Oxford Properties' industrial real estate portfolio has topped the 10 million-square-foot mark, and it intends to double its size by 2018.
Industrial real estate, such as factories and warehouses, draws much less attention than other real estate asset classes, such as office buildings and shopping malls. But within the real estate industry, the buzz around industrial properties is picking up.
The Canada Pension Plan Investment Board announced its first investment in industrial real estate in Canada this month, having decided to team up with WAM Development Group and Walton Group of Companies to develop about four million square feet of distribution and logistics warehousing in northwest Edmonton.
Online shopping is one of the reasons that this asset class is gaining attention. While e-commerce is generally expected to cause a reduction in demand for retail space in shopping malls and plazas, it is simultaneously leading to greater demand for shipping and distribution centres.
Oxford has just begun developing industrial sites in recent years. Its properties include the Vaughan Industrial Park and Brampton Business Park in the Toronto area and the Cityview and Northport business parks in Edmonton. It is developing Oxford Airport Business Park north of the Calgary International Airport, and another business park in South Burnaby, B.C.
For the moment it is keeping its portfolio to those four core markets: Toronto, Edmonton, Calgary and Vancouver.
"We do have some manufacturing, but for the most part these are large warehouse distribution facilities that would handle the goods that enter the country," says Jeff Miller, vice-president of industrial at Oxford Properties. "They would typically end up in these warehouse distribution facilities before going, for instance, to retail malls."
The average size of one of the buildings in Oxford's industrial portfolio is about 270,000 square feet. Tenants include Nestle, Best Buy, Future Shop, Saputo and Exel Logistics.
Land for massive industrial properties is not easy to come by.
"Location is obviously the most important factor, and around that we look at access to highways, access to labour, and access or proximity to the intermodal yards," Mr. Miller says.
Oxford has enough confidence in both its locations and the general demand for industrial space that it is building developments speculatively, without signing up tenants first.
The growth in this portfolio is part of a greater growth trend at Oxford, which is the real estate arm of OMERS, the Ontario Municipal Employees Retirement System. OMERS has been increasing its allocation to real estate. In 2010 Oxford Properties CEO Blake Hutcheson set a goal of roughly doubling the business's assets under management in five years.