Sign up today to get the latest blogs delivered straight to your inbox.
Earlier this year, as CBRE’s Mitchell Blaine, Kyle Hanna and Luke Slabczynski worked with Healthcare of Ontario Pension Plan (HOOPP) to unveil its grand designs for iPort Cambridge, a state-of-the-art logistics and advanced-manufacturing campus to be located in the heart of Waterloo Region, they recognized that it represented a major development in more than one sense.
Blaine and Slabczynki, industrial brokers in CBRE’s Waterloo Region office, are marketing and leasing the project alongside Hanna’s Toronto West Industrial Team. Comprising more than 4.0 million sq. ft. of industrial space across a 300-acre site at full build-out, iPort Cambridge will be among the largest industrial projects ever undertaken in that market. The development will ultimately represent roughly four per cent of Waterloo Region’s total industrial real estate footprint.
iPort Cambridge will be the third and latest of HOOPP’s iPort developments in Canada. The pension fund has a campus already under construction in Delta, B.C. and another iPort industrial facility is being upgraded in Caledon, ON.
While iPort Cambridge will be sizeable, it is a significant development not just owing to the scale of the project. It also represents a resounding vote of confidence from one of Canada’s leading institutional investors in the rapidly evolving and evermore complex e-commerce and logistics market, which has become increasingly important in the wake of COVID-19.
“The pandemic has accelerated the trend of increased e-commerce penetration across the country,” Blaine says. “And this shift in consumer spending patterns is causing a big spike in the demand for industrial space. So the launch of iPort Cambridge really couldn’t come at a better time.”
Industrial powers ahead
The industrial asset class has remained exceptionally resilient through the current economic slowdown. While Canada’s major office markets are seeing vacancy rates and subletting activity increase, the nation’s top industrial centres continue to power forward, with new space coming online to service surging e-commerce demand.
Toronto, Vancouver, Montreal and Waterloo Region all had industrial availability rates below 3.0% in the third quarter of 2020. Toronto’s availability rate remained the lowest amongst the largest markets in North America at 2.0%, even as 2.7 million sq. ft. of new industrial space was delivered with an additional 10.4 million sq. ft. under construction in Toronto, all of which is expected to be leased quickly. Vancouver’s industrial availability rate was 2.8% in the third quarter, down from 2.9% in Q2, as the market took delivery of 804,000 sq. ft. of new industrial space, with 4.3 million sq. ft. under construction.
“The Canadian industrial market hasn’t missed a beat. In fact, it has unprecedented momentum and is truly the rock star of the commercial real estate world right now,” said CBRE Canada’s Vice Chairman Paul Morassutti. “Investors, tenants and developers recognize that e-commerce and logistics demand are here to stay and they’re making big forward-looking industrial commitments.”
For its part, Waterloo Region and Southwestern Ontario industrial market have had lots going on of late. Recent large deals in the area by national and global companies have helped solidify the Region as a destination for industrial investment.
Amazon is snapping us as much industrial space as it can in the area, with deals for large-scale last-mile fulfilment facilities in Cambridge, Kitchener in Hamilton. And the e-commerce giant is under contract for new spaces in a variety of other locations across the GTA.
Toyota recently did a deal for a 250,000 sq. ft. industrial facility in Cambridge, just north of the company’s existing manufacturing facility, to service the assembly of a new Lexus line.
And PRIMED Medical Products’ in August announced it would be establishing a new major medical manufacturing facility in Cambridge to produce surgical masks for domestic requirements.
“Industrial real estate is proving to be a bright light in a challenging period,” says Hanna. “We expect demand to grow and for industrial properties to come out ahead in the wake of COVID-19. That’s true for Waterloo Region and for most industrial markets across Canada.”
Much-needed industrial space
That confident industrial outlook has helped to bolster HOOPP’s decision to move forward with iPort Cambridge, a distribution hub that will be rolled out in several phases over the coming years, with the first 500,000-sq.-ft. building slated for completion in the second quarter of 2022.
The project is positioned to attract both new businesses wanting to relocate to Waterloo Region and existing local companies looking to expand there. It will also cater to industrial users seeking large space requirements but unable to secure them in the Greater Toronto Area.
iPort Cambridge will enable large scale industrial users to benefit from the close proximity to a recently widened Highway 401 and the Waterloo International Airport. The campus gives HOOPP the ability to draw a wide variety of larger scale uses to the area and will help to establish Cambridge as a key driver of economic growth and competitiveness for Waterloo Region.
“iPort Cambridge positions the western fringe of the GTA as a destination for future growth and solidifies our Region’s status as a global technology hub and a centre for advanced manufacturing,” says Slabczynski, noting that Waterloo Region was just named the No. 1 up and coming tech employment market in CBRE’s just-released Scoring Tech Talent report. The Region’s tech labour force grew by a remarkable 51% over the past five years, for a total tech labour pool of 22,400.
“iPort Cambridge will provide our thriving region with a much-needed infusion of top-tier industrial space,” Blaine adds. “And given the surge in demand for e-commerce and logistics we’ve seen during these unprecedentedly challenging times, it’s a development that is meeting the market at precisely the right moment.”