Purchasing rather than leasing industrial land in Calgary can give business owners greater control over total landed costs. Companies remain at the whim of landlords when leasing. And, that’s a factor that can drive up costs and reduce profitability. Companies interested in buying industrial land should consider five questions:
- What’s available;
- Who should they contact;
- What should companies be asking to ensure their needs are met;
- Is land near transportation systems, and;
- What tax considerations should be accounted for.
Land Availability and Search
Calgary is poised for growth with more than 3,500 hectares of raw land within its corporate limits earmarked for industrial use.
Three major industrial areas in the Northeast, South Central and Southeast service the city.
Those areas have access to a network of industrial parks, intermodal facilities and on-airport logistics parks to facilitate logistics and drive down transportation costs.
Sales negotiator Alex Wihak with The City of Calgary said Calgary Economic Development and real estate brokers are the prime places to start with any land search.
"Economic Development provides really good background on the city, the employment market and the workforce," Wihak said.
The City is Calgary’s largest industrial land developer, he said. All current and future developments offered by The City can be found on its real estate website and its sales team can help businesses find the right location.
Local and international brokerages can also help.
Local ones will know the city’s market intimately.
"They have an idea of what’s going on in individual areas," Wihak said.
"Those would be research to begin with."
The international brokerages have access to global research capabilities and a greater reach, he said.
Such brokerages are often dealing with searches coming from outside the Calgary region.
"There are positives to both," Wihak said.
The City senior sales negotiator Angela DeCaria said brokerages also deal with the leasing and improved property side of real estate.
"The City is the primary owner of serviced industrial land," DeCaria said.
According to its website, Calgary Economic Development’s Business Development managers have strong relationships with local brokers.
That means they are skilled in matching organizations and individuals with the appropriate broker.
Brokers are well-versed in purchasing land and infrastructure and can assist with legal requirements, making offers and writing and reviewing documents related to purchase.
Also, Calgary Economic Development is partnered with consulting firm Altus InSite to assist in commercial real estate searches.
The online tool helps companies search for available industrial, office and retail space in the Calgary region based on the square foot size required.
Companies can compare available space by office class, total space and leasing district.
The tool provides leasing contact information so companies can inquire about space they are interested in.
Meeting Companies Land and Transport Needs
Wihak said businesses should ask which type of industrial land best fits for their operational needs.
Manufacturing operations generally need a smaller building footprint but a large yard while warehousing operations require a larger site cover with loading and vehicle marshaling areas. And, he said, trucking operations need large yards to park trucks.
DeCaria said companies should ask what the availability of intermodal transport operations are in proximity to industrial land. Does the operation require access to the airport, she asked.
Will it need to be near the Canadian Pacific or CN yards?
Wihak said CN has invested $200 million into a large logistics park east of the city with easy access for trucking.
Easy access to CP’s Calgary Intermodal Terminal and major trucking routes, for example, are main reasons Home Depot Canada chose The City’s Dufferin North industrial park for its new stock and flow campus, which opened earlier this year.
A recent Conference Board of Canada report said Alberta’ overall tax regime ranks third in competitiveness behind Saskatchewan and New Brunswick.
And, Wihak said, Calgary retains a competitive position with property tax. Property taxes in Calgary’s major industrial areas are compared in a recent Altus Group report.
A full understanding of the federal and provincial taxation regimes will help a business know the tax implications on total landed costs.
When all land type, needed transportation and taxation needs are understood, a business can move forward with knowledge of their overhead costs minus labour and materials.
In asking the right question in these areas, a business can better understand what the total landed cost structure will look like.