Berkshire Axis Development and Fiera Real Estate have collaborated on two such projects and will be launching a third in the GTA based on their early successes.

“A partnership relationship between two entities always starts with the profitability of carrying out a project,” Fiera fund manager and senior vice-president of opportunity and development Pierre Pelletier told RENX.

Berkshire Axis has completed more than 30 industrial projects in the GTA over the last 10 years, while Fiera is a global real estate investment management platform serving investors in Canada and the United Kingdom. It globally manages more than $5.9 billion of commercial real estate through its investment funds and accounts.

While the two companies may vary in size, they’ve found an alignment in interests.

Benefits of industrial condos

The industrial real estate sector has shown strong resilience through this year’s COVID-19 crisis, and Pelletier noted the GTA’s availability rate of two per cent is 150 basis points below the national average.

Rents have risen substantially over the past two years and good industrial space is now leasing for more than $10 per square foot in the GTA.

Industrial buildings constructed in the 1960s through the 1980s aren’t likely to be as in good condition, or offer as much, as a newly built industrial condo. Maintenance costs for those older properties are also rising on top of increasing rents.

“You’re either living with a building that has deficiencies, or a broken-up parking lot, or poor power and an old roof, or you’re fortunate enough to be in a situation where everything is in good shape but the landlord is amortizing all of the costs back to you,” Berkshire Axis vice-president Craig Wagner told RENX.

Business owners want to control their real estate, build liquidity and keep costs in check, he added. “Industrial condos really provide that, particularly for small business owners.”

Wagner said condos account for less than five per cent of industrial space in the GTA, so there’s plenty of room for growth in the sector. He believes developments between 100,000 and 250,000 square feet are “a pretty sweet spot for condos.”

Pelletier said industrial condos don’t require a lot of capital to build and have relatively short construction times, so banks like them.

“It’s a product that’s here to stay and to take even more space in the GTA market,” said Pelletier.