In Q3 of 2019, through the joint efforts of the Colliers Toronto and Colliers Chicago teams, Bridgestone chose Colliers as its real estate representative. Led by Colliers Toronto’s Colin Alves and Graham Meader,the Colliers team secured a complex assignment involving consolidating two of Bridgestone’s facilities and accommodating a production increase in its third, as well asPrologis buying raw land and simultaneously negotiating a lease. The resulting 450,951-square-foot site on Osprey Drivein Hamilton represented one of 2019’s larger lease deals.
A Complex Assignment
Bridgestone’s main objective was to consolidate its two existing facilities: a 3PL in the GTA East and a lease distribution facility in LehighCounty, Pennsylvania.
Bridgestone’s third location, located in Quebec, started to see a significant increase in production, adding a layer of complexity to the assignment as the Colliers team needed to identify an optimal location that would accommodate the production increase in Quebec, as well as the consolidation of the two distribution centres. The minimum requirement for a new facility was 300,000 square feet– securing such a space would be challenginggiven thetightGreater Toronto Area (GTA) real estate market.
The Advantages of Emerging Markets
As a result of the lack of space within the core GTA, tenants were looking at secondary and tertiary markets and were consequently concerned with labour availability. The Colliers team recognized this concern and produceda labour study report, highlighting emerging markets such as Hamilton and their upcoming infrastructure improvements. The report emphasized how these improvements would increase the accessibility of surrounding areas,widening the labour pool and benefiting the community, tenants and owner occupiers.
This labour study’s findings prompted the team to expand their search and run a sophisticated and extensive Southwest Ontario Market Analysis.
A Solution that Works for All Parties
As a result, Graham and Colin presented to Bridgestone a 60-acre, off-market land parcel in Hamilton.Unlike core GTA markets, the City had a short site plan approval process and therefore had the potential to accelerate construction timelines,complementingBridgestone’s timing requirement. Thanks to the Colliers team’s strong relationship with the institutional and investor community, Graham and Colin engaged Prologis, knowing the firm would be interested in purchasing the land and expanding its development portfolio.
Prologis acquired the land and moved forward with its 450,000-square-foot, build-to-suit development, enablingthe Colliers Team to secure a new lease with both Prologis and Bridgestone. WithColliers negotiating a seven-year lease term on a brand-new buildinglocated within a secondary market, Bridgestone did not need to obtain capital budget approval from its headquarters in Japan,a step that would have delayed the project process and timeline.
Considering Bridgestone’s lease expiry dates on its existing locations, the Colliers team also negotiated a short-term lease renewal at its Pennsylvania location (which happened to be part ofPrologis’portfolio) until its new Hamilton location was ready for occupancy.
A Landmark Transaction
As a SIOR-recognized transaction (2019), the Bridgestone-Prologis deal put Hamilton on the map as an emerging market. Following the transaction, four major institutional Toronto-based developers have acquired landin the city. With the core GTA’s lack of available land and declining vacancy, tenants, developers and investors are now looking into secondary markets such as Hamilton to help balance the demand and supply ratio, positively impacting Hamilton’s economy and growing market.
We see beyond what’s directly in front of us.
At Colliers, we don’t see what is. We see what could be.
