A Toronto real estate investment trust is buying six industrial buildings in London for $103.5 million. Nexus Real Estate Investment Trust is investing in London because it believes the city has a solid business climate, said Kelly Hanczyk, the trust’s chief financial officer. 

“London is a tight industrial market. I think there is a lot of growth, a lot of upside in this portfolio,” he said. “We are building our industrial portfolio across Canada. These are well-maintained buildings.”

Hanczyk declined to reveal the buildings’ addresses or sellers until the deal closes in April.

The London business group selling the properties will take $65 million of the value in Nexus shares and the balance in cash, he said.

“We have been trying to get them for five years. They (the sellers) liked the idea of a REIT dividend. At the end of the day, it made sense for us and them,” Hanczyk said.

Nexus may not be done, as it is seeking additional industrial properties and more area purchases may follow, he said. “We hope this is the beginning of more in Southwestern Ontario. We will add more as we go through the year.”

The industrial sector is experiencing interest nationally as the COVID-19 pandemic has created uncertainty in office and retail markets, making industrial property attractive, said Ted Overbaugh, Southwestern Ontario vice-president for CBRE, a commercial realty firm.

“There is a lack of product in industrial right now. We need development in Southwestern Ontario,” he said. “Good industrial is hard to find. It is a good investment.”

In a January report on the London-area commercial realty sector, CBRE said 786,878 square feet of industrial space was under construction in London in the final quarter of 2020, up 48,750 square feet from the third quarter.

Also, leases rose to $6.17 a square foot from $5.67 in the third quarter and sale prices are up to $75.95 a square foot from $66.92.

“Industrial is the one asset class every investor is backing up the truck for right now,” Overbaugh said. “It is the safest asset class. There are a lot of unknowns in office leasing. We don’t know what it will be like in three to five years and the same with retail. Industrial is safe.”

Nexus also announced the purchase of two Edmonton industrial properties for $14 million. That deal is expected to close March 1.

It takes time to get industrial lots on the market. If property is zoned, serviced and ready for manufacturing use, it may take six months before construction can occur as municipal studies and requirements have to be met.

If land is not zoned or serviced, it may take years to get industrial building lots ready for construction.

“There is a bottleneck of demand right now,” Overbaugh said.