GlobeSt.com: What initially attracted you toToronto?

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Cornforth: We really like the supply and demandequation. There's very little land availability and a lot ofdiscipline in the market. The vacancy rate has never gone above 6%in the last 10 years. We like the land constraints. We like theTrans-Canada Highway, which serves the entire nation.

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GlobeSt.com: How aggressive have you beenthere?

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Cornforth: We've grown very quickly over three anda half years, mostly through development. We acquired 1.5 millionsf of buildings, but the rest we've developed or plan to develop.We're a long-term owner, and our goal is to be a significantplayer. At four million sf, we've got a good presence, but we needto continue to grow.

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GlobeSt.com: Given the market's land constraints,isn't it tough to grow there?

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Cornforth: We It's not really that difficult toacquire suitable sites. There are always opportunities through theacquisition of existing properties with development orredevelopment potential, particularly brownfields. It's not likethey're out of land, but there are very strong constraints in termsof how quickly that land is brought on line. The regionalauthorities have decided there is not going to be rampant growthbut slow and rational expansion. We like the infill story whererents grow at a faster clip because it's difficult to develop newproduct.

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GlobeSt.com: How is the market faring in terms ofthe downturn in the US economy?

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Cornforth: We all recognize we're in a bit of atough economic market, but what Toronto has going for it is newconstruction is diminishing. It had nine million sf of completionslast year. Our estimate is it will have six to eight million [sf]this year. AMB had a pretty good first quarter in Canada.Unemployment is low, and the Canadian dollar has been prettystrong. Plus, Canada has been significantly de-linked from the USeconomy, which has not been the case historically. It's very muchan independent market now.

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GlobeSt.com: So Toronto is not competing withChicago or other Midwest US markets?

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Cornforth: I don't see the linkage with theMidwest despite NAFTA and even the auto pacts. There are a lot ofUS auto plants in Southwest Ontario, it's true, but in terms ofdistribution, Toronto is a stand-alone because it has such a bigpopulation base. It doesn't make sense to distribute to Torontofrom Chicago. I don't see American companies pulling out of Torontoand saying we're going to go to our main US distribution centersand distribute from there.

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GlobeSt.com: What about building a presence inother Canadian markets?

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Cornforth: We've been really disciplined, stayingin the Toronto-west market. It's possible we'd expand farther west,though I'm not sure we'd get out as far as London (Ontario). Theonly other city in Eastern Canada we have an interest in isMontreal. At some point, we'll go there. We've looked at Calgaryand Edmonton, but Toronto is our major focus, our growth engine,and the majority our portfolio will continue to be based in thatcity. It's that big; it's that important. In general, we let ourcustomers decide where we go, and we don't have the same customerbase in Montreal, Edmonton or Calgary. One day our customers maytake us to other cities, but not yet.

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