Winnipeg's next mayor must address shortage of shovel-ready industrial land
Industrial development outside city has intensified, permanently depriving Winnipeg of property-tax revenue
As Winnipeg mayoral candidates trade blows over financial policy, experts in commercial real estate warn the city's next mayor must pay more attention to a long-neglected economic weakness: A critical shortage of shovel-ready industrial land.
For decades, city-commissioned studies have warned Winnipeg will lose out on millions of dollars of property-tax revenue if the city fails to ensure businesses — and large employers in particular — have access to an adequate supply of industrial lands serviced by water mains, sewer pipes and roads.
A study published in 2019 warned the City of Winnipeg would run out of serviced industrial land entirely within five years. Since that study's release, industrial development has intensified just outside city limits in rural municipalities such as Rosser, Ritchot, Macdonald, Headingley, Springfield and West St. Paul.
Commercial real-estate experts now say roughly 90 per cent of all industrial land sales in the Winnipeg region take place outside the city's borders, resulting in a permanent loss of tax dollars for a city desperate for new revenue sources.
"We haven't been able to take advantage of those people that want to come here, those companies that want to come here. So the RMs are the ones that are actually selling the bulk of all the industrial land these days," said Bob Antymniuk, senior sales and leasing director for Capital Commercial Real Estate in Winnipeg.
"They're all doing really, really well. But when you actually look at the sales of industrial lands in Winnipeg, it pales in comparison to the sales that are happening outside of Winnipeg."
When new employers set up just outside city limits, Winnipeg residents still benefit because they are the ones who end up taking most of those jobs. But the property-tax revenue from these new ventures flows to the rural municipalities, instead of city coffers, while Winnipeg also bears hidden costs in the form of maintaining roads used by commuters who have no choice but to drive to work in ex-urban areas unserved by Winnipeg Transit.
Antymniuk said whoever is elected to succeed outgoing Mayor Brian Bowman must do more to ensure employers have the option of setting up shop in Winnipeg.
"Whoever's coming on as the new mayor ought to address the fact that they don't have industrial land that they can have to induce others in, rather than just leaving it to the private sector," he said.
"I mean, I'm happy as a member of the private sector, but I think from a public perspective, the city also needs its own level of land to have some inducements to bring others in that are looking."
Matin McGarry, president and CEO of MMI Asset Management, said while he understands the city has other development priorities to consider, employment lands offer permanent benefits.
"It's the lifeblood. I mean, it's jobs, right? That's where jobs come from: Industrial real estate," he said, adding Winnipeg could still compete with its rural neighbours.
"You could argue that it's cheaper [to develop industrial land] in the RMs. I don't really buy that argument. Sure, there's no business taxes, but there's also limited service in terms of fire protection, ambulance and buses."
McGarry credited two-term St. James Coun. Scott Gillingham, who is running for mayor, for ensuring Winnipeg set aside $20 million in the 2022 budget to extend water and sewer pipes into the City of Winnipeg's portion of the CentrePort development.
Most of CentrePort sits in the RM of Rosser on the city's northwest flank, which is highly desirable to industrial developers because of the proximity to Richardson International Airport, major roads and rail connections.
"That was a monumental feat," said McGarry, referring to the budget allocation for CentrePort servicing, which he expects to result in matching commitments from the provincial and federal governments in the coming months.
"So we better not squander this opportunity. The province has to commit, which I believe they will, and the feds have to commit, which we all believe they will. So we're almost there."
Gillingham, however, has his critics among his mayoral-campaign rivals, who charge he has dawdled on the CentrePort file.
Candidate Jenny Motkaluk has questioned why it took the St. James councillor two full terms, spanning eight years, to convince his council colleagues of the need to service Winnipeg's portion of CentrePort.
"The inexcusable delays have cost the City of Winnipeg hundreds of millions of dollars over the last 12 years," Motkaluk said at a Sept. 13 campaign announcement near agricultural lands earmarked for industrial development once servicing arrives.
Charleswood-Tuxedo-Westwood Coun. Kevin Klein, who is running for mayor, also chided Gillingham for moving slowly.
"We know that the RM [of Rosser] has done very well at selling and servicing their land and a lot of their servicing is from the City of Winnipeg. So we've missed the boat," Klein said on Wednesday.
Gillingham said he did not dawdle.
"I've outworked every other councillor to get these lands serviced and as mayor, I will make sure that they are serviced so that we can be competitive," he said on Friday.
One of the City of Winnipeg's senior policy advisors conceded city administrators could have made CentrePort more of a priority.
"I think we could have moved faster, but hindsight is always 20/20," said Matt Dryburgh, a senior manager responsible for economic development and policy.
He said the city was trying to get other levels of government to the table first.
Diane Gray, CentrePort's outgoing president and CEO, said the city had to ensure it had enough wastewater-treatment capacity at the North End Water Pollution Control Centre before the city extended sewage pipes into CentrePort.
That lack of capacity, however, did not prevent Sam Katz's city hall from cutting sewage-treatment deals with West St. Paul and Rosser in 2011, a full decade before a deal was reached to fund sewage-treatment plant upgrades in Winnipeg.
Gray said what's important is the commitment for servicing now exists for a development expected to generate $315 million in annual property-tax revenue by the time it's built out.
"Better late than never," she said in an interview on Thursday, suggesting the city ultimately could not overlook the demand for industrial lands.
"I think that observers just have to spend a bit of time driving around what's happened in the RM of Rosser to appreciate the incredible demand there is for employment lands in the northwest part of the city."
Antymniuk said the city also ought to consider opening other tracts of industrial land, over and above the inventory available in the St. Boniface Industrial Park.
He suggested agricultural land within city limits along the Route 90 corridor could be converted to industrial use.
Dryburgh poured cold water on that idea.
"That's a tough one," he said. "I think that there is still a still a need and a desire on the part of council to protect those lands. I think that the province also in some of its policy announcements has indicated a fairly strong desire to protect existing agricultural lands."
Ultimately, industrial employers are less concerned with political boundaries than they are with transportation access when they decide on a location, McGarry said.
"The buyer doesn't care what side of the border it's on, as long as it's a decent industrial park and there's shovel-ready inventory," he said.