DREAM REIT Director of Leasing Kelly Willson Harvey on The Value of Tenant Relationships in Industrial Leasing
In this edition of the VTS Innovators Spotlight, we sat down with Kelly Willson Harvey at DREAM INDUSTRIAL REIT and spoke about embracing challenges and continuous learning, the value of tenant relationships, and leveraging technology for success.
Hello Kelly! First of all, thanks so much for your time. You’ve made a very steady and inspiring climb up the corporate ladder in your time at Dream. Thinking about your initial role as a leasing manager and what your purview is today, what has been consistent about the way you operate that’s led to your career growth?
I've always been excited to learn new skills and take on new challenges, and I've never been afraid to say “yes,” even if I was really kind of stretching. I've always felt like I can figure it out and make it happen. Dream is a very, very supportive type of organization that supports internal growth, and they're happy to provide opportunities to anyone who would like to grow, so that’s been a big part of my success.
I also really care about my tenants! I've been in this game for a long time, even before the industrial market was hot, and I realize the relationships with my tenants are really what’s led to my success. I really value those relationships because they're my customers, essentially.
That’s one of the main things that drew me to VTS when we did the initial outreach and evaluation of the platform. The fact that I can see every touch point, historical documents, and the historical deals with my tenants in one spot is amazing. Even tenants I don’t reach out to every day but who are still under my purview in Ontario, I can go in and see what's going on with them.
Speaking of purview – the DREAM industrial portfolio, particularly in the Ontario area, is humungous. That sort of implies DREAM’s leasing resources are also extensive. First, is that true? Either way – how do you ensure your leasing teams are successful across so many properties?
Great question. When I started at Dream in 2016, the REIT had only been formed four years prior. I think the entire portfolio across Canada was 16 million square feet. Now, we're 70 million square feet across Canada, the United States, and Europe, and I oversee about 9 million square feet in Ontario. I think the ability to stay focused and organized during that rapid expansion was key, and it’s largely credited to VTS.
Back in 2020-2021, there was a major, major explosion in the industrial real estate market within the GTA (Greater Toronto Area). So, being able to see every deal, every tour, inquiry, etc., that my team was working on, in real-time, during that growth period really allowed me to manage my leasing team’s success. It’s still key to ensuring that I can coach my team in the right way to maintain our tenant base.
There’s been some recent debate around Industrial fundamentals in the States. Post-pandemic, there was huge growth in leasing activity and rents across the board, which led to a ton of new construction. Now, it’s being suggested that some markets have been overbuilt, and leasing is going to get softer. What is your outlook on the market north of the border? What trends are you seeing in your own portfolio?
I agree with you, and we’ve watched those trends very closely in places like the Inland Empire, Atlanta, Philadelphia, and Chicago to see what's happening there. We have seen some cooling demand and vacancy rates creeping up a little bit, but I think we still haven't built enough real estate supply in the GTA. As of the end of Q3, we were still at 1.9% vacancy overall, and that was even after bringing on 4.6 million square feet of new supply over that quarter.
Sure, we're not seeing the 35% year-over-year growth we saw a few years back. But last year, we still saw an 11% growth in rates and a 5% growth in rates this year, so we're kind of holding steady. We're still increasing, and we still have low vacancies.
In my opinion, the market here is still really healthy. Logistics obviously is a big driver of demand, but so is manufacturing. During COVID we had to reassess how we were getting our products created and shipped. I think domestic companies are trying to produce items more in-house again in case we ever have another shutdown.
On the topic of construction, Dream has engaged in some recent development projects, like 203 Abbotside Way. How does Dream identify new opportunities for industrial development? Does leasing get involved in that analysis and decision?
So, we just delivered Abbotside Way, and we have four more projects under development across the GTA that will be delivered over the next two years. They're totaling just under 2 million square feet, and we're optimistic and excited to introduce them to the market.
I think the key when identifying opportunities for development is to understand the local micro market you're working in. It’s important to do your homework on population, workforce, and transportation and to set realistic market-reflective rates that can be achieved. Often, when you're doing the underwriting for these projects, you know, they're a year or two away from having tenants paying rent. So you have to sort of use your crystal ball. You want to be aggressive and make sure you're keeping up with the market, but you also want to be realistic at the same time in case of market corrections.
What’s great about Dream Industrial is our development process is done collaboratively with Leasing. I think that sets us apart from other companies I’ve spoken to that are also developing. We're involved in the process from day one, every step of the way. We collaborate on design, building features, on underwriting – and we have input on the rates that we can realistically achieve. And we constantly check in – every two to three weeks, we have a meeting with Development, Leasing, and our senior management team to review everything.
That’s awesome. Final question – please fill in the blank: ___ is what will separate the winners and losers in Industrial leasing over the next five years.
I think it's going to be a combination of creativity, flexibility, and organization. As the market kind of cools or corrects itself, we want to remain focused on offering value, support, and opportunities for expansion or contraction to all our tenants.
And that's where a platform like VTS comes in. It's really important because I can literally look at the entire portfolio. If a tenant in the GTA says to me, you know what, we're closing down here, and we're not renewing, but we really want to outsource or expand our operation in Calgary or the Netherlands - we can literally go into VTS and say yeah, we've got a project there, let's put you in touch with our leasing person. Or if somebody is looking at my portfolio, I can do my research beforehand and say, “Hey! You're actually in our portfolio in Quebec.” and establish that commonality.
I think addressing that relationship from the beginning - it just helps, right? It really helps to be able to speak to the tenants specifically and to understand where they're coming from. That is and will continue to be a huge part of how we operate.
