communities that were unpopular with buyers two years ago because of a lack of jobs or amenities are some of today’s most active markets. Even taking out a gargantuan mortgage in the midst of a crushing global recession went from “undeniably risky” to “par for the course” seemingly overnight.

And this Great Real Estate Rethink continues: A new survey by real estate brokerage Royal LePage finds that 79 per cent of real estate professionals think sellers should list their homes this winter rather than waiting until spring 2022.

Winter is traditionally the slowest season for home sales in Canada. But buyers have already tossed aside so many real estate traditions. What’s one more?

Advertisement

Article content

Survey says…

The pro-winter listing sentiment is strong across all regions.

Realtors in British Columbia led the way, with 93 per cent of respondents in the province saying they would advise their clients to sell this winter; 87 per cent of agents in Quebec and 85 per cent of those in Atlantic Canada shared the same view.

The proportion of agents in favour of winter listings were lower in Ontario (72 per cent), Alberta (73 per cent) and the remaining prairie provinces, Manitoba and Saskatchewan (75 per cent).

While those numbers are all high, many of the real estate agents surveyed — at least half in every area of the country — were advising their clients to list in the winter even before the pandemic. The reason then is the same as it is today: A painfully low number of homes for sale has created a seller’s market so rabid that weather is the last thing desperate buyers are worried about.

Advertisement

Article content

“Typically we see a seasonal adjustment in real estate activity,” says Adil Dinani of Royal LePage West Real Estate Services in Vancouver. “However, last year, we saw one of the busiest winter markets in our history. Even if there are fewer buyers in the winter, it is unlikely there will be enough inventory on the market to satisfy demand.”

That could be especially true in Toronto, where there were only 7,750 homes left on the market at the end of October.

“That’s versus 17,000 last year,” says Cameron Forbes, general manager and broker at RE/MAX Realtron Realty in Toronto.

But Forbes still believes that a spring listing is better for sellers, pointing out that since 1999 there have, on average, been more homes on the market in the winter in the GTA than in the spring. If selling in a low-supply market is the goal, why not wait until the spring, when the market will be even more depleted?

Advertisement

Article content

“All things being equal, that’s a better time to sell your home,” he says. “That’s why agents will generally recommend that you wait to list in the spring market, when your home shows well and, frankly, when buyers are out looking to buy.”

Low supply vs. the harsh Canadian winter

You may have noticed that the areas where the preference for winter listings were lowest are in parts of the country where winter can be especially brutal. (Ontario’s placement in this category may have more to do with fears around what an extra three or four months might do to the province’s already sky-high prices.)

And this one could be particularly messy. Both The Weather Network and the Farmer’s Almanac are preparing Canadians for a potentially long, storm-filled winter.

Advertisement

Article content

Can sellers in hard-hit markets really plan on buyers being hungry enough to brave the elements and view properties when winter’s at its most miserable?

Regina-based Royal LePage agent Shayla Ackerman, no stranger to extreme winter weather, says listing in the winter is not something she would recommend unless a seller has no other choice.

“Our winter market slows right down,” she says.

But in Montreal, which also receives its fair share of colossal snow-dumps, Century 21 Immo-Plus agent Angela Langtry expects buyers to be out in droves.

“We are still in a low-inventory market, especially for houses,” Langtry says. “I always say that the serious buyers come out in the snow storms.”

A spring housing slowdown?

Capitalizing on raging buyer demand is not the only reason to list your home this winter.

Advertisement

Article content

The Bank of Canada announced in late October that it is ending a key pandemic emergency measure: buying billions of dollars in bonds to keep interest rates low, including those attached to mortgages.

If mortgage rates begin rising, and mortgage amounts begin shrinking, buyers may have less buying power in the spring. Listing now may give sellers one last shot at enticing buyers while they have more money to play with.

But Paul Taylor, president and CEO of trade association Mortgage Professionals Canada, isn’t sure a rise in interest rates will impact buyers’ budgets in the next few months.

“Almost everyone is qualifying at a 5.25 per cent stress test rate today,” Taylor says, referring to the benchmark interest rate lenders use to evaluate mortgage applicants’ ability to repay their loans.

Advertisement

Article content

Even if the Bank of Canada were to raise interest rates by 100 basis points, or one per cent, over the next 12 months, Taylor says buyers who qualified at 5.25 per cent would still have at least 200 basis points worth of breathing room, meaning their mortgage budget “will be effectively unchanged.”

Taylor expects a 0.25 per cent increase in the BoC’s overnight rate, which should trigger a rise in variable mortgage rates, in the spring. He says two additional increases could occur before the end of 2022.

“I expect the media coverage of the tiny rate increases will scare many and slow the market, which is likely very good for everyone, but I don’t think we’ll see enough of a slowdown to erode prices,” Taylor says.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

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