By Steve McLean
John C. Munro Hamilton International Airport has grown to become one of Canada’s largest airports for domestic air-cargo distribution, and developers, investors and users are scooping up nearby land for logistics and fulfillment centres.
“It speaks to what’s happened with industrial lands in Southwestern Ontario as well as Hamilton more specifically,” Joe Benninger, vice-president with CBRE’s Southern Ontario investment team, told RENX. “Hamilton was a tough place to sell land three or four years ago.
EDITOR’S NOTE: This is the second of two articles on the SW Ontario industrial development boom. Part 1 is entitled The rush is on for industrial land, and space, in SW Ontario.
“But in the last few years, the pricing and velocity of land sales have really ramped up. Everything’s being bought with increasing pricing.
“There’s a lot of land designated in the official plan for employment around the airport, so institutional guys have taken large positions around the airport.”
More airport-area land needs to be serviced
The City of Hamilton’s Airport Employment Growth District is a planned development area of 1,361 acres of employment land bounded by: Garner Road East and Twenty Road West to the north; Upper James Street to the east; Whitechurch Road West to the south; and Fiddler’s Green Road to the west.
Plenty of the land around the airport is still unserviced and not immediately developable, but Benninger said serviced land in the area is selling for from $900,000 to more than $1 million per acre.
“Broccolini, Fengate, Panattoni, Pure Industrial, Hopewell, First Gulf and Sun Life are all major institutional players taking up dozens and dozens of acres around the airport,” said Benninger. “They have to figure out how to get those lands serviced.”
There was just a 0.8 per cent availability rate in the Hamilton industrial market in Q4 2021, according to locally based Forge & Foster Investment Management, so there’s an obvious need for more industrial space to meet demand.
Industrial rents have risen along with land prices and demand. Benninger said they’re now well over $10 per square foot and up to $12 or more for new product. Rents are expected to continue to increase, which makes development more feasible and attractive.
Recent airport area transactions, developments
Following are examples of industrial land acquisition activity and development taking place near John C. Munro Hamilton International Airport:
– Broccolini’s recent acquisitions have positioned it with 280 acres of land with airport access on Dickenson Road West, where it’s proposing to build — in phases as per market requirements — up to 3.8 million square feet in five buildings;
– a 172-acre tract of land at 140 Garner Rd. E. was sold by a private individual to Alberta Investment Management Corporation (AIMCo) for $38 million;
– a 56.37-acre piece of land at 2876 Highway 6 was sold by RCG Upper James Hamilton Inc. to Pure Industrial for $33.95 million;
– Hopewell Development partnered with Nicola Wealth Real Estate to purchase 55 acres at 9555 Airport Rd. for $36 million, with plans for a three-building speculative development encompassing 750,000 square feet;
– Fengate Real Estate paid $29.2 million for 76 acres at 3054 Homestead Dr. that needs to undergo rezoning before plans to create an industrial business park of roughly one million square feet can move forward;
– Panattoni bought a 24-acre site at 2240 and 2254 Upper James St. for $17.5 million;
– First Gulf and Sun Life bought an 86-acre site on Southcote Road in Ancaster for $23.76 million to complete an assembly for the 403/6 Industrial Park, where there are plans to build almost two million square feet of space;
– DHL Express invested $100 million in a 238,000-square-foot facility that opened at the airport in September 2021;
– and Panattoni built an 885,000-square-foot fulfillment centre for Amazon on Upper James Street and Dickenson Road West.
Broccolini’s attraction to the area
To illustrate the rise in land values, Forge & Foster reported the property acquired by Hopewell and Nicola transacted for about $713,000 per developable acre. It had previously been sold to that vendor in January 2020 for $11.25 million, or $212,000 per acre.
Hamilton received a Foreign Trade Zone designation from the federal government in 2020. As a result, businesses that import and/or export goods or manufacture products in the city were granted access to direct support on a range of duty deferrals and tax exemptions.
The airport, which has 24-hour landing capability and dedicated Canada Border Services Agency staff on site, has also received federal government funding to support its growing importance.
These factors and the proximity of much of the developable land to the airport property are major attractors for commercial real estate investors.
“What’s exceptionally unique about our lands in Hamilton is that we are immediately adjacent to Hamilton airport and we do have a unique ability to accommodate airside access,” Broccolini director of real estate development Toni Wodzicki told RENX.
“We’re neighbours to the largest domestic overnight express cargo airport in Canada, so basically 24/7 freight is moving through there and our lands represent an opportunity to those companies and groups that want to benefit from that airside access.”
Wodzicki expects logistics and cargo movement activity to pick up on its lands not only because of the location close to the airport, but also highway access and proximity to the Greater Toronto Area and American markets via commercial border crossings in Fort Erie and Queenston.