Why Companies Are Consciously Decoupling Industrial and Office Space

More GTA manufacturers are separating industrial facilities from office space, aka decoupling. CBRE’s Masha Dudelzak spoke to us about this Paltrow-esque phenomenon that's taking commercial real estate by storm.

“The needs are different for industrial and office space,” Masha says, “so it often doesn’t make sense to co-locate them on one premises.” For industrial firms seeking to centralize office ops, the Markham North/Richmond Hill and Meadowvale submarkets have been top destinations, with new buildings offering large floor plates, ample parking and highway access. Acklands-Grainger is consolidating the “little pockets” of office workers it has at each of its GTA industrial locations and leasing 81k SF at 123 Commerce Valley Dr E in Markham (below), making this its new HQ. 

The decoupling trend is also seeing firms outsource industrial, particularly warehousing. Remco (3PL provider for retailer H&M) just leased 300k SF at 100 Ironside Dr (below), whose other tenant is Exel, logistics provider for Keurig Canada. And Werner Ladder and Hilti Canada have let 3PL groups assume operation of warehouses they previously leased. Adds Masha: “If a company’s in the business of providing third party logistics, and yours is in the business of providing, say, fashion, you want someone else to do your logistics so you can focus on fashion.”

Other firms are keeping offices here while moving production abroad to cut costs. Cinram International, a Scarborough-based manufacturer and distributor of DVDs, CDs and Blu-ray discs, shifted its Canadian production south of the border to existing plants in Pennsylvania and Alabama. Cinram said its finance, marketing and distribution will remain HQ'd here. “They already had production facilities in the US, so they just consolidated, which is usually how that happens,” Masha says. “It’s typically not a company that’s always been in Canada suddenly decides to move to the US.”