The Industrial sale market is characterized by very little supply and high demand, from both users and investors. This compounded by the recent drastic increases in industrial land prices, continuing increases in construction costs and high development charges means replacement costs are soaring. Therefore, tenants have few alternatives for relocation, and we expect lease rates to rise sharply in response to the cost of new development.
Waterloo is the smallest of the Region’s three industrial markets and continues to see its inventory converted to office and technology space at a rapid pace. Occupiers of industrial space in Waterloo have seen rapidly rising rents brought on by the lack of supply.
607 Kumpf Drive is uniquely positioned to be purchased below comparable user sales, and well below replacement cost. This property provided an excellent initial yield, and the potential to add value through increased rent in the future.