“Given the option, every company would choose to locate near the airport,” says Scot Steele, an executive vice president with CBRE. “That’s a key consideration for the industrial sector in this part of the city.”
Scot heads a team of brokers who focus on the western end of the Greater Toronto Area. It’s a market that was starting to gain momentum when he joined CBRE in the mid-1980s. And as he set out to identify the key factors driving growth, he quickly saw the importance of having a major airport nearby: “Toronto Pearson was clearly a magnet for real estate sales and leasing.” That insight led CBRE to form a specialized Airport Industrial Team, which Scot still leads today.
Businesses on the doorstep
For some companies, ensuring the best possible air connections is built into the business model. The most obvious examples are international courier services: both UPS and FedEx have large facilities immediately adjacent to Toronto Pearson.
Another industry that depends on easy access to a global hub is freight forwarding. In recent years, as many smaller logistics providers have been acquired by larger ones, merged companies have consolidated their operations in new or expanded facilities around the airport. Adding to the need for proximity is the fact that many of these companies operate sufferance warehouses – special storage facilities, licensed by the Canada Border Services Agency (CBSA), where imported goods can be stored up to 40 days before being cleared through customs for sale in Canada. To facilitate inspection by CBSA officers, these warehouses must be located within a prescribed perimeter around the airport.
Close enough for comfort
Even companies for which air connectivity is less critical still prefer to locate close by – especially growing businesses with a global perspective. A good example is Wayfair, the U.S.-based e-commerce retailer of home furnishings and décor items. In 2018, the company opened its first Canadian warehouse in Mississauga, employing 200 people in an 800,000-square-foot storage and logistics facility. Having a global hub airport right next door was critical for employees travelling to and from Wayfair locations across the U.S., as well as for some air-based order fulfillment. Equally important was having an efficient road network for the online retailer’s truck-based distribution. “Toronto Pearson is not only a draw in terms of air connections,” Scot explains. “It’s also extremely well connected by surface roads – especially the 400-series highways.”
As for public transit, while most people working in the area currently travel by car, Scot foresees a shift in commuting patterns with the opening of the proposed Regional Transit and Passenger Centre at Toronto Pearson. He predicts that the impact will be particularly evident for office-based businesses – some of which have been moving closer to downtown to attract younger employees, who tend to avoid commuting by car (and increasingly don’t even own a vehicle).
“Employers have had trouble attracting millennials to the suburbs,” Scot says. “The ‘Union Station West’ transit hub will get them here.” He predicts that office vacancy rates in the area, currently higher than in Toronto’s core, will drop as well, ultimately sparking more development.
The next wave
What remains constant amidst these changing trends is the demand among globally focused enterprises for the kind of connectivity that only a mega hub airport can provide. This is true for multinationals – including CBRE itself – that have leaders constantly travelling back and forth for face-to-face meetings. And it’s a priority for many other rapidly expanding companies as they try to determine the best strategic locations for new offices.
“Air connectivity is very important for anybody trying to find the best way to get from point A to point B,” says Scot. “And oftentimes the conclusion is to meet at point C – which is Toronto. The hub factor is extremely important.”
It’s a factor that’s opening up new avenues for development in the Airport Employment Zone, from innovative hotel chains creating economical “express” locations in nearby industrial parks to the recent launch – backed by U.S. media giant CBS – of a 260,000-square-foot TV production facility just south of the airport.
“Developments like these are part of the next wave,” Scot says, “as land and buildings are being put to new and better uses all around Toronto Pearson.”
“Toronto Pearson is not only a draw in terms of air connections. It’s also extremely well connected by surface roads – especially the 400-series highways.”
