London revving up for VW spinoffs by adding more industrial land
Strong demand for industrial sites in London is driving city hall to add more land to attract manufacturers, local business and realty officials say.
The city is preparing for spinoffs from German automaker Volkswagen's announcement of a new electric vehicle battery plant for St. Thomas in 2027, believing it will land suppliers here, and it has to act now to get the land ready.
In a report to the city council's strategic priorities and policy committee, city staff recommend adding 200 hectares of land to the city's industrial holdings for new business.
“With the arrival of large, anchor manufacturers like Volkswagen, we're on the radar for suppliers feeding these companies,” said Kapil Lakhotia, chief executive of the London Economic Development Corp. that supports the ask for more industrial land.
“We're already responding to a lot of inquiries from various suppliers in the EV supply chain. We want to be well positioned to make sure we have appropriate industrial infrastructure to capitalize on investments when they come knocking.”
London has about 120 hectares of land serviced and ready for building with another 109 hectares waiting to be serviced, said Bill Warner, the city's director of realty services.
But that may soon be snapped up.
“We may sell much of that in a few months. We have a lot of interest,” Warner said. “We're forecasting as we sell. We plan three to five years and need to add inventory.”
In 2020, the city sold about 24 hectares of industrial land, followed by 17 ha in 2021, and an additional 12 ha in 2022.
“Recent announcements to establish two electrical vehicle battery manufacturing facilities in Southwestern Ontario — Stellantis-lg in Windsor and Volkswagen in St. Thomas — are anticipated to attract spinoff industries and supplier interest in local industrial lands to support these two facilities,” reads the city staff report.
“London's location, with direct access routes to both facilities, could generate additional sales interest in the city's inventory of industrial lands.”
The city's industrial land strategy sells land to “targeted” industries in the areas of advanced manufacturing, life and health sciences, information and digital media, and research and development.
It does not support warehouses, transportation and logistics businesses that use large tracts of land with fewer workers.
“It has been a very successful strategy to develop municipally owned industrial land for the purposes of employment and it's time to refresh it,” Warner said.
City industrial land sells for $310,000 to $620,000 a hectare, depending on where it is located. If land is added to the city holdings it will take several years before it is serviced by adding water and sewage lines and other infrastructure.
The move to add land is not only to support automotive manufacturing. London's food sector continues to grow and Maple Leaf Foods, the poultry processing plant, has added suppliers to the city since it opened in December, Lakhotia said.
“We're constantly getting inquiries from other sectors such as food and beverage,” he said.
The staff report says 20 per cent of London's workforce is employed on industrial lands and that manufacturing makes up about 14 per cent of all employment in the city.
The report also says from 2020 to 2021, London grew at the fastest rate of any other city in Ontario, and the fourth-fastest in Canada. The city's population has increased from 383,822 in 2016 to 422,324 in 2021 according to Statistics Canada.
The city's employment is forecast to reach 305,500 jobs by 2051, representing an increase of about 108,200 from 2021. Industrial employment is expected to account for 11 per cent of total job growth.