London's industrial land values rising at 'unprecedented' rate

Industrial land is so hot in London, prices have risen by about a third over the last two years, according to commercial real estate and investment group, CBRE.

I've never seen that level of increase over such a short period of time.- Peter Whatmore, CBRE

"It's pretty unprecedented in London," said PeterWhatmoreaCBREvice-president and a broker for southwestern Ontario."I've never seen that level of increase over such a short period of time."

The price per acre for industrial land in London has risen by $5,000 an acre in the last few years to $70,000 an acre for plots larger than four acres and $80,000 per acre for plots smaller than four acres,according to Bill Warner the manager of realty services for the City of London.

"We've had a couple of very good years," Warner said."There's definitelyinterest in some of those larger warehouse and distribution developers."

Whatmore said rising industrial land values is something that's happening across North America, as expanding e-commerce and manufacturing companies look to bolsterwarehouse and distribution space along key transportation routes, such as Highway 401.

"We have an amazing location in London on the 401 corridor, but our challenge is that we're so far away from the GTA that we don't get all the positive impacts that say a Kitchener, a Cambridge and a Guelph gets because they're on the doorstep of Toronto," he said.

Despite that challenge, WhatmoresaidLondon has some pretty impressive feathers in its cap, chief among them is the new $660 million Maple Leaf Food poultry processing plant set to be built in the city's south end. It'sthe largest single-site investment in the Canadian food industry.

Maple Leaf Foods CEO describes the new London plant

6 years ago

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Maple Leaf Foods CEO Michael McCain says the London facility will be state of the art and fully sustainable.

"There is some fairly significant growth happening in the industrial sector," he said.

Whatmore said the Maple Leaf's arrival in London will likely also herald a number of positive economic spinoffs, including bolstering the local service sector and the potential relocation of suppliers.

London office vacancies remain 'stubbornly high'

While industrial space in London might be a hot commodity, commercial office space doesn't seem to have the same allure.

"The office market has been stubbornly high for a considerable period of time," Whatmore said. "The more of that we can get occupied the better."

What's driving the surplus of office space is the fact companies have been ruthlessly trimming their bottom lines for decades, including trying to make their footprint smaller and more compact.

Very rare do you find a site that big in a city of our size.- CBRE's Peter Whatmore on the former London Psychiatric Hospital

Whatmore said the glut of empty offices in the cities means a company looking for more space or a better location might be able to find a number options at a bargain.

Even though commercial office space remains relatively cheap in the city, many companies are looking for the prestige of upgradinghistorical spacethrough renovations, such as Roundhouse London, located at the former Great West Beef Co. on Horton Street or Info-Tech Research Group, inside a former metal works on Talbot Street at King.

Take a tour of Info-Tech's new London office with company founder Joel McLean

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Take a tour of Info-Tech's new London office with company founder Joel McLean

"[Those]are great examples of some old industrial facilities that have been incredibly repositioned," Whatmore said. "Unfortunatelyin London, we don't have a lot of that kind of product."

"They're doing it as part of a workplace strategy in many cases, creating collaborative, funky,interesting spaces for people to work makes for a much more collaborative environment," he said.

One of most exciting real estate projects in London, according to Whatmore, isthe redevelopment of the former London Psychiatric Hospital lands in the Oxford and Highbury area.

"I think the most interesting thing about it is its 175 acres of land, more development in the heart of the city," he said. "That is an incredible opportunity and very rare do you find a site that big in a city of our size."

Whatmore said the property also has unique historic character, which the developers will use in their modernization of the former hospital grounds.

"I think if you look at it five to 10 years from now, you'll find that they found a way to bring those elements into the community and make them really cool, funky spaces and we don't have a lot of that in London."