Big interest in Ontario's small markets

06/14/2005

BY CRAIG SAUNDERS
THE GLOBE AND MAIL

As the land crunch in the Greater Toronto Area sends commercial developers farther afield, even those smaller communities are beginning to experience tightness in land availability and vacancies.

And the mayor of one of the hottest destinations for developers is happy about it.
As mayor of Brantford, Mike Hancock has seen the small southwestern Ontario city enter an unprecedented industrial boom.

A shortage of cheap, serviced industrial land, as well as the province's new greenbelt legislation protecting land from industrial development, are driving commercial developers to look further afield, into new and smaller markets, industry experts say.

Although Brantford is one of the prime destinations, they forecast growth for other communities, especially to the west of the GTA.

The sod had barely been turned on Procter & Gamble Co.'s new, 775,000-square-foot Canadian distribution centre in Brantford when Ferrero Rocher announced it would be making all its chocolates for North America in a new, 750,000-square-foot plant to be built in Mr. Hancock's town.

Things haven't been so good in many years. Its industrial leaders, most notably Massey-Ferguson, closed up shop in the 1980s, leaving Brantford a largely forgotten rural backwater with unemployment topping 20 per cent.

But in 1997, the province completed Highway 403, finally linking Brantford to the GTA and the border at Niagara Falls, and vastly improving the city's prospects for growth.

"Brantford is unbelievably hot right now," said John Arnoldi, vice-president and managing director of Colliers International Kitchener. "It's on every developer's hit list."

As prices for serviced land in Toronto and Mississauga have increased, developers have been looking further afield for places to locate new industrial buildings. Kitchener, Waterloo, Cambridge and Guelph began to benefit from this phenomenon about three years ago, Mr. Arnoldi said.

Brantford has been the big beneficiary, with roughly two million square feet of industrial development in the past year. In addition to P&G and Ferrero, which invested $70-million and $150-million, respectively, the city's location on the 403 also attracted other companies, mostly in warehouse distribution and food manufacturing.

Inside the Greater Golden Horseshoe, industrial land prices including development charges range from just over $200,000 per acre in Ajax and Pickering to nearly $700,000 per acre in Mississauga, according to real estate consultants Altus Helyar.

Further afield, they drop dramatically. Prices in Cambridge are just under $200,000 per acre, Barrie's are slightly lower, and in Peterborough they're closer to the $50,000 mark.
In Brantford, serviced industrial land has gone up in price. It was around $55,000, but the city's land along Highway 403 is now around $110,000, according to Mr. Arnoldi. Private land is closer to $150,000.

Land availability was a big factor in P&G's decision to locate in Brantford, according to company spokesman Win Sakdinan.

"We need space that can accommodate the growth of our business."

In addition to land availability, Mr. Sakdinan said his company was attracted by Brantford's access to highways and border crossings, making it convenient for shipments from P&G's plants in the United States.

Land is becoming scarce in the city, according to John Frabotta, director of Brantford's economic development department. This is thanks, in part, to Ferrero's acquisition of 162 acres.
The city's 309-acre Northwest Industrial Park, which opened in 2001, now only has 30 acres left. Mr. Frabotta said the city is bringing another 76 acres on line near the 403 highway, then "we're out of land municipally." However, two parcels of private land totalling just over 200 acres will be available.

The land crunch is a new challenge for smaller communities outside the traditional Toronto megalopolis.

With Brantford already the darling of developers, eyes are now turning to its neighbour.
Situated at the western junction of highways 403 and 401, Woodstock may be the next boomtown. In June, Toyota is expected to announce the site for a new $600-million assembly plant, and Woodstock is rumoured by industry insiders to be on the short list. "The trend will continue to see development going west of the GTA," said Sheila Botting, executive vice-president of Royal LePage Advisors in Toronto. The spread will also go north to Barrie and east as far as Peterborough, she added. However, development will mostly be in the west, as the highway network to the east isn't as well developed, she said.

Earlier this year, the government of Ontario brought in legislation to protect a wide swath of land surrounding Toronto and the Golden Horseshoe from development. Within the greenbelt, land use is restricted, essentially making it off-limits to industrial development.
Such restrictions will drive up prices inside the greenbelt, Ms. Botting said, and will cause developers to "leapfrog" over the belt into communities previously considered too far from the urban core.

In Ontario, communities just outside the greenbelt include Guelph, Cambridge and Brantford to the west. It stretches quite far north, and east almost to Peterborough. Those on the 400 series of highways will benefit most and attract any major warehousing and manufacturing developments setting up outside the greenbelt, particularly in the west, which has quick access to Detroit and Buffalo, Ms. Botting said.

Some smaller towns are benefiting indirectly from the boom.

Collingwood, on the western shore of Nottawasaga Bay, for instance, is running out of office and industrial space, according to Catherine Durrant, the town's economic development officer. When Canada Steamship Lines closed its shipyard in 1986, predictions for the town's future were dark. Over the last twenty years, though, Collingwood has capitalized on its waterfront and ski hills, and transformed itself into a major four-seasons tourist destination.
More recently, it has been attracting numerous small companies with 20-50 employees. Many of these have moved away from the congestion of Mississauga and Toronto, Ms. Durrant said.
"A lot of small manufacturers in larger cities are looking at the lifestyle here," she said. Collingwood already had an industrial base that included Alcoa Wheel Products, Pilkington Glass and VOA Canada. Recent growth has included knowledge-based industries, and planning and engineering firms.

As for Brantford's mayor, he couldn't be happier.

"A few years ago, we'd have taken any plant that came in," he said. Today, the desperate past has been replaced by "an air of optimism."