Rocky View County set to outpace Calgary for industrial development in 2021

City council's plans for industrial growth in Calgary may be overshadowed by what's happening outside Calgary's boundaries.

Some large companies have relocated warehouse business out of Calgary for lower land value and taxes

The new Amazon distribution facility in Balzac. Lower taxes and land values are some of the factors driving industrial development in Rocky View County. (Monty Kruger/CBC)

When it comes to industrial development, the City of Calgary is keeping an eye on Rocky View County.

City council's planning committee met on Wednesday to talk about the city's new industrial growth strategy.

But the neighbouring county was the elephant in the room.

Paul Marsden, a commercial real estate broker with Colliers International, told the committee that Calgary's industrial space has nearly doubled since the year 2000 and has grown continuously.

But it's what's happening outside the city boundaries that should be a concern for city council.

"Balzac specifically is now a household name in the industrial market, not just locally but nationally," said Marsden. 

"Both from the institutions who invest in this real estate as well as occupiers who fill that real estate with pallets and products."

He said that back in 2011, there was 775,000 square feet of inventory space in the Balzac area. This year, that area in Rocky View County is expected to surpass nine million square feet of industrial space.

"This explosive growth is driven largely due to the cost advantage of what we see outside the city limits," said Marsden.

Rocky View advantages

Among the differences, land values are lower in Rocky View, taxes are low, development standards are lower and the area has developed its own market momentum.

For the first time, he said there will be more industrial development in the county than in the City of Calgary.

It's not just companies interested in coming to the Calgary area that are choosing Balzac.

He pointed out that a company can save 18 per cent simply by relocating from Calgary to Rocky View County.

For that reason, large companies are crossing the boundary line.

Marsden said Sobey's, Lowes and Smuckers have already moved warehouse business out of Calgary and the city should pay attention so that other major companies, such as Loblaw, Saputo and Federated Co-operatives, don't follow suit.

He said existing companies in Calgary are pushing landlords for lower lease rates to compete with Balzac and that means lower property tax revenues for Calgary.

If that's not enough of a challenge for the city, Marsden said developers are actively looking for even more developable land on the city's doorstep.

"A number of developers are currently looking for other regions in Rocky View County including the southeast area off Glenmore Trail past the HeatherGlen golf course, where a number of developers are looking at large land positions to build what would be dubbed as Balzac 2.0."

Keeping up means change

While the city's industrial market in the northeast and southeast quadrants currently amount to more than 100 million square feet, the amount of growth that's happening outside of Calgary's borders is a concern.

The city's new industrial growth strategy calls for a number of changes to be made to help it compete.

The planning department is proposing new industrial zonings, infrastructure improvements to help speed access to freeways and working with Calgary Economic Development to help attract new customers.

An industry working group is seeking ways to make Calgary's non-residential property tax rate more competitive but proposals aren't expected until later this year.

Role seen for province

The chair of council's planning and urban development committee, Coun. Jyoti Gondek, said the growth outside the city's boundaries is well known.

But she said it shows a need for guidance from the provincial government.

"If the Government of Alberta actually is interested in making sure that we have economic success in all of our jurisdictions, they need to step in here," said Gondek.

"It wasn't enough to create a metropolitan regional growth board that only looked at planning and servicing. The economics has been left entirely out of the equation."

Ward 3 Coun. Jyoti Gondek said she would like to see Calgary and Rocky View cooperate on industrial development standards that would benefit all municipalities involved. (Scott Dippel/CBC)

If the province doesn't get involved, then she said Calgary has other options.

"When you see the economics like you did today, we've got a problem," said Gondek. "Maybe it's time to look at where our boundaries actually are."

Annexation not only solution

Annexing land from surrounding counties has been talked about in the past. 

In expressing his displeasure in 2015 with then proposed redevelopment plans in the Conrich area just beyond Calgary's northeast boundary, Mayor Naheed Nenshi said the "mother of all annexations" might be a way to solve the problem.

Gondek said she's not sure annexation is what's required on the industrial development file. 

She'd rather see Calgary and its neighbours cooperate on industrial development standards which would benefit all municipalities involved in terms of attracting jobs while building quality places to live and work.

From her perspective, she said not addressing the sprawl that's occurring on both sides of the city's boundaries is a missed opportunity to do regional planning better and more efficiently for taxpayers.


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