October 18th, 2024
“For every action, there is an equal and opposite reaction.”
- Isaac Newton
When riding a wave at its peak, few seldom stop to think about the next sequence of events as it inevitably comes down.
This doesn’t mean that every bull run is followed by a crash.
That said, humans are known for their over-indulgence in both optimistic and pessimistic scenarios; the former manifesting as the largest industrial pipeline in the GTA’s history while the latter took form as enormous overflow and stockpiles following the pandemic.
As we work through supply-side shocks and integrate new technologies, businesses change. And these changes are reflected ultimately in the real estate footprint underlying the operation.
This has led us to a point where the GTA industrial market just saw the highest industrial vacancy rate in a decade, with the largest quarterly negative absorption in 14 years, and the first average rent decline in 8 years.
Heading into the tail-end of 2024, we expect a flurry of transactions as tenants weigh their options, look to re-organize and enhance their spaces, as well as to take advantage of more moderate pricing.
We also forecast the changing landscape and shift towards the on-shoring of manufacturing to result in a strong demand for heavy power facilities and design-build opportunities. General industrial users and logistics and warehousing tenants will continue to purchase and lease, albeit at reasonable levels relative to the recent boom.
That is why, for this week’s newsletter, we will continue our series and take a look at some examples of “Heavy Powered Warehouse.”
Warehouse 4.0: Examples of Heavy-Powered Facilities Maximizing Space and Throughput
As discussed in our last issue: in the Greater Toronto Area (GTA), modern industrial warehouses, often referred to as “heavy-powered warehouses”, are transforming the logistics and warehousing sectors. These warehouses are equipped with advanced automation systems that significantly enhance throughput, reduce labor dependence, improve productivity, and optimize the cubic volume of available space.
Below are some examples of heavy-powered warehouses which possess the specifications that would enable a business to equip it with the advanced systems previously featured.
For your quick reference, the topics we previously touched on were: (1) Warehouse Management Systems (WMS), (2) Automated Storage and Retrieval Systems (AS/RS), (3) Robotics and Automated Guided Vehicles (AGVs), (4) Conveyor Systems, (5) Charging Stations for Electric Vehicles and Machinery, (6) Automation Software and Data Systems, (7) Temperature-Controlled Environments, (8) Energy Management Systems (EMS), and (9) Net Zero Carbon Ready Certifications.
- 587 Avonhead Road, Mississauga – Zero Carbon Industrial Campus
Avonhead – Zero Carbon Industrial Campus. Source: Carterra.
Carterra is bringing to market the Avonhead Zero Carbon Industrial campus, comprised of two buildings totaling 740,000 square feet. The project is targeting both LEED Gold and Zero Carbon Ready certifications and will have a “Solar Ready R40 Roof” and BIPV Solar Panels on the facade.
Phase 1 will bring a 362,000 SF building located at 587 Avonhead Road with a 40 foot clear height, 56 truck-level and 2 drive-in doors, 5000 amps of power, and 32 trailer parking spaces; ready for occupancy in Q4 2023. Phase 2 will see a 378,000 SF building located at 557 Avonhead Road with the same specifications for clear height, truck doors, parking, and power; except that it will deliver in Q4 2024. Located in proximity to Highways 403 and 407, the QEW and MiWay and GO Stations, the asset offers excellent connectivity. CBRE is leading the project.
- 20 & 30 Ironside Drive, Brampton
- 601 Milner Avenue, Scarborough – Toronto East Logistics – 350,000 SF Redevelopment
601 Milner Avenue. Source: Cushman & Wakefield.
Toronto East Logistics, located at 601 Milner Avenue, will bring 350,000 SF of warehousing and logistics space that will be ready for occupancy in Q4 2024.
The state-of-the-art facility will have:
- 40’ clear height;
- 56’ by 40’ bays;
- 61 TL shipping doors;
- 43 trailer parking spots; and
- 1,600A/600V heavy power.
- 10 Newkirk Court, Brampton – 316,452 SF
10 Newkirk Court, Brampton
Fiera Real Estate and Berkshire Axis have brought to market the Heart Lake Business Park in Brampton – with just one building remaining available at 10 Newkirk Court.
The park is comprised of five buildings with 40 foot clear heights ranging from 87k SF and 316k SF. 10 Newkirk Court is 316,452 SF in size with demising options starting at 114,372 SF. The property offers a 40’ clear height with 48 truck-level and 2 drive-in doors, 3,000 amps of heavy power, a 60’ speed bay, and 15 trailer parking stalls. Cushman & Wakefield is leading the project. Contact our team for more details.
- 541 Kipling Avenue, Etobicoke – 337,210 SF Redevelopment
OneProperties and AIMCo have partnered to redevelop the site at 541 Kipling Avenue in Etobicoke, Ontario. The 337,210 SF state-of-the-art, last-mile distribution facility will have a 40’ clear height with 78 truck-level and 2 drive-in doors, 3,000 amps of power and 3 active available rail spurs. Avison Young is leading the project and is marketing a Q4 2024 possession date.
- 25 Dyas Road, North York
Nicola Wealth is offering for sale or lease a 74,717 SF temperature-controlled facility, perfectly suited for a variety of business operations.
Situated on a 4.13-acre lot, this freestanding property offers flexibility for industries such as education, self-storage, high-tech, pharmaceutical/laboratory, light manufacturing, last-mile distribution, and more.
Property Highlights:
- High-percentage of office space which can be reduced to fit your needs;
- Clear height from 13’5″ to 16’1″;
- 3 truck-level loading docks and 1 drive-in door;
- 1,600 Amps/600 Volts of heavy power;
- 214 surface parking stalls;
Available for February 1st 2025 or earlier, the property is well-situated with easy access to Highway 401 and the Don Valley Parkway, ensuring excellent connectivity to transportation and labor pools. For more information or to schedule a tour, please contact our team.
- 221 Church Street South, Ajax – Industrial On the Park
Crestpoint Real Estate Investments is constructing a three-property industrial park totalling approximately 1.1-million square feet and surrounded by 82 acres of natural green space. Building A will be 698,301 square feet with 118 truck-level and 2 drive-in doors, 3,000 amps of power, and 96 trailer parking spaces.
Buildings B and C will be 198,946 square feet and 195,853 square feet, respectively, with 53 truck-level and 2 drive-in doors and 2,000 amps of power each. All assets will have 40 foot clear heights with 60 foot staging bays, and will target LEED Gold and Zero Carbon Ready building design certifications.
CBRE is marketing the project with Q4 2024 occupancy for Building A, while Building B has been taken and just half of Building C remaining.
- 5762 Mayfield Road, Caledon – Building D – Choice Caledon Business Park – 1 MSF
RICE Group and Choice Properties are constructing a 6.1-million square foot industrial park at 5762 Mayfield Road in Caledon.
The twelve properties will be constructed in stages, with:
- Phase 1 bringing Building A (1,083,000 SF) in 2025;
- Phase 2 seeing Buildings C, D, and H (totalling approximately 3 MSF) coming online in 2026;
- Phase 3 delivering Buildings E and F (about 1.8 MSF together) in 2027; and
- Phase 4 rounding out the development with Buildings I, K, J1, J2, J3, and J4 (representing around 700,000 SF) in 2028.
For this issue, we will hone in on Building D which is offered for lease with Q1 2026 occupancy. The 1,009,216 SF property offers 3,000 amps of heavy power with 40’ clear height, 209 truck-level and 5 drive-in doors, a 70’ staging bay, 152 trailer parking stalls, and 506 car parking spaces. CBRE is leading the leasing of the Zero-Carbon Ready assets.
- 1565 Thornton Road North, Oshawa – 500,000 SF Development
Pannatoni is developing a 499,665 square-foot warehouse at 1565 Thornton Road North in Oshawa. The Class A facility will have a 40 foot clear height with 104 truck-level and 8 drive-in doors, a 60’ marshalling bay, 2,500 amps of heavy power, alongside 104 trailer parking spots. Delivering in Q4 2024, the site is easily accessible through Highways 401, 407, 412, and 418.
Conclusion:
In summary, heavy-powered warehouses in the GTA are leveraging modern automation technologies to streamline operations, reduce reliance on labor, and maximize productivity and storage capacity.
From Warehouse Management Systems (WMS) and Automated Storage and Retrieval Systems (AS/RS) to robotics and conveyors, each component requires a significant and reliable power supply to function efficiently and continuously.
This shift toward automation in logistics and warehousing is increasing throughput, reducing costs, and ensuring that businesses can scale to meet growing demand while maximizing the cubic volume of their facilities.
As a continuation in this series, there has been a shift back to reality with respect to logistics and warehousing leasing and speculative development. No – this industry vertical is not going away, it is simply counterbalancing following the enormous growth of the past several years.
In the meantime, businesses are looking to nearshore their manufacturing, processing, and packaging operations just as all industrial users are exploring ways to enhance productivity and leverage automated systems. Finally, the rise of AI and quantum computing means a need for semiconductors and data centers. All of these translate into a need for heavy power capacity.
Just as high-clear warehouses draw a premium on rents due to their ability to better-service warehousers through racking and cubic volumes, so too may heavy power facilities command higher prices, particularly due to the time and cost required to bring said power to an industrial property.
Next week, we will look into some examples of heavy powered warehouses, as well as shift into an overview of a new, emerging niche that is taking the world by storm.
In the meantime, for a confidential consultation or a complimentary opinion of value of your property please give us a call.
Until next week…
Goran Brelih and his team have been servicing Investors and Occupiers of Industrial properties in Toronto Central and Toronto North markets for the past 30 years.
Goran Brelih is an Executive Vice President for Cushman & Wakefield ULC in the Greater Toronto Area.
Over the past 30 years, he has been involved in the lease or sale of approximately 25.7 million square feet of industrial space, valued in excess of $1.6 billion dollars while averaging between 40 and 50 transactions per year and achieving the highest level of sales, from the President’s Round Table to Top Ten in GTA and the National Top Ten.
Specialties:
Industrial Real Estate Sales and Leasing, Investment Sales, Design-Build and Land Development
About Cushman & Wakefield ULC.
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries.
In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com.
For more information on GTA Industrial Real Estate Market or to discuss how they can assist you with your real estate needs please contact Goran at 416-756-5456, email at goran.brelih@cushwake.com, or visit www.goranbrelih.com.
Connect with Me Here! – Goran Brelih’s Linkedin Profile: https://ca.linkedin.com/in/goranbrelih
Goran Brelih, SIOR
Executive Vice President, Broker
Cushman & Wakefield ULC, Brokerage.
www.cushmanwakefield.com
Office: 416-756-5456
Mobile: 416-458-4264
Mail: goran.brelih@cushwake.com
Website: www.goranbrelih.com