Windsor’s industrial real estate market reached new heights in 2023 as a strong fourth quarter saw records smashed for average sales and lease rates and new industrial space under construction.
The average sales price in Windsor ($175.55 per square foot) rose eight times as much as the national average (1.5 per cent). Lease rates climbed 13.6 per cent to $10.53 per square foot, more than double the Canadian average.
A record 1.17-million-square-feet of new construction is currently under development, not including the NextStar Energy battery plant.
“The big thing that happened at the end of the year were a couple of large blocks of industrial space got absorbed,” said CBRE Windsor senior vice-president Brook Handysides.
“Those two deals accounted for half-a-million square feet in Q4 of 2023. Large chunks of space can inflate or lower the market.”
The former CS Wind plant, which is 213,000 square feet, was one of those two sites that is now filled.
Guelph-based automotive supplier CpK Interiors is opening its first Windsor site in the plant and it will share the main building with NextStar Energy. The battery plant firm will use the site to house its growing business/administrative offices until it completes its own building.
Valiant TMS has taken over the 95,000-square-foot CS Wind paint shop on the site.
The other major deal in the fourth quarter saw automotive supplier Ventra Assembly Company, a subsidiary of Flex N Gate, taking over an empty 290,000-square-foot plant on Cantelon Drive next to Ford’s Essex Engine plant.
“It’s auto industry-driven, specifically Tier I suppliers,” said CBRE Windsor associate vice-president Brad Collins of the industrial real estate activity.
“A lot of it’s related to the retooling (of Windsor Assembly Plant). We’ve seen very little related to the battery plant supply chain.
“That is still to come.”
Collins added the softness in the industrial market is for sites under 20,000 square feet.
“Tool and die and mould shops haven’t seen some of the OEMs’ new programs launched yet,” Collins said.
“We’ve seen a lot of Tier I clients in Windsor expanding their existing facilities or their footprints. We expect to see that trickle down to the tool and mould shops soon.”
Collins cites TRW Automotive’s 196,450-square-foot site and 320,000 square feet at the former Nemak site coming onto the market shortly as examples of expansions or repurposing. The owner of the Nemak site, which is being refurbished, will retain an additional 100,000 square feet for a logistics and industrial services hub.
The strong demand for industrial space has driven down the availability rate to 2.86 per cent. New construction won’t do anything to help improve that number with the space already pre-leased.
Handysides added the Syncreon property, a former logistics and warehousing site for Stellantis covering 750,000 square feet, is also inflating the space available.
The Pilette Road facility represents 44 per cent of all available industrial space in the region. Without it, Windsor has an availability rate of 1.59 per cent.
“There’s interest now in that building from both the logistics/warehousing and from the electric vehicle side,” Handysides said.
The limited supply and positive economic prospects for Windsor have pushed up the asking prices for space.
The average sales price climbed 12 per cent per square foot in 2023, more than doubling the 2018 price average of $85.99.
The average leasing price per square foot rose 13.6 per cent last year. It was $6.88 in 2018.
“Investors and sellers remain bullish on Windsor, so that’s what’s driving prices,” Collins said.
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Despite the annual percentage increases in the Windsor area for both sales and leasing being the second-highest in Canada in 2023, the local area remains cheaper than the national average for sales ($276.75) and leasing rates ($13.71).
“Windsor remains relatively well-priced compared to the rest of Canada,” Handysides.
“We’re still $100 per square foot below the national average (to buy industrial property). That’s a sizable spread.”