Forget factories. Canada’s Pure Industrial Real Estate Trust sees its future in e-commerce — and potentially weed.
The country’s largest multi-tenant industrial landlord, which counts firms such as FedEx Corp. and Best Buy Co. among its customers, expects e-commerce to account for half of its portfolio in the next few years, up from 30 per cent today, according to Chief Executive Officer Kevan Gorrie. He’s also considering adding a burgeoning industry to his tenant roster: medical marijuana. It’s all to remain on the cutting edge of an industry that’s evolving as quickly as North America’s economy.
Mr. Gorrie’s also working on a lease in Brampton, Ont., for a pot distributor seeking a place to store its product. Canada is set to introduce legislation to legalize recreational use this year, which would make it the first Group of Seven nation to do so. In the U.S., eight states plus the District of Columbia have done this, while 28 states have medical marijuana laws.
“At the beginning, we shied away from it but more and more it’s becoming mainstream,” Mr. Gorrie said. “We would treat them as any other tenant that would require a lot of due diligence.” Pure Industrial wouldn’t allow companies to grow weed in their facilities, he said. He declined to name the company he’s in talks with.
The availability rate of industrial space across Canada has tightened to an average 5.3 per cent in the fourth quarter, the lowest in two years, and to 8.2 per cent in the U.S., the lowest in at least seven years, according to CBRE Inc. That’s pushed industrial rents in the period to a record $6.60 a square foot in Canada, where Pure Industrial has 75 percent of its assets, and up 6.3 per cent to $6.58 a square foot in the U.S., the biggest year-over-year jump since 2007, the commercial brokerage said.