Crown Realty adds to Ottawa holdings with acquisition of five-building industrial portfolio

January 3, 2024

Crown Realty Partners purchased the 205,251-square-foot portfolio last month on behalf of its fifth value-add fund. Terms of the deal were not disclosed.

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A Toronto real estate firm has acquired five small-bay industrial properties in Ottawa’s east end as an ongoing shortage of warehouse and light industrial space continues to attract investors to the National Capital Region. Crown Realty Partners purchased the 205,251-square-foot portfolio last month on behalf of its fifth value-add fund. Terms of the deal were not disclosed. According to CBRE, which marketed the properties, the portfolio was previously owned by Pensionfund Realty. The company said the buildings, which are located at 2660-2710 Lancaster Rd., 2750-2772 Lancaster Rd. and 1117-1141 Newmarket St., were 92 per cent occupied as of last summer with a weighted average remaining lease term of 2.7 years. In a statement, Crown Realty said the properties, which feature ceilings with 16-foot clearance, offer units ranging from 2,500 to 11,900 square feet with a mix of “drive-in/truck level shipping facilities.” The firm says it plans to upgrade the units as leases expire as well as implement a series of other improvements to the buildings’ exterior facades, landscaping and signage. Crown says it also intends to modernize the facilities’ HVAC and lighting systems to ensure the buildings “continue to maintain their value proposition in the market.” Crown purchased the three buildings on Lancaster Road in partnership with Ripple Developments, a firm based in the Greater Toronto Area that specializes in small-bay industrial properties. The deal marks Ripple’s first foray into the Ottawa market. Crown will oversee management of the joint venture. The transaction comes as Ottawa’s industrial market enjoys a sustained boom that has prompted a wave of new acquisitions and development activity over the past few years. After decades of stagnation, the region’s industrial sector has found new life amid the pandemic-fuelled rise in e-commerce that triggered demand for warehousing and fulfilment space. The capital’s abundance of skilled labour and proximity to the country’s two biggest urban markets made it an ideal choice for firms such as Amazon to set up new distribution hubs. As a result, Ottawa’s industrial availability rate dropped to a new-record low of 2.2 per cent in the third quarter of 2023, according to CBRE, while rents have soared to historic highs. Space is at even more of a premium in the east submarket, which had an availability rate of just 1.2 per cent at the end of September. Crown said the east end is “well-suited for a diverse range of businesses due to its immediate proximity to Highway 417 and other major arterial roads that service nearby communities.” Developers have scrambled to help satisfy some of that pent-up demand. According to CBRE, more than 1.6 million square feet of new industrial inventory is expected to be delivered over the next 12 months and millions of additional spare feet of new product is in the development pipeline. Even still, Ottawa’s industrial inventory – between 36 million and 46 million square feet, depending on the source – lags far behind other Canadian cities of similar size, including Edmonton (156.6 million square feet), Calgary (153.7 million square feet) and Winnipeg (86.4 million square feet). CBRE vice-president Steve Piercey told OBJ in November that industrial buildings, particularly those with smaller bays, remain so sought-after that tenants are often forced to occupy units that don’t fit their needs. “Ottawa has been underdeveloped from an industrial perspective for 40, 50 years,” Piercey said. “I feel like we’ve been afraid of industrial development.” The acquisition is the newest addition to Crown’s growing Ottawa portfolio. Founded in 2001, the firm now manages more than three million square feet of assets in the National Capital Region. The Toronto-based company’s other local holdings include the three-building Carling Executive Centre, which it recently put up for sale, the four-building Park of Commerce on Blair Road, which it purchased in early 2022, and a share of Place de Ville, which it acquired on behalf of Toronto’s Crestpoint Real Estate Investments and New Brunswick-based investment management firm Vestcor in late 2021. Scott Watson, the firm’s managing partner of leasing and acquisitions, said in an October interview that while the Ottawa market has been “a little mixed” over the past two years, Crown remains bullish on the capital region’s long-term investment potential. “We will continue to invest in Ottawa,” he said. “It’s been a great market.”