Calgary Economy

[Spring2008]

Originally Posted by Full Mountain

Sears, Canadian Tire, and Walmart have had their DC's here for 10+ years, the fact they are out in the far reaches of the SE (Sears, Can Tire) (Walmart is in the NE not so far out) helps keep them under the radar for most people. They do seem to be continuing to expand though, I believe Sears was the first to hit 1M sqft (Walmart's expansion of the NE facility happened around the same time), now 1M sqft is the smallest one of these places typically are (interesting that this Home Depot facility will be about half that size). I'm curious when Amazon's facility will show up (I believe they operate out of the Vancouver area and Mississauga right now).

Almost all of the major retailers have Distribution centres here now. Seems like most of them used to just serve the prairies, while some of the new ones are serving all of western Canada and becoming much larger. City's logistical infrastructure has definitely improved a lot over the past decade. I think the high lease rates for industrial property's in greater Van also factors into the equation.

[Chadillaccc]

Originally Posted by MalcolmTucker

Same reason we don't produce cars. Other people can do it for cheaper and we have better things to do.

Oh but we need the economic diversity, they don't.

[Full Mountain]

Originally Posted by Chadillaccc

Oh but we need the economic diversity, they don't.

This comes down to economics, the wages they have to pay here to attract labour is so much higher than elsewhere (look at the military supply ship contract - 4x the cost for smaller ships than those the Brits are getting built in South Korea).

[mersar]

Yep. Economic diversity is fine if its sustainable. Building a wind turbine factory here that goes under in 2 years as it can't compete with overseas where the same product is made for a fraction of the cost may be more harmful then beneficial to the local economy.

[VIce]

Originally Posted by Chadillaccc

I wonder, why doesn't Alberta have any turbine and turbine blade manufacturing facilities? Since we have such a large demand and potential for wind power here.

Lets say you're in the market for a new car. These things have a retail price of 20 grand for something on the cheaper end, so the cost of shipping the thing in from Michigan or Ontario isn't that bad, at least as a fraction of the total cost of the vehicle. That's something you would never do with, say, concrete. Transportation costs would be 90% of the total price. Meanwhile, what would plant duplication cost for a car? A couple billion? Amortize that over every car of that make sold in Alberta, and you once again end up with a venture that makes no sense.

From the perspective of the automaker, the vehicle and its method of assembly are one thing, one singular project. Or you could even go one step further and call the vehicles just an operand, which you can modify to the whims of the market. Your investment into the factories and supply chains are much, much more than what you spend on the actual design of the vehicles themselves. Wind turbines are in a similar class of product. Certainly wages are not cheap in Germany or Denmark, probably similar to those in much of Canada. That's not what is keeping Vestas, Enercon, and Siemens manufacturing in Europe. The reason they're in Europe is because they've always been in Europe, and they can't afford to leave.

Edit: This is true for wind turbine blades, gearboxes, control systems, and specialized generators. Towers are usually locally-sourced, and also much of the transforming equipment.

[MalcolmTucker]

Originally Posted by Chadillaccc

Oh but we need the economic diversity, they don't.

When we actually need it, we will be able to buy it with all the money we have from not doing it when it isn't in our best interest. Or whatever an area with a lot of engineers, geologists, and corporate support systems do when the oil industry isn't as strong. I remember a friend's parent worked on engineering the Confederation Bridge in PEI, from an office in Calgary in the mid 90s.

It might be messy during the rejig, but the world needs lots of services we currently provide to ourselves.

Heck, there was even a fire truck factory in Red Deer that employed the specialist aluminum welders after the Joffree plant was built. You just can't plan for a transition exactly, only have the right support systems in place (credit, incubators, talent).

[trofirhen]

Perhaps this is the wrong thread, but I felt like saying that is pleasing to see Calgary (and Vancouver and Edmonton, also) gaining more head offices, attracting more workers, both blue-collar and high-level professionals, to see major companies setting up in Calgary (and in Vancouver we just got the Microsoft Canada Centre for Excellence ... or a title like it, plus several natural gas companies from the USA) ....
That this all "tilts" Canada, and Canadian economic influence somewhat westward, though of course Toronto calls most of the shots.

There was a time when Toronto-Montreal were the axis of Canada, and everything but everything pivoted around them. Seeing new airlines coming to both YVR and YCC is just another sign of economic influence shifting west, and it's a refreshing trend.

[freeweed]

Better in this thread than in the Canada forum.

[Chadillaccc]

haha, it would cause an uprising. Quebec would probably separate!

[geotag277]

Originally Posted by trofirhen

Perhaps this is the wrong thread, but I felt like saying that is pleasing to see Calgary (and Vancouver and Edmonton, also) gaining more head offices, attracting more workers, both blue-collar and high-level professionals, to see major companies setting up in Calgary (and in Vancouver we just got the Microsoft Canada Centre for Excellence ... or a title like it, plus several natural gas companies from the USA) ....
That this all "tilts" Canada, and Canadian economic influence somewhat westward, though of course Toronto calls most of the shots.

There was a time when Toronto-Montreal were the axis of Canada, and everything but everything pivoted around them. Seeing new airlines coming to both YVR and YCC is just another sign of economic influence shifting west, and it's a refreshing trend.

Anyone who knows any history of Western Canada will say it's about time. Ontario/Quebec have had way too much influence in Canadian politics for too long, and Toronto/Ottawa in particular have a long history of attempting with too much success to limit the influence of the Western regions in national politics. A large motivation for politically separating Alberta and Saskatchewan was because Ontario liberals were worried about the influence of a united West.

Now the cat is out of the bag and the train has left the station, there is no putting the genie back in the bottle of Western influence, and many out here will loudly exclaim - it's about damn time. The centre is shifting and this country will be the better for it.

[Spring2008]

Calgary described as Canada’s economic engine

City currently in a ‘very enviable position’

By Mario Toneguzzi, Calgary Herald May 23, 2014


CALGARY - Calgary has become Canada’s economic engine, says Bruce Graham, president and chief executive of Calgary Economic Development, but with that status also comes some challenges.

Graham made the comments during the organization’s 2013 Report to the Community on Friday.

“The major challenge I see is managing growth and expectations. We are challenged by opportunities. We actually have to keep our costs under control. We have to make sure we can make this city affordable for the labour force we need to continue our growth and opportunities,” said Graham.

The CED is looking at putting together a housing monitor which would gauge the availability and costs of various housing types in the city for people who want to move to Calgary.

“This past year marks a significant milestone for Calgary Economic Development as we celebrate our 10th year of operations,” said Graham. “This past year can be summed up as the year of collaboration, both as a city and as an organization working with our partners and the community.

“The city is in a very enviable position . . . It’s a great place to live, work and make a life.”

Calgary Mayor Naheed Nenshi said 2013 was a very difficult year for Calgary - a year of trial and tribulation due to the summer’s devastating flood but the year was also ultimately a year of triumph as the city recovered and demonstrated a tremendous amount of resiliency in the face of tragedy.

Of the 4,000 businesses that had to shut down for a period of time following the flood, Nenshi said only 20 of them remain closed today.

Looking forward, Nenshi said the city needs to continue to be a magnet for talent and it needs to continue to ensure that Calgary is the best place in Canada to start and grow a business.

“There are a number of challenges that we have to look at . . . Demographics is going to drive a lot of change. So traditional areas of economic prosperity for the city like real estate will still be areas of prosperity but they’re going to be different. The smart developers have figured out the kinds of homes people want, the kinds of shopping they do, the kinds of offices they’re building. (They) are shifting quickly. Most of the developers here in Calgary have been great because they’re trying to ride that wave and get ahead of it.

“Clearly there are potential bumps ahead for the energy industry . . . Yes there is a lot of conversation about access for Canadian energy to markets which is vitally important . . . We also have to look at cost and productivity in those industries and how that affects the kinds of jobs that happen here in Calgary that could be done frankly somewhere else. We’re in a good place. We’re a very prosperous place. We’re one of the few places in the world where we’re managing growth more than we are dealing with unemployment.”

CED announced Friday that Wilfred Gobert will step down after six years in the position of chairman of the board of directors and Steve Allan will assume the role after heading the Economic Development Strategy Advisory Committee for CED. Allan is a Fellow of the Institute of Chartered Accountants of Alberta and is the current Chair of the Board of Directors of the Canadian Tourism Commission.

“Calgary Economic Development focuses on action today with a long term view of our city’s sustainable economic development and community vitality,” said Nenshi. “Our new chair, Steve Allan, will be a great leader of the next phase of the organization. I cannot think of a better person to step into that role as many of the long term projects started by Calgary Economic Development over the past few years come to fruition.”

http://www.calgaryherald.com/busines...440/story.html

[Spring2008]

We need more big events like this, and maybe even a new conference centre:

Global Petroleum Show generates revenue across Calgary

Variety of businesses see economic spinoff from the big event

By Mario Toneguzzi, Calgary Herald June 9, 2014


LaPrairie Crane uses its 165-ton crane to move a coil tubing injector off a flatbed at Stampede Park in preparation for the Global Petroleum Show, which begins Tuesday.
Photograph by: Christina Ryan , Calgary Herald

The massive Global Petroleum Show, which kicks off Tuesday in Calgary, will have a huge economic impact for numerous businesses throughout the city.

From hotels to taxis to restaurants and bars, business owners are looking forward to the spending frenzy created by the one of the world’s biggest oil and gas exhibitions.

The economic impact in Calgary touches so many businesses in so many different ways. And the reach takes in some not-so-obvious enterprises.

Jennifer Carter, founder of Yen Talent and Staffing which supplies ‘brand ambassadors’ for booths at GPS, said the event this year will see about 40 of its staff employed compared with about 25 last year.

“We’re in the business of face-to-face marketing. Our goal is to hand select individuals that we feel are a good match for our company and will represent our clients’ brand very well. So we look for intelligent, professional and attractive people to join our team,” said Carter, who has been supplying staff for GPS exhibitors for the past three years. “We’re going to generate interest for people that are walking by. We’re going to captivate and hold their attention by delivering some key messages our clients have given us to deliver to the customers.

“It’s going to be a very busy year. I think everybody is noticing the boom. It’s going to be a busy Global Petroleum Show for sure. This is definitely one of our top events. This year we’ve noticed a lot of growth in the company with a lot more clients.”

The Global Petroleum Show, which will run until Thursday at Stampede Park and other downtown locations, will host a record number of registered attendees, exhibitors and international delegates.

GPS has experienced tremendous growth since its inception in 1968, and is now set to welcome a record number of attendees to the city. Previously a biennial event, 2014 marks GPS’s first year as an annual event. It features over 2,000 exhibiting companies, including 400 new exhibitors, and is expected to draw $8.9 billion in business transactions to the province, and host nearly 65,000 attendees.

According to GPS organizers, 87 per cent of attendees are from Canada. In 2012, the international proportion was 10 per cent.

Top represented international countries include the United States, China, Mexico, India, the United Kingdom, and Russia.

GPS organizers said 91 per cent of Canadian attendees come from Alberta, with Ontario and British Columbia next in line for representation and 69 per cent of Canadian registrants are from Calgary.

“In addition to providing a remarkable networking and business opportunity to our exhibitors and attendees, GPS showcases Calgary as an energy leader, and the innovation taking place within the energy industry today. It is the perfect city to host an energy event of this magnitude,” said Wes Scott, executive vice-president of dmg :: events, organizers of GPS.

Stuart Allan, owner of Bottlescrew Bill’s Pub and Buzzards Restaurant and Bar in the downtown, said GPS is “pretty good” for business at the two establishments.

“The white tablecloth restaurants I would think would benefit enormously,” said Allan. “For people, hosting and entertaining visiting delegates, they host people from out of town or their head office at a fancy place rather than a place that’s a little more affordable like us.

“But we do get lots of people coming for drinks when they’ve completed their dinner or their reception and occasionally we’ll get bookings from local companies, 25 to 35 people kind of thing, getting together for drinks afterwards. When the show shuts down or after dinner, people from the hotels will come in too. We don’t get a great deal of food out of it but we do get beer.”

http://www.calgaryherald.com/busines...271/story.html

[Chadillaccc]

The economy of the Calgary CMA has surpassed $130 billion (2014 dollars)

[Spring2008]

Finally back to our ~1M sf of positive absorption per quarter pace!

Office demand on the rise in Calgary

Energy sector tenants committing to space

By Mario Toneguzzi, Calgary Herald June 25, 2014


Office demand on the rise in Calgary


CALGARY - The Canadian office market is exhibiting signs of life after a prolonged period of lackluster leasing activity, says a new report released Thursday by CBRE Limited.

And the most active market in the second quarter of this year was Calgary where the overall office vacancy rate fell 30 basis points quarter-over-quarter to 10.6 per cent, said the National Office and Industrial Second Quarter 2014 Statistical Summary.

The report said Calgary benefited from the delivery of Eighth Avenue Place West, a new 841,000-square-foot building in the city’s core, which was fully leased upon completion. Energy sector tenants also committed to office space in the suburbs, causing the suburban vacancy rate to fall 230 basis points to 11.7 per cent.

CBRE said Calgary recorded 855,930 square feet, or 59.3 per cent, of national office space net absorption in the second quarter.

“Most importantly for Calgary, existing tenants cancelled sublets causing the amount of sublet space to drop for the first time since the second quarter of 2013 to 33.9 per cent of vacant space,” said CBRE.

Nationally, the report said more office space was taken off the market than at any time in the last two years but it is too soon to say that this is the beginning of a new positive trend.

“Landlords remain confident about the long-term prospects for the Canadian office market,” said John O’Bryan, chairman of CBRE Limited.

“The flight to quality and emphasis on workplace efficiency continue to move the market, but I’m more interested in hiring intentions. Intentions are improving and so too could the demand for office space.”

The overall national office vacancy rate rose 10 basis points to 10.4 per cent in the second quarter of 2014. This marks the eighth consecutive quarter in which the national vacancy rate has risen but the vacancy rate is now rising much more slowly, said CBRE.

In the industrial market, Calgary saw the availability rate drop to 4.6 per cent in the second quarter from 5.6 per cent a year ago.

CBRE said there is 3.8 million square feet of downtown office space currently under construction in Calgary as well as 1.6 million square feet of suburban office space. There is also 1.5 million square feet of industrial space being built.

Another report released Wednesday by commercial real estate firm JLL said Canada’s commercial real estate boom has led to an increasing number of office deliveries in Canada’s quartet cities, which include Toronto, Montreal, Calgary and Vancouver. According to JLL’s annual research Look Forward series, many tenants will be leaving large blocks of space behind for those developments, which are already substantially pre-leased.

It said Calgary features six buildings moving forward with development where 4.9 million square feet will be delivered to the market by 2018.

“As more and more offices are added to the various markets across Canada, we are going to see significant changes from both tenants and landlords,” said Brett Miller, president of JLL Canada. “With large tenants pre-leasing considerable amounts of space in new buildings, they will be leaving large blocks of space behind, opening the door for new tenants to move in. We are likely to see an increase in landlord incentives in an attempt to appeal to the limited number of tenants who are looking to make a move into the mature office towers.”

The report said energy giants Husky and Nexen renewed in their current downtown locations after considering opportunities in both the suburban and downtown markets.

http://www.calgaryherald.com/busines..._lsa=6477-0e04

[Spring2008]

Not bad, not bad:

Calgary industrial real estate market thriving

Leasing activity over 3 million square feet in second quarter

BY MARIO TONEGUZZI, CALGARY HERALD JULY 8, 2014 9:28 AM

0

STORYPHOTOS ( 1 )

Calgary industrial real estate market thriving

Calgary’s industrial real estate market showed strong leasing activity in the second quarter of this year.
Photograph by: Colleen De Neve , Calgary Herald
CALGARY - All signs are pointing to a robust and thriving industrial real estate market for Calgary in 2014 and 2015 with more development expected in the future, says a new report.

“Leading economic indicators have remained positive and Calgary’s economy is building substantial momentum,” said commercial real estate firm Cushman & Wakefield. “With over one million square feet of new construction completions expected within one year, it is anticipated that strong leasing activity and absorption will support the upward pressure on lease rates and property values.

“The short and long term economic outlook is positive, however potential downside risk exists. Energy transportation constraints and lack of pipeline development could well hinder necessary land and industrial development in spite of indicators that suggest the market should be at the front end of a strong development cycle.”

The report said that the industrial real estate market in Calgary had an unprecedented three million square feet of absorption during the second quarter of this year and vacancy rates dropped from 7.4 per cent to 5.0 per cent.

It said the substantial decline in vacancy has seen net asking rates increase to average $9.41 per square foot from $8.48 a year ago.

“Although Calgary saw over 350,000 square feet of new construction completions, the huge amount of absorption soaked up a significant portion of Calgary’s available supply. Virtually no availabilities exist for spaces larger than 200,000 square feet,” said Cushman & Wakefield.

It said there is a scarce supply of serviced and limited serviced land in Calgary and the greater surrounding area.

http://www.calgaryherald.com/busines...563/story.html

[Spring2008]

Calgary seeing about 10% of the country's total BP values:

Calgary region sees huge spike in building permits

37.3% increase from last year

BY MARIO TONEGUZZI, CALGARY HERALD JULY 7, 2014

Calgary region sees huge spike in building permits

The value of building permits in the Calgary region is on the rise.
Photograph by: Gavin Young Gavin Young , Calgary Herald
CALGARY - The Calgary region saw a whopping year-over-year hike in May in the value of building permits, according to Statistics Canada.

The federal agency reported Monday that permits reached $636 million in the Calgary census metropolitan area. That was up 37.3 per cent from a year ago and it increased by 6.1 per cent from April.

During the month, residential permits were $432.6 million, an increase of 34.81 per cent from April but non-residential permits declined by 27.02 per cent on a monthly basis to $203.4 million.

“The population in Calgary has made some strong gains in recent years, largely due to the elevated number of people moving to the region,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. “This along with impressive job growth has pushed up the demand for housing. New home inventories, and active listings in the competing resale market have also been relatively low, adding to the incentive to build more homes.

“We are expecting the pace of construction to moderate in the coming months. The number of units under construction in Calgary has risen and may put some upward pressure on inventories as these units reach completion. This may reduce the incentive to start new projects and temper the recent pace of new building permits.”

In Alberta, total permits of $1.5 billion rose by 9.8 per cent from April and by 4.4 per cent from May 2013. The residential sector saw permits of $845.7 million, up 5.5 per cent from the previous month but down 0.6 per cent from last year. The non-residential sector experienced permits rising by 16.2 per cent month-over-month and by 11.9 per cent year-over-year to $627.8 million.

The federal agency said municipalities issued building permits worth $6.9 billion in May, up 13.8 per cent from April. However, on a year-over-year basis permit value was down 6.4 per cent.

It said construction intentions for residential dwellings rose 9.5 per cent to $4.1 billion in May, but still off by 9.0 per cent from a year ago.

In the non-residential sector, the value of permits rose 20.8 per cent to $2.8 billion, which was also down from a year ago by 2.3 per cent.

Nick Exarhos, with CIBC World Markets, said building permits in Canada for May “blew the doors off expectations of a muted 2.0 per cent.”

http://www.calgaryherald.com/busines...514/story.html

[Chadillaccc]

Wow 1.2 million (municipality) and 1.5 million (metro) here we come! Let the good times roll!

[Spring2008]

Ridiculous monthly permit #'s!

Value of Calgary region building permits soars

Increase of more than 50% from last year

BY MARIO TONEGUZZI, CALGARY HERALD AUGUST 7, 2014 7:22 AM



STORYPHOTOS ( 1 )

Value of Calgary region building permits soars

The value of building permits in the Calgary region continues to rise.
Photograph by: Gavin Young Gavin Young , Calgary Herald
CALGARY - The value of building permits in the Calgary region ballooned in June to more than $800 million, according to Statistics Canada.

The federal agency reported Thursday that permits hit $811.7 million during the month in the Calgary census metropolitan area, an increase of 26.6 per cent from May and up by 51.3 per cent year-over-year.

In Alberta, total permits of $1.7 billion rose by 13.0 per cent on a monthly basis and by 25.5 per cent on an annual basis.

Residential permits in the province of $849.8 million were up by 12.5 per cent from last year but down 1.2 per cent from the previous month. Non-residential permits in the province rose 31.5 per cent month-over-month and 41.6 per cent year-over-year to $865.1 million.

Nationally, Statistics Canada said contractors took out building permits worth $8.0 billion in June, up 13.5 per cent from May and 20.1 per cent from June 2013.

“The June increase was mainly due to higher construction intentions for institutional and industrial buildings in Quebec and commercial buildings in Alberta,” it said.

The value of non-residential building permits rose 32.5 per cent to $3.8 billion in June, a third consecutive monthly gain. That was also an increase of 42.4 per cent from last year.

In the residential sector, the value of permits edged up 0.4 per cent to $4.2 billion, a fourth consecutive monthly increase, said the federal agency. That was also up 5.2 per cent from a year ago.

http://www.calgaryherald.com/busines...283/story.html

[ItsALondonThing]

As someone who is shortly emigrating to Calgary, and as somebody who works for a consultancy in Oil & Gas, I am a little concerned to read the stories in the press over the last few days regarding the drop in oil price and how its likely to be very negative for the Alberta economy. Here are links to just a few:

http://globalnews.ca/news/1617917/oi...nd-canada-too/

http://www.theglobeandmail.com/repor...ticle21116012/

http://www.edmontonjournal.com/Alber...975/story.html

To what extent will this affect Calgary? Will we see big projects cancelled and cut backs in state spending?

[Full Mountain]

Originally Posted by ItsALondonThing

As someone who is shortly emigrating to Calgary, and as somebody who works for a consultancy in Oil & Gas, I am a little concerned to read the stories in the press over the last few days regarding the drop in oil price and how its likely to be very negative for the Alberta economy. Here are links to just a few:

http://globalnews.ca/news/1617917/oi...nd-canada-too/

http://www.theglobeandmail.com/repor...ticle21116012/

http://www.edmontonjournal.com/Alber...975/story.html

To what extent will this affect Calgary? Will we see big projects cancelled and cut backs in state spending?

At worst you'll see some big extraction projects timelines pushed, but for the most part they will go forward. There is only a very remote chance that the price won't return to a $100+ level in the next while.

And if you're really concerned look at the midstream market, it's the place to make the differential.