Industrial spaces move faster

May 20, 2008
Winnipeg Free Press
Written by: Murray McNeill

They may not be the new belles of the ball, but larger industrial properties are definitely attracting more suitors these days, industry officials say.

While it used to take many months, sometimes years, to find the right buyer or tenant for a large industrial property in Winnipeg, some big buildings in the city have recently been snapped up in weeks.

A case in point is the Brewers Distributors Ltd. building at 1400 Saskatchewan Ave. The 109,000-square-foot complex was conditionally sold within eight weeks of hitting the market.

"And I would say my level of confidence is quite high that it (the deal) will close," listing agent John Pearson of Shindico Realty Inc. said in an interview.

Two other large chunks of industrial space that had languished on the market for several years -- 193,000 square feet in the former SAAN Stores warehouse/distribution centre at 1370 Sony Pl. and the 112,000-square-foot former General Motors regional office/distribution centre on Redwood Avenue -- have also been leased in recent months.

And the 150,000-square-foot former Coldstream Products Corp. building at 1001 Regent Ave. was also recently purchased by Canada 1 RV's.

"I think the market has improved considerably in the last year in that larger industrial category," Pearson said, adding he thought it would take three to six months to find a buyer for the Brewers Distributors building. "But we had three offers and there was other interest."

Another veteran commercial real estate agent -- Brian Aronovitch of Cushman & Wakefield LePage -- said he's also noticed an increase in demand for larger industrial properties.

Aronovitch said he wouldn't call it a boom in sales and leasing activity because there are still relatively few large industrial properties on the market in Winnipeg at any given time.

"But I would call it a very good absorption rate or turnover rate," he added.

Aronovitch said he's optimistic that he and Alex Ross, an associate vice-president with the Winnipeg office Cushman & Wakefield LePage, will find a buyer or tenant for the former 130,000-square-foot Wilson Auto Electric building at 600 Golspie St., which has been on the market for about six weeks.

"We've been out shopping it around to some large industrial companies in that area (East Kildonan) and we've had several showings of the building," he said.

He and Pearson said the strong Manitoba economy has a lot to do with the heightened interest. When the economy is humming, more local companies are expanding and looking for extra space.

Pearson said all three companies that bid on the Brewers Distributors building were local firms looking for larger premises. He also noted Brewers Distributors is moving into the former SAAN building because it has outgrown its current facility.

And Boeing Canada Technology leased the former GM building on Redwood because it needed the extra space to assemble large composite parts for its parent company's new 787 Dreamliner passenger jet.

Wayne Johnson, a commercial and leasing representative with Royal LePage Dynamic Real Estate, said it's only been in the last year or so that the industrial market has begun to reap the full benefits of the strong economy.

"Initially, I think there was some pain from the Canadian dollar... and that impacted the industrial sector. But companies got through that and now they're expanding."

Another contributing factor is the skyrocketing cost of constructing new buildings, according to Joe Diner, a commercial agent with DTZ Barnicke Winnipeg Ltd.

Diner said one reason it can take longer to sell or lease a large industrial building is because there are a limited number of potential buyers and tenants in a smaller market like Winnipeg.

"In a sense, this is a small town for big buildings. When you get an item that's big, you need to find someone who can use it, and that's a small club."

He said the former SAAN complex is one of the better industrial buildings in the city, yet it still took nearly three years to lease that last big chunk of space.

Know of any newsworthy or interesting trends or developments in the local office, retail, or industrial real estate sectors? Let real estate reporter Murray McNeill know at the e-mail address below, or at 697-7254.

murray.mcneill@freepress.mb.ca

Industrial buildings' track record in city

Some local commercial real estate agents define a large industrial building in Winnipeg as anything 90,000 square feet or larger. Others, like Wayne Johnson of Royal LePage Dynamic Real Estate, consider anything over 50,000 square feet to be large for a city the size of Winnipeg.

Here is a breakdown of how many 50,000-square-foot properties were sold or leased in the city in each of the past four years:

• 2007-- Six sold, four leased
• 2006 -- Two sold, three leased
• 2005 -- Five sold, one leased
• 2004 -- Four sold, four leased

-- Source: Wayne Johnson, Royal LePage Dynamic Real Estate

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