AutoShack leases Rosefellow’s new 250K square-foot industrial building in Kanata

July 31, 2024

Montreal-based developer Rosefellow said Wednesday locally based auto parts retailer AutoShack has signed a deal to lease a soon-to-be-completed 248,000-square-foot building at 405 Huntmar Dr. in Kanata, just north of the Tanger Outlets mall.

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One of the largest Ottawa industrial properties ever built on spec has been fully leased to a single tenant amid an ongoing shortage of warehouse and light manufacturing space across the city. Montreal-based developer Rosefellow said Wednesday locally based auto parts retailer AutoShack has signed a deal to lease a soon-to-be-completed 248,000-square-foot building at 405 Huntmar Dr. in Kanata, just north of the Tanger Outlets mall. Terms of the agreement were not disclosed, but David Salomon-Lima, Rosefellow’s Montreal-based vice-president of sales and business development, told OBJ the deal is significant for the Ottawa market. “Obviously, a move like this is not something you do for the short term,” Salomon-Lima said, adding AutoShack president Gary Calagoure “has ambitions for growth and he needs that platform to be able to support the growth.” AutoShack’s main retail and distribution centre is currently situated on Iber Road in Stittsville, a couple of kilometres south of the new facility. The company is expected to consolidate most of its operations at its new home, which is slated to be completed by mid-October. The state-of-the-art building, which has 32-foot ceilings and features 28 loading docks, is located just a few hundred metres from Highway 417. In a statement to OBJ earlier this month, AutoShack said the facility will boost the company’s logistics and distribution capabilities, “resulting in increased efficiency and service to its customers.” It’s one of two industrial properties Rosefellow is currently constructing at the 21.4-acre Kanata site, which the developer purchased in 2022 from the Taggart Group for $25.7 million. The other building, which has similar specifications but is slightly smaller at about 230,000 square feet, is also expected to be ready for occupancy this year. Colliers senior vice-president Lindsay Hockey, whose firm is brokering leasing activity at the site on behalf of Rosefellow, said there is “ongoing interest” in the second building from prospective users in a range of industries, including a “large defence-sector” company that recently toured the property. “That traditional flex space does not exist in Kanata,” Hockey explained. “If it does, it’s older stock with much lower ceilings, problems with power, parking. A tenant really has to work to make the space work. Here, it’s pretty … easy to (move) into from day one.”

Industrial building boom

Rosefellow’s project is among several major industrial developments now underway in Ottawa. About 570,000 square feet of industrial space is currently under construction at 16 sites in the National Capital Region, Avison Young said in its second-quarter report on the Ottawa market. Meanwhile, industrial vacancy rates rose to 2.3 per cent last quarter, the firm reported, up from 1.7 per cent a year earlier. Still, Avison Young said rents “remain high” at an average gross asking rate of $23.08 per square foot, adding incentives for tenants are “scarce” in a tight market. Long-term tenants renewing their five- and 10-year leases are seeing “dramatic rental increases” of up to 100 per cent, the report said – a stark contrast to hikes that have historically been around three to four per cent. Salomon-Lima said his firm – which is no stranger to launching major projects before tenants are secured – is benefiting from the ongoing “flight to quality” in the Ottawa market. “Fundamentally, we believe that if we put ourselves in locations where the demand is there, where the market dynamics will support this type of development, we are the ones to take the risk and go for it,” he explained. “We see opportunity with the fact that there’s not a lot of new product (in Ottawa). We want to beat everybody to the punch. We are not builders that buy land to sit on it and wait for a tenant to come. We build it and bank on the fact that the tenant will come. At the end of the day, (the AutoShack deal) is a perfect example of that.” Besides the Kanata project, Rosefellow has another proposal on the books to build a pair of 150,000-square-foot industrial buildings not far away at 545 Dealership Dr. in Barrhaven, east of Highway 416 and a few blocks south of Amazon’s 2.8-million-square-foot fulfilment centre that opened in 2021. Salomon-Lima said Rosefellow wants to ensure its Kanata spaces are occupied before embarking on another big building project. “For right now, we’re focused on our existing properties,” he said. “We’re just being mindful of how much new product the market can bear in essentially one shot. Once we can demonstrate that those properties are getting leased, there will be others.”