$600 million in government projects - including a new hospital - helps Grande Prairie turnaround

BY DAVE HUSDAL

Northwest Alberta's entrepreneurial city is expected to enjoy a boost from a less traditional source in 2011: government investment.

Grande Prairie, which has thrived in the past thanks to everything from its can-do spirit to high natural gas prices and growing demand for forestry products, is poised for roughly a half-billion dollars in health infrastructure investment in the next few years.

That's because the province, even in these leaner budget times, has finally found money for a long-awaited new hospital in the Peace city of more than 50,000.

Ed Stelmach's Tories announced in July that they would proceed with a new $520 million hospital in the northwest's regional service centre. They followed up the announcement with soil testing and preparatory work on the hospital site at Grande Prairie Regional College.

The project's timing - construction is set to start this spring - couldn't be better, according to some local businesspeople.

"It's absolutely perfect timing for Grande Prairie to get a new hospital," said Jamie Menzies, president of the Grande Prairie and Area Association of Realtors.

"That will create a lot of employment in the construction industry alone," Menzies added.

This year will also mark the grand opening of the city's new $110 million Aquatics and Wellness Multiplex. The facility will offer a full slate of recreation options in a building that connects the existing Coca-Cola Centre twin arenas and a gymnasium complex on the city's south end.

The project has been a long time in the making and will add to the city's debt load by about $61 million, but it's considered an important part of what makes Grande Prairie a place to stay for more than just work.

Like the hospital - being built on the west of downtown - the new multiplex will likely impact commercial and residential real estate markets in the city over the long term.

Low-cost homes

In the short term, it should improve the chance of higher rents and stronger home sales in a city where a new-construction boom was building when the market crashed in 2008.

Public support to the economy - especially the rental market - is also seen in Grande Prairie Regional College, which has 2,000 students and more than 700 employees.

There was a housing inventory of 20.4 months in July, realtors say. The good news is that fell to 17.7 months by the end of August. The rental vacancy rate has also fallen to a still-high 14 per cent. It was in the 16 per cent range in 2009, according to Canada Mortgage and Housing Corp.

On the plus side for employers looking to attract new staff, Grande Prairie's homes are remarkably affordable, especially when you compare their prices with northern Alberta's more prominent resource boom town, Fort McMurray. There, a typical detached home might set you back $700,000. In Grande Prairie, by contrast, the average single-family home sold for $279,000 at the end of September. The average MLS home price, including condos, was $259,000. Both figures are up about are up about 2 per cent from a year earlier.

Realtors hope the improvement in public amenities may help attract home buyers.

"We have a very young community, a lot of young families, a lot of people who are working, so these amenities are the things that, once people come here for work, keep them wanting to live in Grande Prairie," said Menzies. "It's the quality of life, because Grande Prairie's a wonderful city in which to raise a family."

As a real estate agent, Menzies knows the value of showing off the amenities in her longtime home city.

Number 1 rank

While 2010 - and likely 2011 - may be slower years in a region where the level of hustle and bustle rises and falls with natural gas prices, there has still been some modest growth. Enough in fact to rank Grande Prairie Number 1 this year in the Canadian Federation of Independent Business's Communities in Boom list for 2010.

The list is intended to rate a municipality on its entrepreneurialism, and Grande Prairie is typically at or near the top of the list because of factors such as self-employment, businesses per capita, net business startups and diversity.

Rhonda Side, a broker and property manager for Devco Developments Corp., said small startup businesses backfilled bays in a city industrial park fairly quickly when established businesses started moving north of the city into larger-lot industrial subdivisions.

Like Menzies, Side is hopeful the slowdown in Grande Prairie will end in 2011. She points to some encouraging signs among businesses shopping for space to lease right now.

"Not many are leaping, but they're looking," Side said.

"There's renewed interest in expansion. Existing companies are looking for places to grow into. This is a good time to be buying land or negotiating your 10-year lease term in a bigger facility."

Like Menzies, Side sees the new hospital project as something that will impact property sales, particularly on the commercial land closer to the west-side location.

"It's going to happen, and we're all pretty excited about it," Side said, alluding to past promises by the province to expand hospital space in the city that were put on hold.

Industrial

Investors that are looking for serviced industrial land in Grande Prairie can expect to pay as much as $300,000 an acre for ideal locations to as little as $40,000 per acre, Side says.

Industrial/commercial shop space leases in a wide $8-to-$15-per-square-foot range annually on a triple net basis, while newer office space runs in the $18-to-$22 range in the city, and new retail space is higher.

There's not a lot of spec building going on right now, and there hasn't been since the slowdown hit in 2008.

Still, Side says that the commercial and industrial market is far better than it was two years ago.

Downtown

Another sign of that would be a local office developer's success in filling new space downtown.

A 40,000-square-foot addition to 214 Place by Grande Prairie Place Enterprises is now 98 per cent leased, says Shane Mudryk, the general manager for the company whose holdings include 215,000 square feet of office space in several buildings in the city.

"We feel this is a strong market, a strong economy," Mudryk said of the northwest service centre. The new addition includes a large government tenant.

While Grande Prairie is an oilpatch and forestry town, agriculture, retail trade and the public sector are key players as well, and it's likely to stay that way, particularly as the retail service sector grows. Grande Prairie is already the service centre of choice for northeast B.C., where sales taxes are higher.

Even with the slowdown, Grande Prairie building permit totals hit $113.2 million for the first 10 months of 2010, a drop from $144.4 million in 2009. Past years have seen the number in the $300 million range.

Expect to see that number spike in 2011 with the start of the new hospital. Expect to see it spike more if natural gas prices start to climb.

In the meantime, Grande Prairie residents can enjoy the present - an affordable community with a strong employment base - and dream of what's to come: a state-of-the-art leisure centre in which to play, better access to health services and more development to help pay for it all.

from Western Investor, January 2011