which constructed two buildings on Huntmar Drive in Kanata two years ago<\/a>. One of those buildings remains unoccupied, but Laleye said he expects it to be leased by the end of this year.<\/p>\nThe nation\u2019s capital is one of the tightest industrial leasing markets in Canada, with an availability rate of 4.2 per cent in the third quarter, CBRE said earlier this month. That\u2019s third-lowest among the 11 major cities the brokerage surveys, behind Winnipeg at 3.1 per cent and Calgary at 3.6 per cent.<\/p>\n
At the same time, the availability rate of industrial space \u2014 which factors in both empty space and real estate that will soon hit the market \u2014 has nearly doubled in the past three years as new supply has been added to the city\u2019s inventory and users look to cut expenses by downsizing or staying where they are.<\/p>\n
But with federal defence spending set to rise from the current $75 billion annually to more than $95 billion by 2030, brokers say more and more companies are touring potential sites for factories, R&D facilities and warehouses in the National Capital Region as demand for military technology is poised to soar.<\/p>\n
Laleye said that presents a massive opportunity for developers like Rosefellow, which is in talks to buy more industrial land in the Ottawa area.<\/p>\n
\u201cObviously, there\u2019s a lot of money that\u2019s being unlocked right now by the federal government (for defence), so we\u2019re going to see a lot of square footage absorbed,\u201d he said. \u201cThose (tenants) aren\u2019t going to be able to wait the 18 to 24 months that it takes to build, so we’re going to continue to build on spec to make sure we\u2019re ready for them when we need the space.\u201d<\/p>\n
Users in related fields such as aerospace are also flocking to Ottawa, said Laleye, who told a crowd of real estate executives on Tuesday that the region is just \u201ctwo deals away\u201d from not having any industrial spaces of more than 100,000 square feet left to lease.\u00a0
\n‘When someone needs space, they need it now’
\n\u201cThe minute steel goes up, the phone starts ringing off the hook,\u201d he said during a panel discussion on the future of Ottawa\u2019s industrial market. \u201cPeople don\u2019t have the luxury of waiting anymore. When someone needs space, they need it now. Things change so fast.\u201d<\/p>\n
Neil Mason, a vice-president at the Ottawa office of Cushman & Wakefield who brokers industrial leasing deals, agreed.<\/p>\n
\u201cWith all of this defence spending that’s coming in, it\u2019s not all here yet, but there\u2019s going to be this demand,\u201d he said. \u201cWe\u2019re going to have situations where we\u2019re saying to (tenants), \u2018We can have you a building in 18 to 24 months.\u2019 But that\u2019s going to be a challenge (for users), because that funding\u2019s going to come in and they\u2019re going to need to have space up and running right away.\u201d<\/p>\n
Asked whether the city can expect to see more projects the size of Amazon\u2019s current warehouse in Barrhaven and an even larger 3.1-million-square-foot distribution centre being built for the e-commerce giant a few kilometres away, Laleye said those developments are \u201ca bit of an outlier\u201d because Amazon shut down all seven of its warehouses and distribution centres in Quebec last year and is now serving customers in that province from other locations, including Ottawa.\u00a0<\/p>\n
\u201cBut I think Ottawa will continue to attract large companies that will continue to set up large operations,\u201d he said. \u201cI don\u2019t think it\u2019s going to be a 3.1-million-square-foot facility, but I think other large facilities will be coming to the Ottawa market.\u201d\u00a0<\/p>\n
Laleye said tenant requirements are changing. While most developments in Ottawa, including Rosefellow\u2019s buildings on Huntmar Drive, currently have 32-foot ceilings, he said 42-foot heights are becoming the new standard in Montreal and expects the same trend to take hold in Ottawa.<\/p>\n
\u201cFlight to quality is a big thing right now,\u201d Laleye said in an interview with OBJ. \u201cPeople want to get out of the older (properties) and really maximize clear height, so that\u2019s definitely a driving force.\u201d
\nLabour shortage looming?
\nIn addition, industrial users are demanding more power as AI, robotics and other emerging technologies become more prevalent in manufacturing and logistics operations, he noted.\u00a0<\/p>\n
Traditionally, industrial buildings in Ottawa have been equipped with a 2,500-amp power supply, he explained, but a growing number of tenants in larger buildings are now asking for 5,000-amp systems.<\/p>\n
Still, while brokers and developers say they\u2019re bullish on the future of the Ottawa industrial market, they also point to a few potential headwinds that could slow its momentum.<\/p>\n
Matt Blasioli, a director at Ottawa-based industrial developer Avenue 31, noted there are already three massive projects either under way or proposed in the Ottawa region \u2014 the $1.4-billion modernization of the Canadian military\u2019s special forces base at Dwyer Hill; Nokia\u2019s new 750,000-square-foot campus in Kanata North; and a new data centre the federal government wants to build in the National Capital Region at a price tag of $1.5 billion to $1.8 billion.<\/p>\n
Projects of that magnitude require a large number of skilled tradespeople, Blasioli explained, and he questioned where the workers needed to build all the projects will come from.<\/p>\n
\u201cThere\u2019s always been one big project that\u2019s always kind of been sucking up labour,\u201d he said. \u201cAnd now we\u2019re going to have three of them, maybe even more. We don\u2019t know what else the government is going to announce. It just sucks up the local talent, and it sucks up materials.\u201d<\/p>\n
Blasioli said rising diesel prices and competition for materials from projects in the U.S. and other jurisdictions are driving up construction costs. Meanwhile, Ottawa also faces a potential shortage of industrial land with adequate power and other essential infrastructure, he cautioned.<\/p>\n
\u201cRunning an industrial project on septic and well is not easy, especially if it\u2019s a user that has manufacturing,\u201d he said. \u201cWe need more serviced industrial land.\u201d<\/p>\n
Laleye said industry leaders and government officials need to act now to ensure Ottawa can accommodate future industrial growth.\u00a0\u00a0<\/p>\n
\u201cWe have to work with local, provincial and federal governments to start unlocking a lot of that land and then start getting services out,\u201d he said. \u201cYou can\u2019t put these buildings on wells and septic tanks. It just doesn\u2019t work long term. So it\u2019s really working together to see what the market needs.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Rosefellow director of business development Adekambi Laleye says the company expects to break ground \u201cin the next couple…\n","protected":false},"author":2,"featured_media":943514,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[194295],"tags":[49,48,20739],"class_list":["post-943513","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ottawa","tag-ca","tag-canada","tag-ottawa"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/943513","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=943513"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/943513\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/943514"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=943513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=943513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=943513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}