PROPERTY SEARCH SALE LEASE     ADVANCED SEARCH
Home Page


Print Friendly  Print Page

Waterloo Wellington
Market Overview
Feature Listings
Market Listings
News and Information
Personnel Profiles
Links

219 Labrador Drive
Suite 200
Waterloo, Ontario
N2K 4M8
Tel: (519) 746-6300
Fax: (519) 746-0455
john.whitney@dtzbarnicke.com


Home > Market Coverage > Waterloo Wellington

Waterloo Wellington Market Overview

Q2 – Market overview – Waterloo Wellington

Welcome to our DTZ Barnicke market update for Q2, 2010.

 

It’s fair to say the further we get away from 2009 the more we are seeing the return of a stabilized industrial commercial real estate market in Waterloo Wellington! 2010 has seen activity levels increase and we are anticipating this to continue through the last two quarters of the year.

Finally!!

 

Many of the manufacturing and office user groups put their real estate decisions on hold through 2009. The financial crisis that occurred in late 2008 did affect local business and most people were uncertain as to the future so they did nothing as it relates to their real estate. Nobody had the “right” amount of space and they were afraid to do anything, as the future was very uncertain. Today the picture is improving and we are pleased to say that business is once again engaging in real estate rightsizing.

 

Money is beginning to get a little more expensive but it is still on somewhat of a limited access basis for the real estate industry. Interest rates are still on the low end of the spectrum and money for real estate projects is being heavily scrutinized by the lenders. We did see the transaction volume and the overall dollar volume drop substantially in 2009 and it is our prediction that we will not return to the 2008 levels until into 2011.

 

Office Market

The brightest light in the Waterloo Wellington Region’s ICI market has to be the office market.

 

Leasing and sales activity continues in all sub markets and searches that were conducted in late 2009 became deals in early 2010.

 

DTZ is a strong player in the local office market and we were pleased to assist these companies

in their office relocations.

 

Agfa HealthCare has announced it is moving to a new building under new construction in the Research and Technology Park at the University of Waterloo. The Cora Group is building a 105,000 three storey office building at 375 Hagey Blvd. in Waterloo. Agfa will be the anchor tenant in that project and will occupy 80,000 sq ft in the spring of 2011. The balance of the space is available for lease.

 

 

Other recent transactions that occurred is the Digital Media Centre is going to The Tannery, which is the building in the downtown market of Kitchener where they will be joining Desire2Learn. These two tenants will occupy 70,000 sq ft of renovated space within The Tannery. Rumours are that Google is also considering a move to this building.

 

An interesting lease that was finalized - Quarry Integrated Communications is leaving Allen Square where they’ve been a tenant for over 20 years and are moving to the retrofitted Riverworks Building. The funky building with post and beam construction will allow Quarry’s employees to enjoy beautiful downtown St. Jacobs. It’s a former two storey retail building which is being converted to office and enjoys beautiful views as it is adjacent to the Conestoga River.

 

The spec building at 140 Columbia Street in Waterloo, know as Columbia Place has been leased to Research in Motion. This 50,000 sq ft office building is a good example of how strong the office market is in the Waterloo area.

 

 

Rates are continuing to hold strong for these office developments. New offices are leasing in the $15-$18 per sq ft net range. The backfilling of the existing office buildings appears to be holding strong. Overall vacancy rates in the office sector are in the 6% range and we expect this to continue to drop. New office construction will occur within the Region of Waterloo. Development charges have increased substantially and non res DC’s in Waterloo are $14.33 per sq ft!

 

The Cambridge / 401 area has seen a few office buildings built on spec and we are pleased to see some leasing activity occurs within this submarket.

 

Industrial

Industrial vacancy continues to increase and at Q2 2010 we are seeing a 11% vacancy factor.

 

It appears that plant closures have been significantly reduced however the carnage is still on the ground as we continue to see large manufacturing facilities remain idle. The Kitchener Frame (Budd Automotive) building at Bleams Road and Homer Watson is a 1M sq ft facility and is sitting idle. Buildings like the Engel building in Guelph have been on the market for two years and are seeing some activity but the building has still not traded.

 

Rates have definitely dropped from the highs of 2008 where we saw general rental rates for the industrial market at $5.50 per sq ft. Today we are seeing transactions that are 30-40% of this however we are pleased to say activity levels are continuing to improve. It’s also reassuring to see that the Belmont Equities and Hopewell Development at Hwy. 401 and Townline Road are seeing industrial and office leasing activity occur.

 

Hopewell landed Haldex Limited and the Belmont Equities Developments has seen Jones DesLaurier Insurance Management Inc. lease space in their building.

 

It’s our belief that the industrial market will continue to improve however, rental rates will continue to remain soft and this may be the new norm. Trying to fill some of these larger industrial buildings is going to be extremely difficult. Adaptive reuse and the potential for the demolition and rebuilding of some of these buildings will most certainly occur. This also helps to avoid development charges for new construction – there are development credits for the demolition of non residential buildings that can be applied to new construction.

 

The Investment Market

After the banner year in 2008 for investment real estate in Waterloo Wellington, activity levels in 2009 were almost nonexistent. Many people with existing investment real estate were reluctant to sell as they have found it difficult to replace that product with new investment product and having cash in the bank shows very little return. As interest rates climb we will see renewed activity in this sector. Waterloo Region has a great number of “offshore” owners of real estate and with the financial issues going on within the Euro counties many are looking at their Canadian investments as a “safe harbour”.

 

Multi Res

The multi unit residential market continues to remain strong and in this subcategory we would include in the student housing market. If you drive along King Street North in Waterloo or Columbia Street you will definitely see a changing landscape. Laurier University has rented 500 beds in a private sector building on King Street for their expanding student body. New student housing buildings are selling at $70,000-$75,000/door range!

 

Trades in the multi residential market are at sub six cap rates, which is again, lower than we’re seen.

 

Retail Market

The retail market has continued to remain strong in Waterloo Wellington Regions.

 

Most of the Conestoga Mall expansion and retrofit has been completed and it’s enjoying brisk activity at that mall. The biggest news for 2010 is the development of The Boardwalk at Ira Needles Blvd. project by the Voisin Group. This is the 50 acre site on Ira Needles Blvd and we are seeing announcements that site will be anchored by Wal-Mart, Toys”R”Us, Best Buy, Golf Town, Loews, Indigo and Empire Theatres just to name a few.

 

 

The retrofit of the former Bauer Industries building at King and Allen Streets is just complete and Bauer Kitchen, Vincenzos and other retailers are open and all seem to be well received by their customer base.

 

The Tannery is rolling out its retail main floor area and leasing activity appears to be continuing.

 

Balsac’s is a confirmed tenant and other smaller food eateries are going to be opening in the Tannery by early summer.

 

 

We are pleased to provide you these market updates and if you require any additional information please be in touch with our office.