A leading Winnipeg real estate asset management firm is expanding outside the province for the first time, targeting a future in the Land of the Living Skies: Saskatchewan.
MMI Asset Management president and CEO Martin McGarry said that while investment opportunities in Manitoba continue to exist, our nearest western neighbour was ripe for the picking when it came to industrial and office markets, which make up the bulk of MMI’s million square-foot portfolio here.
“There was a recent article in the Western Investor which called it a Saskaboom,” McGarry said in a phone call with the Free Press. The article referred to a highly competitive suburban office market in Saskatoon, with significant availability for investments in the city’s core office sector, where “double-digit vacancies” have created opportunities, which were in part spurred by the instability inherent to the pandemic.
ETHAN CAIRNS / WINNIPEG FREE PRESS
MMI Asset Management president and CEO Martin McGarry says Saskatchewan is ripe for the picking when it comes to investment opportunities in the industrial and office markets.
“Whenever there’s upheaval in the market, there’s always opportunity to acquire and redevelop, though probably not to build anything new,” said McGarry, who also acts as the CEO of Cushman & Wakefield, and said the asset company has been eyeing Saskatchewan for a while.
It has reached the point where doing so felt right, he said. Since its founding in 2009, MMI, a sister company of the Cushman-Wakefield real estate group, has focused on bringing groups of investors together to buy AAA commercial real estate, then offering professional asset management. At that time, McGarry said there weren’t any private equity players in the city doing just that.
In the decade-plus since, MMI raised $57 million in equity, from 150 investors across the country, with over $200 million worth of assets under its management umbrella, spread across 17 projects. Among its largest holdings is the Steele Business Park, a three-phase, 17-acre industrial development in the Centreport Canada inland port, announced in the fall of 2020 with an estimated capital investment of $46 million.
On the strength of its local performance, MMI hired commercial developer Mike Brown, who the firm says has nearly 20 years of acquisition and asset management experience, plus knowledge of Saskatchewan, which he called in a release “an epicentre for growth and development right now.”
To McGarry, the neighbouring province presented a stable option through which MMI could diversify its own holdings, particularly on the industrial side — a segment which has maintained strong momentum in both Manitoba and Saskatchewan throughout the pandemic.
According to Collier’s Canada’s most recent national market snapshot, Winnipeg’s industrial market has enjoyed sustained demand, marked by three deals of over 100,000 square-feet transpiring this past quarter. Multiple offers have occurred on lease transactions, which according to Collier’s, is a rarity locally. Meanwhile, quality existing properties are trading for higher rates as landlords see their value as comparable to new buildings.
Local industrial vacancy, per Collier’s, is down this quarter to 2.3 per cent. Meanwhile, the average asking rents for local industrial property is up to $8.95 per square foot, marking a steep upward trend. Saskatoon’s industrial market is in a similar position, with a 2.1 per cent vacancy rate and a higher asking net rent at $11.82, though that has trended downward over the past three quarters. In Regina, industrial vacancy and asking rents both decreased over the past year.
In McGarry’s estimation, while Winnipeg is still a bastion of opportunity, Saskatchewan is poised for growth. “It’s firing at all cylinders,” he said.
With about 100 employees in Winnipeg, McGarry estimates that MMI will have 20 in Saskatchewan within the next three to five years.