There is a common misconception about the industrial land and building availability in Hamilton’s lower city. Within this first installment of commercial property information we aim to shed some light on the availability, or lack thereof, of industrial building space in the lower city Hamilton market.
With over 65 years of combined experience of selling and leasing commercial/industrial real estate in Hamilton, the specialized team of Sydney Hamber, Paul Mariutti and John MacNamara of Colliers International have a real-time understanding of what is available in the city of Hamilton, delving more specifically into the lower city area. Since 2010 the team has leased and/or sold over 3,342,000 square feet of industrial space.
The team works with the City of Hamilton’s Economic Development Department, MPAC records and pairs with that their combined market intelligence to determine that there is over 38,600,000 square feet of industrial buildings greater than 15,000 square feet in the Hamilton market, (excluding US Steel and Arcelor Mittal Dofasco). The following represents the approximate percentages of various sizes of space by square feet (15,000 to 30,000 = 50%), (30,000 to 50,000 = 20%), (50,000 and up = 30%). As far as vacancy statistics go, the Q4 statistics were 6.1% in 2010, 3.4% in 2011, 2.2% in 2012 and 2.8% in 2013. 80% of this vacancy is represented by only six buildings, the smallest being 50,000 square feet. It’s easy to see the current trend is towards a lack of available product rather than a surplus. As we move closer towards a more stable economy the gap between supply and demand will become a greater problem for businesses that wish to expand within the city.
Part of the availability problem lies in the lack of any new building construction for sale or lease over the last five years and part lies in the fact that a large number of buildings have been demolished. It is easy to argue the majority of the buildings that came down needed to, but it has resulted in a substantial drop in the overall industrial base regardless. The Rheem building, the old Firestone plant, and most notably the Studebaker building at 600,000 square feet sq.ft. have been demolished. In spite of the new construction with Navistar (250,000 square feet), Maple Leaf Foods (400,000 square feet) and Canada Bread (385,000 square feet) there has been a zero sum gain in industrial space.
Generalizations have been made that there are hundreds of buildings that aren’t generating any tax revenue while the owners are holding out for larger revenue. These misconceptions are false and misleading. The six vacant buildings that make up the majority of the current vacancy indicated above are generating over $1,206,000 in taxes on an annual basis. It is hard to make the case that owners could reap any benefit by leaving their buildings vacant while they pay taxes, maintenance and higher insurance rates that accrue because the property is vacant.
In closing, Hamilton’s vacancy is at or below the average of other GTA cities and unless new buildings are built to service the current demand the city may miss out on current and future opportunities.
Stay tuned for the next edition where will discuss vacant land opportunities within Hamilton.
Sydney Hamber is Senior Vice President and Broker, Colliers International 1122 International Boulevard Suite 102 Burlington, ON. 289 266 1020