A Toronto-based real estate firm is making its first big move into the Eastern Ontario market, acquiring a major automotive distribution centre for more than $116 million.
Nexus Industrial Real Estate Investment Trust finalized an agreement earlier this month to buy a newly constructed class-A, 532,000-square-foot industrial building in Casselman from Quebec-based property developer Rosefellow for $116.8 million.
Located just south of Hwy. 417 about 56 kilometres southeast of Ottawa, the facility is slated to open this spring and will serve as a parts distribution warehouse for Ford Motor Co., which has a 15-year lease on the property.
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“It becomes one of our trophy assets,” Nexus CEO Kelly Hanczyk told OBJ on Thursday.
It’s also the first significant addition to Nexus’s portfolio in the eastern part of the province. Created in 2017 from the merger of Toronto’s Edgefront REIT and Montreal-based Nobel REIT, Nexus has an ownership stake in about 115 office, industrial and retail properties across Canada with a total footprint of more than 113 million square feet.
Most of its holdings, however, are in the Greater Toronto Area, southwestern Ontario and southern and eastern Quebec. Before the Casselman deal closed, Nexus’s portfolio included just two properties in eastern Ontario and western Quebec – a 38,000-square-foot industrial building in Cornwall and a 68,000-square-foot office building on Laval Street in Gatineau.
“It breaks us into the Ottawa (regional) market a little bit,” said Hanczyk. “It kind of spreads us right across the Ontario market.”
Ford recently told OBJ the Casselman warehouse will store up to 45,000 automotive parts and serve 154 dealerships in Eastern Canada. The automaker has the option to order up more industrial space at the 35-acre site should it be required.
“It really depends on whether they need to expand in the future,” Hanczyk said.
Now that it’s established a bit of a beachhead in the region, Nexus plans to keep looking for other potential acquisition targets in and around the nation’s capital, the CEO added.
While Ottawa’s industrial availability rate ticked up nearly a full percentage point in 2022, average rents continue to rise and the region remains a hotbed of e-commerce warehousing activity due to its easy access to major highways and close proximity to Toronto and Montreal.
“Ottawa is a fairly major centre,” Hanczyk said. “Overall, with the warehouse distribution demand, some of the smaller markets, like Ottawa and London, are having their moment and I think they’ll continue to stay strong. It would be a good market for us to grow in, for sure.”
