Monday, August 17, 2020 / by Sergey Korostensky
announcement of a 1.23-million-square-foot Lowe’s Canada distribution centre in Balzac is the latest example of how the area just outside Calgary has become a magnet for huge commercial real estate developments and job growth.
Despite its already explosive growth over the past decade, the area in Rocky View County is poised for more development.
“We estimate half of the land in East Balzac has been developed to date,” David Kalinchuk, the economic development manager of Rocky View County, told RENX. “This leaves plenty of room, nearly 2,400 acres, for more commercial and industrial development in this booming part of Rocky View County.
“When it comes to attracting new tax base growth, Rocky View County has so many things going for it. The county has become Western Canada’s centre for warehousing and logistics. Rocky View is set to buck the national trend of an economic slowdown from COVID-19 and chronic low oil prices.
“Jobs are being created, new industries are being built and the Alberta economy is being diversified in a very tangible way in Rocky View County.”
Many attractions to Rocky View County
The East Balzac area is easily accessible from the Queen Elizabeth II Highway which cuts north to south through Calgary. To the north is Edmonton, while the route opens up Southern Alberta and the United States to the south.
The Stoney Trail highway offers access from east to west.
Developers are attracted to the area because of the availability of large tracts of land.
And, of course, cost is top of mind. Land is cheaper than in the City of Calgary. The county also offers lower overall business operating costs than its more urban neighbour.
The combination is resulting in an unprecedented commercial real estate boom in the region.
Annual growth averages 9.5 per cent
Kalinchuk said commercial and industrial growth in Rocky View County averages 9.5 per cent per year. That’s like a municipality attracting a world-class, once-in-a-lifetime development . . . every year.
The county’s best year-over-year gain in assessment value was $144,217,700 in 2018. However, 2019 was also a banner year with $82,114,070 added to the commercial and industrial assessment total.
“Total commercial and industrial growth in East Balzac in 2019 stood at $1,680,775,070, approximately one-third of the non-residential assessment base in Rocky View,” Kalinchuk said. “According to Alberta Municipal Affairs, Rocky View’s total non-residential assessment base was $5,190,534,040.
“This means Rocky View’s 2019 tax ratio stood at 72 per cent residential to 28 per cent non-residential (72/28). The county’s target ratio is an ambitious 65/35. We are well on our way to attracting this level of new commercial and industrial growth.”
In 2014, the total assessment was about $1 billion.
Growth accelerates since 2009
Balzac was basically gopher pasture as recently as 2005, with the exception of the Nexen Gas Plant.
The majority of that massive growth has occurred since about 2009. It’s not limited just to industrial and logistics. Other major projects have included the CrossIron Mills shopping centre, the New Horizon Mall and the Century Casino and Racetrack.
One of the key developers in the market is Highfield Investment Group. It has partnered with Lowe’s Canada for the new $120-million distribution centre.
The building will be located in the High Plains Industrial Park and is scheduled to open in the fall of 2021.
“We have been extremely successful at High Plains over the past 18 months, during which time we have secured over two million square feet of park tenants including Rona / Lowe’s Canada for 1.2 million square feet, CHEP Canada for 150,000 square feet, Home Depot for 418,000 square feet as well as numerous regional businesses who prefer to own their facilities,” said Adrian Munro, president of Highfield Investment Group.
“To underscore our bullishness in our park and the distribution sector, we are also nearing completion on the construction of a new 409,000-square-foot speculative distribution building. Given the size of this facility, in a less busy time (it) would constitute a story on its own.”
High Plains offers options for virtually any size of business, Munro added. It can accommodate million-square-foot tenants “as well as smaller businesses requiring sites as small as five acres.
“Our ability to deliver highly efficient distribution centres as well as compelling economic savings, when compared to the Calgary markets, places High Plains at centre ice of the Calgary industrial market.”
80 per cent of region’s industrial absorption
Kalinchuk, citing data compiled by veteran Alberta commercial real estate expert Kit Rowley, said the total built-out space in Balzac is close to 9.5 million square feet. The Lowe’s project will push it well beyond 10 million square feet.
A very conservative estimate is the total number of jobs today in Balzac is 90,000.
Iain Ferguson, executive vice-president of commercial real estate firm CBRE, said Rocky View County since 2015 has attracted over seven million square feet of distribution centre / e-commerce fulfillment centre tenants.
That represents about 80 per cent of the overall absorption in the Calgary market for tenants over 150,000 square feet, during the past five years.
“The locational decisions for these large-scale facilities are driven by transportation efficiencies, the labour force, and the cost of occupancy,” said Ferguson.
“The RVC area offers excellent highway access and proximity to the CN and CP intermodal yards, an abundant and quality labour force, and competitive rent when compared to the City of Calgary.”