One of the largest industrial buildings to hit the local market in recent years is attracting interest from investors from across the country, according to one of the leasing agents for the Fort Garry property.
The building in question is the 412,849-square-foot former TruServ Canada/Ace Canada head office and distribution centre at 1530 Gamble Place.
The 28.6-acre property, which includes a large parking lot and 13.2 acres of excess development land, was put up for sale by Lowe’s Canada.
Lowe’s acquired it last year when it purchased Rona Inc., which purchased TruServ in 2010 and subsequently renamed it Ace Hardware.
Lowe’s announced in February the Winnipeg facility would be closing later this year because Ace is consolidating its distribution operations in Calgary, Mississauga, Ont., and Boucherville, Que. It subsequently hired commercial real estate firm CBRE Ltd. to sell the property.
Ryan Behie, vice-president and managing director of CBRE’s Winnipeg office, said the firm began marketing the property on Aug. 1, and has been fielding numerous inquiries from local and out-of-province investors alike.
"Certainly there is local interest, but there’s also an awful lot of national interest."
He said many of the inquiries are from institutional players, which include real estate investment trusts, large private equity firms and pension funds.
“We don’t tend to boom, and we don’t tend to bust in any given year. It’s just a slow climb, and that’s something that a lot of investors value.” -Trevor Clay, Winnipeg Realtors Association
"There was tremendous interest in the property even before we launched the marketing (campaign)," Behie added.
"The word on the street had been out for some time that this building would be coming onto the market, and Lowe’s has been getting inquiries on the building that they have been sending to us for months now from users and investors alike who wanted to kind of get ahead of the line."
He said there is no asking price for the property. Instead, a date will be set — likely next month — for interested parties to submit their bids. The company will review the offers and decide which are acceptable.
He said it’s hard to say how long that process might take.
Much interest in industrial market
The chairman of the Commercial Division of the Winnipeg Realtors Association said there is a lot of outside interest right now in the Winnipeg industrial market in general.
"(There are) lots of national investors who very much would like to get into Winnipeg," said Trevor Clay, who is also a principal with Winnipeg’s Capital Commercial Real Estate Services Inc.
"The problem they have is a lack of available product."
Clay said large institutional investors looking to enter the Winnipeg market tend to prefer larger buildings or a portfolio of properties.
"They don’t want to buy one small building at a time."
But there aren’t a lot of industrial buildings in the city that are 400,000 square feet or more in size, he added, and even fewer that are for sale.
He said institutional investors are only interested in a building if they think they can find a tenant or tenants to lease the space.
One of the issues in Winnipeg is there aren’t a lot of companies that need 400,000 square feet of space.
"In Winnipeg, a 50,000-square-foot tenant would be considered a large tenant, and once you get over 100,000 square feet, the tenant pool tends to shrink."
Clay said if a single tenant can’t be found, another option is to convert the building into a multi-tenant facility — although that can get expensive.
High ceilings sought
He noted Capital Commercial is the listing agent for another similar-sized building — the 420,000-square-foot former Canada Safeway distribution/production facility at 1000 King Edward St. It’s listed for sale or lease and is subdivided.
About 120,000 square feet is leased, but another 140,000-square-foot space remains vacant.
Clay said both of those spaces have high ceiling heights, which is what most industrial users want these days.
However, another unoccupied section of the building, which is about 150,000 square feet, and used to house Safeway’s cheese and ice-cream factories is older and has low ceiling heights, so it likely will end up being demolished, he added.
Behie said the Gamble Place building has high ceilings, large loading docks and there are multiple entrances to the property. He said it could be subdivided into as many as five separate spaces.
One or more new buildings also could be built on the 13.2 acres of undeveloped land.
He said an other factor working in favour of Lowe’s is that Winnipeg has a low overall industrial vacancy rate. CBRE pegs it at about 3.9 per cent and in the popular southwest quadrant of the city it’s closer to one per cent, he added.
Captial Commercial pegged the city’s overall vacancy rate at 4.4 per cent at the end of June, although Clay said it was below four per cent earlier in the year.
But even 4.4 per cent is an "extremely healthy" rate, he said.
He noted Winnipeg’s rate has fluctuated from three to five per cent since at least 2010 and that also appeals to outside investors.
"Our stability is something that everybody wants in their portfolio. We may not have the huge spikes in value that you see from time to time in Calgary or Vancouver, but we have an extremely stable rental market and a broad-based economy that’s got lots of different drivers," he said.
"We don’t tend to boom, and we don’t tend to bust in any given year. It’s just a slow climb, and that’s something that a lot of investors value."
Know of any newsworthy or interesting trends or developments in the local office, retail, industrial or multi-family- residential sectors? Let real estate reporter Murray McNeill know at the email address below, or at 204-697-7254.
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