London and Windsor drew a lot of attention from national investors last year — and this year is looking good to build on that trend, a commercial real estate conference heard Tuesday.
Between the two cities, $567 million was spent in the retail, residential and office sectors in 2015 compared to $367 million in 2014.
“Southwestern Ontario is getting a second look from investors. We are considered fertile ground for high-quality assets,” Kevin MacDougall, an associate vice-president in London of CBRE, a commercial realty company, said at the CBRE-sponsored conference at the Lamplighter Inn.
The region is benefiting from trouble elsewhere in Canada’s economy, such as in the resource-based West, with investment directed here as the region boasts “higher returns than major markets,” he said.
Last year’s regional investment was driven largely by two major transactions in Windsor, including the purchase of Devonshire Mall, as a health-care pension plan bought the remaining shares in it.
Of the $567 million spent last year, just more than $200 million was in London, the rest in Windsor.
That trend of solid investment and return in commercial realty cuts across all areas — retail, industrial and office, which grew in 2015 and has a solid forecast for this year too, said Peter Whatmore, CBRE senior vice-president and executive managing director.
“The theme is we are back in the game. Southwestern Ontario has gone through difficult economic challenges in recent years and it is growing, it is improving,” he said.
He called London’s tech sector “a bright light” with major investments in technology office hubs, such as the former Harmony Grand Buffet restaurant becoming The Cube, the former Abouttown taxi business a centre for iConect and the old Sterling Marking products building the new home for Info-Tech Research Group.
“The tech sector is flexing its muscle and reaching critical mass in London, technology will drive our future prosperity, and commercial space,” said Whatmore.
This year, look for tech businesses to be drawn to London’s SoHo area and near Fanshawe College’s new downtown campus. They want “large floor plates and character spaces in heritage buildings,” said Tim Schnurr, a CBRE vice-president.
Construction has also begun on Sifton’s West 5 project, with the first building to bring 35,000 square feet of office to the market.
The retail sector will also be busy this year with “backfilling” expected for vacant space. Vacancies at Masonville Place mall are “significant,” with the former Target store empty and the former Sears store being altered into smaller spaces with some tenants already lined up, said Whatmore.
This may also be the year ground is broken on southwest London’s long-awaited commercial district, along Wonderland Road south of Exeter Road and known as the enterprise corridor.
In the industrial area, businesses that expanded include auto parts maker Sodecia, which built a new $8.6-million plant, and Kaiser Aluminum with a 3,300-square-metre addition valued at $3.5 million. IO Industries last year also moved into a 15,000 sq. ft. home, to name just a few growing manufacturers.
London and Windsor saw more than six million square feet of industrial space leased and sold last year, up from just over five million in 2014.
Industrial construction is also up, with 200,000 sq. ft. being built and more than 150,000 sq. ft. of new supply in London alone.
Available space would be much less if not for the “anomaly of the Kellogg plant,” said Whatmore.
The massive former cereal plant remains vacant as its new owners repurpose it for multi-use space.
The former Electro-Motive train locomotive plant is full, a new warehousing operation operating there, and the vacant former St. Thomas Ford assembly plant is still being demolished — creating what Whatmore said will become “an incredible industrial development opportunity” as vacant land.