Continued tightness in Canada’s industrial market over recent years has propelled Calgary into the warehousing and distribution spotlight.
Direct access to key inland port hubs, expanded CN and CP intermodal facilities, improved air freight capabilities, and favorable land and leasing costs have attracted many of the world’s largest companies to the city.
Industrial real estate experts note many of these companies are strategically planting roots in one of Calgary’s many industrial parks, capitalizing on shared infrastructure, convenient amenities and proximity to vital transportation networks.
“There is something to be said about a well-developed business park. It generally does a very good job of creating a community with a mix of small and large businesses,” says Paul Marsden, executive vice-president and partner at Colliers.
“A well-developed park also has a mix of things that then can become amenities – for example, a truck service group or a gas station on the corner. It’s the ancillary things that it offers versus the look and feel.”
Marsden credits the City of Calgary with historically creating “shovel-ready” industrial land since the 1960s, including several well-known parks such as Foothills, Great Plains and Starfield.
More recently, City-owned developments such as Dufferin North and Point Trotter have offered similarly attractive landing spots for companies wanting access to amenities, fully serviced land and key transportation routes.
Located south of Glenmore Trail S.E. and east of 68th Street, Dufferin North recently reached full occupancy. The 224-acre development is home to CPKC Rail’s Dufferin Intermodal Facility, a critical inland port connecting to Vancouver and Prince Rupert, B.C. Notable tenants in Dufferin North include Home Depot and Amazon.
Nearby, the Point Trotter Industrial Park has seen similar success since launching in 2016. The first phase of the approximately 220-acre fully serviced land was intended for small users and developers, and is close to full capacity.
In 2022, Panattoni Development Co. and Manulife Investment Management purchased the entire 122-acre second phase of Point Trotter and renamed it to the 68th Street Logistics Park. Offering 2.3 million square feet of leasing space, the development started welcoming occupancy late last year.
Lesley Kalmakoff, coordinator of growth strategy at the City of Calgary, says, “business parks represent an important element of the diversity of the industrial sector in the city.”
She notes that in April, the City unveiled the latest addition to its industrial land portfolio with the launch of Constellation Industrial Park. Located along 50th Avenue and 52nd Street S.E., the first phase includes 12 lots ranging in size from 1.86 to 11.52 acres.
At full completion, Constellation is expected to grow to 600 acres by 2030.
Looking forward, Kalmakoff says the City is closely monitoring the various needs that are emerging from the different subsectors within the industrial market, and ensuring there is sufficient supply and opportunity for the businesses that are involved.
“We’re paying attention to what kind of parcel sizes businesses are looking for, or what kind of buildings they need to accommodate their businesses. For example, we’re seeing taller building needs, as well as large-format warehouses that are very appropriate in suburban industrial parks,” says Kalmakoff, noting the City’s 2023 Industrial Action Plan addresses many of these issues through several amendments to area structure plans that seek to reduce barriers and better align with current industrial trends.
Ray Wong, vice-president of data solutions and client delivery at Altus Group, says much of the demand he’s seeing for space in Calgary’s industrial parks and beyond is largely coming from west of the Rockies.
“Vancouver has a very tight availability right now and very high rental rates. It’s cheaper for companies to look at warehousing space in Calgary and ship it back to Vancouver, which is what’s happening,” says Wong.
Altus, a leading Canadian commercial real estate services and software company, reports the industrial availability rate in Calgary was around six per cent in the fourth quarter of 2023, compared with three per cent in Vancouver.
Altus noted the industrial gross rental rate, meanwhile, was around $18 per square foot locally, compared with $27 in Vancouver.
A separate report issued late last year noted that Metro Vancouver has lost an estimated 5.1 million square feet of industrial businesses to Calgary due to vacancy rates that have been persistently hovering below one per cent and available rates below two per cent.
The report, jointly commissioned by the Greater Vancouver Board of Trade and commercial real estate development association NAIOP’s Vancouver Chapter, noted that land costs in Metro Vancouver have tripled in the last five years. Average costs per acre of industrial land were about six times higher than in the Calgary area.
Looking ahead, Marsden expects activity emerging out of the city’s southeast will continue to largely pace Calgary’s industrial sector.
Of note, the City and Rocky View County have recently agreed to partner on a new industrial corridor along Calgary’s southeast boundary on lands formerly designated for development within the Shepard Industrial Area Plan.
Together with the land the City previously proposed for annexation, the area is expected to total nearly 4,200 acres.
Marsden also points to other emerging areas of the region that will greatly impact the local industrial sector. He singles out Balzac, which currently accounts for 45 per cent of recently completed projects and is home to several high-profile tenants such as Walmart, Home Depot, GFS, Amazon, Sobeys, TJX and Smuckers.
“I think you’re going to continue to see new parks open up within those different nodes like Balzac,” he says. “Whether it’s Enright Capital and their new project coming on or Anthem, Dream, Hopewell – they all have got a bunch of stuff going on. All of these groups have land positions, and they’re going to be bringing on new parks and new subdivisions, which is good to see.
“We have a real opportunistic mindset here right now from the capital side, meaning real estate owners are coming in focused on high growth,” adding that he believes Calgary is also on the cusp of a manufacturing push given increasingly challenging conditions in B.C.’s Lower Mainland.
While Marsden expects areas such southeast Calgary and Balzac will continue to flourish, he’s less bullish on other areas within the region.
“My concern is with northeast Calgary where we’re seeing some very significant amount of land being taken out of the industrial inventory and being putting it into something else like residential,” he says.
Wong, meanwhile, believes many of the hallmarks of what has made Calgary’s industrial sector popular in the first place will continue to hold true moving forward.
He points to land prices in Calgary that are “almost a bargain” when compared with Toronto and Vancouver, thereby creating “pretty good returns.”
“It’s a combination of pricing, availability and performance,” says Wong. “I anticipate there will continue to be strong demand for growth within industrial parks and the sector overall, which will be further helped by the Vancouver market also utilizing some of the space in Calgary.”
