KingSett Capital’s $36.8-million acquisition of an east-end building highlighted a busy finish to 2024 for Ottawa’s industrial sector. Toronto-based KingSett finalized the deal to purchase the 201,000-square-foot building at 2215 Gladwin Cres. from Canadian Urban Ltd. last month. It was the biggest industrial transaction in the National Capital Region since Crown Realty Partners acquired a […]
KingSett Capital’s $36.8-million acquisition of an east-end building highlighted a busy finish to 2024 for Ottawa’s industrial sector.
Toronto-based KingSett finalized the deal to purchase the 201,000-square-foot building at 2215 Gladwin Cres. from Canadian Urban Ltd. last month. It was the biggest industrial transaction in the National Capital Region since Crown Realty Partners acquired a 205,000-square-foot portfolio of buildings from Pensionfund Realty for $39.75 million in December 2023.
Colonnade BridgePort has signed on to manage the mixed-use property, which is located in an industrial park just east of the intersection of St. Laurent Boulevard and Innes Road.
Built in 1982, the building is fully leased to a mix of tenants that includes the Canada Revenue Agency, shipping company DHL and a trampoline and tumbling centre.
In a LinkedIn post announcing its contract with KingSett, Colonnade BridgePort touted the property’s “high-covenant tenancy,” calling the building a “key asset” in KingSett’s Ottawa portfolio.
KingSett and Colonnade BridgePort declined to comment further on the transaction when contacted by OBJ.
Daniel Niedra, an associate vice-president at Colliers’ Ottawa office who specializes in brokering industrial transactions, noted that deals of this magnitude are rare in the National Capital Region.
“We’ve not seen a great deal of trades over the last few years within the industrial space,” Niedra, whose firm was not involved in brokering the transaction, told OBJ this week. “It’s largely institutionally owned properties, and they just don’t trade very often.”
Niedra said the building’s easy access to Highway 417 was among several attributes that likely attracted KingSett to the property.
“It’s one of the larger industrial assets in a great location,” he explained. “It’s fully leased, so it’s stabilized, and it had a certain appeal to KingSett, I’m sure. It’s a good buy for them.”
Slight uptick in vacancies
The deal capped off a busy fourth quarter in Ottawa’s industrial sector, which continues to be one of the country’s tightest markets with an overall vacancy rate of just 2.1 per cent, according to Colliers’ latest industrial report.
While the vacancy rate rose from 1.7 per cent in the previous quarter, Niedra said that was mainly due to the addition of nearly half a million square feet of new inventory at Rosefellow’s recently completed two-building project on Huntmar Road and Journeyman Street in Kanata.
One of those buildings, a 248,000-square-foot property on Huntmar Road, is already fully leased to auto parts retailer AutoShack.
Niedra said Rosefellow is “seeing very strong interest” from potential tenants who’ve been touring the second building, “both from companies within Ottawa and outside of the market that are looking at establishing a foothold in this market.”
Ottawa’s industrial sector recorded 294,000 square feet of net absorption in the fourth quarter, up from 75,000 square feet the previous quarter.
Colliers said large-bay spaces between 20,000 and 30,000 square feet accounted for more than two-thirds of the total space leased in the final three months of 2024 as tenants sought more modern facilities.
“We’re still seeing that pent-up demand (for industrial space),” Niedra said. “It’s really been a limited number of projects that have come online and they’re all getting leased up bit by bit.”
Maxime Foucaud, the new managing director of CBRE’s Ottawa office, said tenants can’t afford to be choosy in the current environment.
“We’re one or two deals away from really having no options (for tenants) at all,” he said.
“When you look at the options for some of these small-, mid-bay tenants, you’re not looking at five or six options. If you’re looking at anything, it’s maybe two or three. It’s hard for tenants to relocate … and sort of limits some of the possibilities they would perhaps want.”
Aside from AutoShack, other occupiers who signed new lease agreements in the fourth quarter included furniture seller Advanced Business Interiors, which is relocating from St. Laurent Boulevard to a 44,500-square-foot space on Ages Drive, and moving company AMJ Campbell, which is consolidating its local warehousing operations in a 34,200-square-foot space on Bantree Street.
In another notable transaction, The Forge, a new pickleball club, leased a 30,200-square-foot facility in the Taylor Creek Business Park in Orléans.
The site, which has 28-foot-clear ceilings, was the last sizable pocket of empty industrial space left in the east-end suburb.
With the pickleball craze in full swing across Ottawa, Niedra said it’s getting more and more difficult to find room for new indoor courts.
“We’re seeing a lot of demand from those groups and limited spaces where we can accommodate them, and not that many landlords willing to get creative and work with them,” added Niedra, who helped broker the lease.
“Kudos to Dream (the industrial REIT that owns the business park) for figuring it out and getting a deal done.”
Rents keep rising
With space still at a premium, rents continued to climb in the fourth quarter. Average asking net rents hit $16.87 per square foot in December, an 8.1 per cent increase from the previous year.
“There’s not enough space, and that pressure is being put directly back on to the rent,” Foucaud explained.
There appears to be little relief in sight in the form of new construction. Only two projects – a 200,000-square-foot building at Avenue 31’s National Capital Business Park and Jennings Real Estate’s 50,000-square-foot development near the airport – are slated to be completed in 2025.
Foucaud said skyrocketing construction costs have kept many builders on the sidelines. He hopes that will soon change as lower interest rates make financing easier to come by and rising rents make the income side of the equation more attractive for building owners.
“Our job right now is really looking at what sites we should really target developers to start building,” he said.
But Niedra thinks it could be a while yet before a new wave of industrial construction kicks off.
“I think for most developers, the economics of small-bay development, it still does not check despite where rental rates are,” he said.
“I think the big question is who’s going to put shovels in the ground next. There’s strong tenant demand, but very limited options for tenants to expand. There’s certainly a need for more development in this market, and we’re certainly looking forward to seeing who else is going to commit the capital to build more product on spec.” 
