HOW WE HELPED SHERWAY GROUP FIND AN INDUSTRIAL FACILITY TO LAUNCH A STRATEGIC PARTNERSHIP
April 22, 2021
Leveraging the Right Strategy in a Limited Industrial Market
The fastest-growing Industrial Users of 2020 were those who successfully tapped into the explosive online sales demand. E-commerce and online grocery sales led the way in the manufacturing, warehousing, food, cold storage, and logistics industries.
The key real estate objective – for those businesses riding the wave – was to find adequate space quickly. The biggest issue: they were all competing for the same industrial stock in one of the tightest markets in North America.
So, in reality, companies looking for additional space needed to approach the problem with a blended strategy of leveraging short-term additional overflow space with long-term planning; whether that be through a design-build, retrofit, or patiently waiting.
That’s where an experienced broker or team can add value. They can examine situations through different lenses in order to identify opportunities where others don’t see them. Sometimes, a counter-intuitive approach can yield the best results, as you’ll read in this case study.
Challenge:
We were retained by Sherway Group to help them find a suitable facility for their partnership with Waterloo Brewing; Ontario’s largest Canadian-owned brewery. The expectations were that Sherway Group would operate and provide both storage and warehouse service on their behalf, while Waterloo Brewing was looking to further upgrade their canning capacity just a few months after announcing a previous can line installation. The timing on the assignment was very pressing as these expansion plans needed to be acted on immediately.
Features:
- Approximately 156,000 SF;
- Sub-lease with additional medium-term lease;
- Zoning: Industrial;
- Quick access to Highways 401 and 403;
- Adequate dock-level shipping.
Transaction:
Just as in the Greater Toronto Area core, distribution facilities along the 401 West Corridor were limited in supply. Our team evaluated a variety of options and markets. As mentioned, competition for on-market supply prompted us to consider a potential sublease option. When reviewing this facility, the immediate access to Highway 401, and close proximity to Highway 403 would help lower pickup and delivery times. The number of dock doors also made the building especially appealing, ensuring efficiency for inbound and outbound loading.
Results:
The Lee & Associates Toronto team was able to strategically turn this sub-lease and turn it into a long-term lease directly with the Landlord. Because of this strong relationship, we successfully negotiated both sub-lease and head-lease concurrently – the blueprint which allowed our client to secure long-term control of the asset.
Summary
Overall, Industrial Tenants undergoing considerable growth in the e-commerce, food, warehousing, and logistics sectors are constantly looking for options to house their growing operations.
Successfully identifying opportunities and pursuing them through a diverse range of approaches enables these businesses to maximize their odds of success. Given the chronic lack of availability in the market, it is often the creative solutions which result in the best long-term outcomes.
