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“The sheer size and scale of these projects is huge,” said Kyle Hanna, an executive vice president at CBRE in Toronto. “Most are talking one million square feet or more.”
While the major activity is centred on the GTA, Vancouver is hot on its heels with Calgary and Montreal coming on strong as well, Hanna said.
The demand for fulfillment space is so strong, and real estate so tight, that some developers are looking to build up as well as out. Oxford Properties hasjust announced Canada’s first multi-level distribution centre concept at its Riverbend Business Park, located in Burnaby, B.C.
It’s a square box that requires less capital and can be reused which can translate into billions of dollars
Kyle Hanna, an executive vice president at CBRE
And the warehousing boom goes beyond megaprojects. While massive regional fulfillment centres that act as hubs for a larger geographical area get a lot of the attention, Hanna said now he is seeing the trend shift to smaller, more urban locations to satisfy last-mile needs.
The fulfillment landscape is becoming so large and complex that some facilities are being designed to handle specific functions, such as only returns, or food and beverage inventory for multi-function retailers such as Walmart.
As for investors, one major appeal of the warehouse sector is the considerably lower development costs versus retail and office real estate. “It’s a square box that requires less capital and can be reused which can translate into billions of dollars,” Hanna said.
That could explain why the development project numbers keep growing.
“It used to be that the number of transactions for large-size industrial deals was one every few years,” he said. “Now it’s not uncommon to see up to five builds in a year. We can expect even more very compelling announcements in the months to come.”
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