Changing market demands drive DC construction

by MM&D staff

MISSISSAUGA, Ontario—American retailers moving into the Canadian market are creating new and different demands for warehouse space.

They’re looking for spaces that traditionally haven’t been available, says Blair Wolk, vice-president of Orlando Corp, a Mississauga, Ontario-based property developer and landlord.

And it’s not only the Americans that are causing a market shift. There are changing demands from Canadian businesses as well.

“We are seeing a demand from the market for the bigger buildings—500,000sqf plus,” says Wolk.

“There have been some really big requirements from the American users, the retailers. There has definitely been a demand from south of the border for big space. The half-million square footers and bigger. There is also some healthy demand from our Canadian companies as well, which is great to see. It has been a good mix,” he says.

“We’ve also been seeing there is an upswing in the market and a demand for space for some of the smaller spaces—50,000sqf to 200,00sqf. And there’s not a lot of that space—good space—available.”

Those two opposing pressures are two of the forces driving Orlando’s current spate of construction projects. Currently, the company, which has built approximately 80 million square feet over the course of its 75-year history, has a number of ongoing projects in Brampton, Ontario.

“We have six buildings—four of which are under construction—in Brampton in the Churchill Business Park, between Steeles Avenue and 407 at Winston Churchill and Mississauga Road. We have one building that is pretty well completed now, it’s about 520,000sqf. We have another one that is under construction that is already spoken for which is 400,000sqf and change. And then we have two other buildings on spec right now which are 200,000sqf each,” says Wolk.

“The two buildings that we have that are 200,000sqf each are divisible down to about 50,000sqf so you can get four 50,000sqf units in there with 32ft clearance, which is unusual. It’s not that common to get that. That’s why we’re building those, and one of those is pretty much spoken for already, so we’ll be starting on the second one shortly. We’re already doing the grading but the steel hasn’t started yet.”

Construction has not started yet on remaining two Brampton projects—buildings measuring 350,000sqf each.

While Orlando has 3PL clients, Wolks says lately they haven’t been the organizations renting warehousing room.

“What we’re seeing is there are quite a few users who put their name on the headlease—the actual retailer—but they’ll have a 3PL operate the facility for them. So the covenant we receive is from the big retailer, not the 3PL, but there are other cases when we have a 3PL straight up looking for space to fill out their contracts, and we are doing leases with them as well. It is a bit of a mix. I’d say we are saying more from the retailer side at this point, the actual end user is coming in for the requirement rather than the 3PL.”

Along with its Brampton sites, the company also has two projects ready to get started in Mississauga, Ontario: one that will be 325,000sqf when finished and second one slated to be 380,000sqf when completed.

One of the Prologis construction projects in Mississauga

Orlando isn’t the only company with projects in Mississauga. San Francisco, California-based Prologis Inc, a logistics real estate developer, is putting up two warehouses in the city. One is 380,000sqf and the other will be 324,000sqf when completed.

Despite numerous requests, Prologis repeatedly refused to be be interviewed and would not provide any statements or details about the projects.