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  • Writer's pictureJoe Rosati

Last-mile Industrial Real Estate: Why Owners should not rush to Selling

Updated: Jul 15, 2022

For anyone that owns an industrial property or is looking to buy or lease an industrial property, or for anyone just involved in that asset class in any way, it's no news to them that industrial real estate has been on fire. But there is a particular segment of the industrial real estate building stock that I think has even more legs in terms of upside, even as the sector more broadly potentially settles down and flatlines a bit over the next few years - these are the so called "last-mile" properties.

What Are "Last Mile" Buildings?

I recently had a client reach out to me who owns a 45,000 sq. ft. industrial warehouse in Vaughan, right in the heart of Vaughan Metropolitan Centre near the new subway station and surrounded by new condo buildings that are seemingly sprouting up monthly. They reached out to say that, given the residential condo boom in the area, it might make sense to sell their building. Not just that, but that it would make sense to specifically sell it to a developer who could build a condo project on the site.

My client was wrong on two fronts, which I took the time to go through with them. Number one, they should not necessarily rush into selling their building at this time (unless there are circumstances that make a sale more urgent, which was not the case here). Number two, they should not target condo developers to purchase the property, even if they wanted to sell, because that would not necessarily be the ideal buyer.

You see, my client owns your classic "last-mile" industrial property, defined at a high level below:

  • Generally less than 100,000 sq. ft.

  • Close to major cities, often in the heart of a well populated area (i.e. surrounded by lots of residential)

  • Close to a transportation network (i.e. highways) that make it easy to transport goods to and from the facility throughout the populated metropolitan areas

These types of commercial properties derive their name from the fact that they represent the "last mile" of the supply chain, that final stretch for getting goods directly to the consumer, or to the retailers that will sell them to the consumer.

I advised my client that this sub-class of industrial real estate is becoming more and more valuable and that I didn't see the value growth abating any time soon. I also advised them that because of the value of such facilities, as well as the challenges with re-zoning industrial lands, it would be very unlikely to appeal to a condo developer and actually much more likely to appeal to an industrial investor, industrial end-user, or industrial developer who could potential improve and redevelop the property.

Why are Last Mile Buildings So Valuable?

There are basically two main reasons why these types of industrial warehouse buildings are so valuable - 1) Demand, and 2) Scarcity. Pretty basic economic price drivers there, eh? But it's the truth, and I'll break it down further below.


With the rapid rise of ecommerce shopping, having facilities that can be used to store and distribute goods and products close to consumers and retailers has become ever more valuable. Amazon has aggressively pursued the acquisition and development of last mile fulfillment centres in the GTA over the past few years as the ecommerce landscape has picked up steam in Canada (no doubt accelerated by the COVID pandemic).

And truthfully, we're just scratching the surface of ecommerce uptake here in Canada which still lags behind the US when it comes online shopping, so the needs for these last mile buildings will just continue to grow over the coming years unless you think ecommerce shopping is going away or getting smaller anytime soon.


Industrial land is scarce to begin with in the Greater Toronto Area (GTA), but industrial land that is very close to large metropolitan or suburban populations is even more rare and there will never be more of it due to land constraints and zoning bylaws. Therefore the existing industrial properties that are within these population zones will continue to achieve 'unicorn' status so to speak, and as a result they will continue to be in very high demand.

It is somewhat counter-intuitive to think, as it was for my client, that as condo buildings continue to dot the skyline around it, their industrial property would actually become ever more valuable not because it too could redeveloped into a condo, but because of what it already is.

There are of course exceptions to what I say here, and this blog is meant to give an anecdotal view of whats happening on the ground in Toronto's industrial real estate market rather than to be a scientific paper.

But in general, if you own one of these "last-mile" unicorns, you may want to talk to a commercial real estate broker like myself before you rush into thinking now is the time to sell and that it'll just be converted to condos one day. There are many options to extracting value from your property, not the least of which is leasing or redeveloping the site, and I'm happy to discuss all of those options.



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