Demand for industrial land to increase after battery plant announcement


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Local economic development officials said municipalities must move quickly to ensure there’s a sufficient supply of shovel-ready industrial properties and buildings to take full advantage of the opportunity presented by Wednesday’s announcement that LG Energy Solution and Stellantis will build a $5 billion auto battery plan in the city.

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Invest WindsorEssex director of property development Joe Goncalves said he’s been inundated with phone calls and emails from new companies interested in locating here and local firms reaching out to engage LG and Stellantis.

“This plant is going to have a big impact on the need for more industrial land from here to Tilbury and Chatham,” Goncalves said. “We need to be getting land shovel ready as we speak.

“The supply chain companies are already here looking around and they need to be ready for production by the fourth quarter of 2024. That’s a tight timeline.”

Windsor is also a tight market for industrial space.

Currently the vacancy rate for industrial space is 1.22 per cent, down from 1.4 per cent in the final quarter of 2021.

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“The demand for (vacant) industrial land is only going to accelerate,” said CBRE Windsor senior associate Brad Collins.

“The price pressure will also be upwards on existing industrial buildings. I think suppliers coming here must move quickly because chances are they’re going to have to build on a greenfield site and that takes some time if you’re looking to be in production by 2025.”

The prices for industrial land had already been rising prior to the battery plant announcement.

The average price per acre of industrial land in 2018 was $156,432 but reached $361,117 by the end of 2021. The year-over-year growth in average price between 2020 and 2021 was 54.17 per cent.

The lease rate for existing industrial buildings has risen from $6 per square foot to $9. There is 227,150 square feet of new industrial construction coming online in 2022. The Windsor area has 58 million square feet of industrial space.

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“We’re definitely going to see new industrial construction,” said CBRE Windsor vice-president Brook Handysides. “Land in general has become a strong asset class and there’s now investor interest in industrial development.

“In the last few days, we’ve seen significant interest because investors see opportunities.”

Handysides said that interest has reached the point where he expects to see industrial development on spec with developers confident they can lease the space quickly. He added that confidence is bolstered by tenants taking longer terms than normal to protect themselves from competition for space and inflation.

“Suppliers like to be within a 15-minute drive of the plant they’re feeding,” said Handysides of where he expects the supplier cluster to concentrate. “That would take in the city, Lakeshore, Tecumseh, LaSalle and a corridor along the 401.”

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Goncalves said he’s already been reaching out to municipal chief administrative officers and economic development officials to develop a strategy on meeting the demand.

He said the “sweet spot” for shovel-ready ground based on inquiries is 10 to 15 acres to accommodate a plant of about 150,000 square feet with 150 to 160 employees.

“In the short term, we’re in good shape,” Goncalves said.

“In the medium to long term we need a strategy to develop more shovel-ready property along the Highway 401 corridor. We need 500 to 1,000 acres of shovel-ready property to get the full benefit of opportunities this plant will present.”

Goncalves said the major pieces of industrial property available are the city’s airport lands (200 acres), Amherstburg’s General Chemical site (400 acres), Lakeshore’s Patillo area (80 to 100 acres), Essex’s industrial park (20 to 25 acres) and Tecumseh ( 15 acres). He added Tecumseh has the potential to add hundreds of acres in the Oldcastle area.

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There are also plots of land in the city in private hands, such as along Central Avenue.

Goncalves said he’ll present some strategies to municipalities on what can be done to create an industrial land bank and develop comprehensive Community Improvement Plans.

He also encourages municipal officials and private landowners to participate in Ontario’s Certified Site Program. The program offers up to $50,000 to get a property pre-cleared to meet environmental, endangered species, archaeological, zoning and infrastructure standards.

“For our communities to grow, I plan to present establishing a regional industrial park with joint development and joint benefits from the tax revenue,” Goncalves said.

“There’d be a joint economic development fund and revenues would be determined by the percentage of the investment put into it.”

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