Article
The Future of Windsor is Electric
September 29, 2022 3 Minute Read
The future of Windsor is electric. As in electric vehicles, which the Southwestern Ontario auto-manufacturing hub is currently in the midst of re-tooling itself to produce.
At the centre of the action is Canada's first lithium-ion electric vehicle (EV) battery manufacturing plant, announced earlier this year as part of a $4.9-billion joint-venture deal between LG and Stellantis, the maker of Chrysler, Dodge, Jeep and Ram.
The EV battery plant, set to be completed in 2025, represents the single largest automotive investment in Canadian history. The goal is to put the province, and therefore Windsor, in pole position for the electric vehicle revolution.
The knock-on effects for the Windsor commercial real estate market will be considerable and lucrative.
“We went to the Detroit Auto Show the other day, and electric vehicles are all anyone was talking about,” says CBRE’s Brad Collins, who runs the company’s Windsor operation alongside Brook Handysides.
“To be on the forefront of that from a Canadian standpoint is very exciting.”
9355 Anchor Drive
Big Buzz
The buzz surrounding the Stellantis plant and Windsor’s electric vehicle future has grabbed the attention of real estate investors and industrial businesses.
“They recognize there will be a whole new ecosystem needed to support the electric vehicle manufacturing industry,” says Handysides, “and they’re hurrying to secure an early foothold in it.”
In the first half of 2022 Windsor recorded 62 commercial real estate transactions worth $328 million, with industrial properties accounting for 20 of those 62 deals.
This includes the CBRE-brokered sale of 9355 Anchor Drive, a two-building industrial property totaling 342,786 sq. ft. that is right next door to the site of the Stellantis battery plant.
CBRE is also leasing the building.
Interest rate hikes and inflation are expected to impact things in the second half of the year. But Collins says he and his team are nevertheless predicting a record year for commercial real estate deal volume and valuations in Windsor. That success is largely because of the city’s prime position to service the electric vehicle evolution.
No Room
Industrial real estate is a hot commodity everywhere these days, but especially so in Windsor, which is undertaking major infrastructure projects such as the Gordie Howe Bridge. And a new regional hospital is planned for the coming years.
These developments are creating further momentum in a heavy industrial real estate market that has little to no space to offer seekers.
Windsor’s industrial availability rate hit an all-time low of 1.2% in the second quarter of 2022, amid 96,889 sq. ft. of positive net absorption. But there is just 50,000 sq. ft. of industrial space currently under construction, and all of it is pre-leased.
While 9355 Anchor Drive is ideally positioned next door to the planned Stellantis battery plant, the buildings are tenanted at the moment with short-term lease-holders.
Handysides notes that the building’s new owner plans to put in place longer-term leases. “And CBRE is assisting on this. We see a bright future ahead for this perfectly situated property.”
Spec Starting
While Windsor will be getting no relief on the industrial supply side in the short-term, according to Handysides, there are several new projects in the works.
Windsor has never been much of a speculative development town, not wanting to move forward on construction of industrial projects without a confirmed tenant.
“Betting on the future in a boom-bust market can be a fools game,” says Handysides. “But this time feels different and now there is talk and plans to do just that – build on spec.
“The future isn’t just bright for Windsor, it’s electric.”
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