Hillwood Investment Properties is entering the Canadian market through a partnership with Highfield Investment Group on a 45,180-square-metre (502,000-square-foot) distribution facility in Balzac just north of Calgary.
Hillwood is a commercial real estate developer, investor and advisor and the second largest owner of land for future development of more than 7.83 million square metres (87 million square feet) of logistics space in the United States.
The company was formed in 1998 and is headed by Ross Perot, Jr., son of the former presidential candidate and well-known American businessman. It has industrial and office projects in California, Florida, Georgia, Maryland, Mississippi, Tennessee, New Jersey, Pennsylvania, South Carolina, Texas and, now, Alberta.
“We feel that they’re people with the highest integrity and they have a very good reputation in Calgary,” Hillwood senior vice-president Chris Brown says of Highfield, a diverse private holding company with operational interests in real estate, commercial and residential development, hospitality, oilfield services and thoroughbred horse racing.
“A very prosperous partnership”
“This should be a very prosperous partnership.”
The first project the two companies are collaborating on is in the High Plains Industrial Park, where Highfield has purchased 384 hectares (960 acres) of land in increments since 2005 for what chief executive officer Adrian Munro estimates to be between $45 million and $50 million. Typical land prices in Calgary are $650,000 to $800,000 per acre.
Construction of the new building on a 12-hectare (30-acre) site will begin before the end of the year, with occupancy scheduled for a year from now. No tenants have been announced and Munro says lease rates will be “very competitive.”
The Balzac location 25 minutes north of downtown Calgary is attractive due to its relative proximity to infrastructure, major roads, Calgary International Airport, CN and CP intermodal rail terminals and amenities at CrossIron Mills, Alberta’s third-largest enclosed shopping centre.
High Plains Industrial Park is already home to Target’s 117,000-square-metre (1.3-million-square-foot) Western Canada distribution hub and Gordon Food Service’s 24,750-square-metre (275,000-square-foot) distribution centre. Lawson Projects is the park’s project manager.
No business tax and low property tax at the fully serviced park in Rocky View County offer annual savings, when compared to Calgary, of approximately one dollar per square foot for tenants.
Brown and Munro both say one of the biggest selling points of the “very modern and efficient” class-A industrial facility will be its cross-dock capability — where materials can be unloaded from an incoming semi-trailer and loaded directly on to outbound trucks with little or no storage in between — which will be new to the Calgary market. It will have 228 parking stalls and 196 trailer stalls.
“We hope that this is the first of many opportunities that we pursue with Hillwood,” says Munro. “It’s a world-class company and I think they have a lot to teach us about industrial development. I think we’re pretty well-positioned in Calgary and I’m hoping that we can leverage this to pursue other opportunities.
“In the past we were traditionally a seller of finished land to users to build their own buildings. But this partnership will allow us to pursue more vertical opportunities in the marketplace, which is a segment that we really weren’t in a position to serve. We’re hoping that by partnering with Hillwood we can pursue other market segments that were really out of our grasp.”
Brown says Hillwood is making a long-term commitment to High Plains Industrial Park and that its goal is “to be building several million square feet” over multiple developments there with Highfield. Highfield specializes in the acquisition, planning, zoning, entitlement and construction of industrial and residential parks throughout the greater Calgary area.
Bought plenty of agricultural land
“My dad’s been an acquirer of land forever,” says Munro. “We bought a lot of it when it was agricultural land, and the cities and towns in and around Calgary have developed around it. We’re positioned very well with a nice land base to bring to market.”
Other major properties that Highfield owns either entirely or in partnership include: a 346-hectare (866-acre) master plan residential community south of Calgary; 180 hectares (450 acres) in the South Macleod area of south Calgary; 104 hectares (260 acres) in Rocky View County; and 309 hectares (773 acres) in Airdrie, north of Calgary, which the company plans for both industrial and residential uses.
“We’ve partnered with developers in the Edmonton region and on projects in Canmore, but our comfort zone is the City of Calgary,” says Munro. “We know the market.
“We know the land. We know the politics. It’s very difficult for us to get out of our comfort zone and go to other jurisdictions just because the learning curve is so steep. We never say never but, if we had our preference, we’d probably stick to our local market.”
That’s not the case with Dallas-based Hillwood, which is best known for its Alliance brand that includes the 7,200-hectare (18,000-acre) AllianceTexas, 1,790-hectare (4,474-acre) AllianceFlorida at Cecil Commerce Center and 800-hectare (2,000-acre) AllianceCalifornia.
While Brown won’t offer any specifics about Hillwood’s future plans in Canada, he says: “We’ve been looking to expand into the Canadian market for a while now and we will continue to look for other opportunities in Canada. We feel like this is an excellent play for us in Calgary, but there are other markets in Canada that we would look for opportunities.”