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MARCH 2010, Volume
25 Issue 3
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Regional Roundup: Balzac, AB
Mall that ate a village
Balzac – pop. 500 – welcomes 100,000 shoppers a week
to giant CrossIron mall
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CrossIron, the biggest new enclosed mall in Canada,
covers 32 acres and draws more than five million
shoppers a year. |
The traffic-directing Mounties are gone for now, and construction in Balzac - named for Honore de Balzac, the 19th-century French realist author - has slowed from the frantic pace of 2009, but development continues in the 500-person hamlet just north of Calgary. Lois Habberfield likes what she's seeing.
Habberfield, the schoolteacher-turned-reeve for Rocky View County, sees ongoing commercial development at Balzac as something that can have long-term benefits - not only for residents of her division, which includes Balzac, but for the entire county.
"This year, we will start to be able to measure what the tax benefit is from non-residential development," Habberfield explains. "We did need to be able to diversify our tax base [about 78 per cent residential] and we wanted to get more to a healthy balance."
Rocky View County is not a sparsely populated rural municipality by western Canadian standards. Its estimated 2009 population topped 36,000 - albeit in an area roughly the size of Prince Edward Island. Rocky View surrounds Calgary on its northwest, north and east sides. It also surrounds the rapidly growing city of Airdrie (pop. 38,000) and borders another Calgary-area boom community, Cochrane.
Still, it hadn't been able to latch on to the type of commercial development and accompanying tax base that many rural and urban politicians dream about, at least until now.
Nowadays, Rocky View is home to CrossIron Mills, the first and biggest enclosed new shopping mall built in Alberta in two decades, and several new large commercial/industrial subdivisions.
The mega-mall, an Ivanhoe Cambridge development with 1.2 million square feet of leasable space, 175 specialty stores and more than a dozen anchor tenants, opened its doors in August 19, 2009. The grand opening happened squarely in the middle of the recession's second quarter. Still, shoppers flocked to CrossIron Mills, jamming the unfinished road network around Balzac, keeping Mounties busy with traffic control chores not commonly experienced two miles north of Calgary off the QE2.
In all, according to James Moller, general manager of Cross Iron Mills, Ivanhoe Cambridge's retail foray north of Calgary city limits has been a successful one to date.
Surpassed targets
"In terms of traffic and sales, we were very pleased with what we accomplished. We surpassed our targets. We were over three million customers between the time we opened and the end of December," Moller says. "Our expectations, we exceeded them."
Moller declines to publicly quote lease rates for CrossIron Mills - noting some significant differences in mall makeup and store style between his mall and its urban competitors - but says lower costs at Balzac help with a winning business formula.
"Being outside of Calgary, being in Rocky View County, definitely helps. The taxes are cheaper out here and land costs are cheaper, so there is an opportunity out here, and that's part of the competitive advantage."
Differences between CrossIron Mills and conventional city shopping centres include larger store sizes - and averaged-sized retail outlet in CrossIron Mills is around 3,000 square feet rather than 2,000 square feet - and the fact an even greater percentage of traffic shows up on weekends.
"We're very pleased with the traffic for the [entire] week, but a majority of that is coming on the weekends, so typical retailers have to adjust to that," Moller notes.
Big boxes blossom
There's are other options for retailers looking for Balzac opportunities. For one, CrossIron Common, which will ultimately offer another one million square feet of commercial space on 122 acres just north of the existing mall, is ready and waiting for new buildings. The project features an under-construction Lowe's Home Improvement Warehouse outlet, one of three big-box stores the home improvement giant intends to open in the Calgary market in 2010.
The new store will boost contractor traffic to the location and give CrossIron Mills more weekday business.
Future development in business parks to the north, south and west of the mall, and residential growth in Airdrie, Calgary and Rocky View subdivisions will also fuel sales at the auto-dependent destination shopping complex.
The retail symbolizes development for a rural municipality that long ago saw Balzac as a non-residential hub.
"We can't put residential development there, and it was always planned in the East Balzac Area Structure Plan as a non-residential growth area, so that's why we've put the infrastructure in there," Habberfield explains.
While several companies are developing the East Balzac area, Ivanhoe Cambridge has set the standard, Habberfield said.
"When it came to building the roads and putting in the infrastructure, there was never any quibbling. What they said they would do, they did. They committed to it, and they built it, so now we have some cost-recovery agreements for them to recoup those costs over time from other developers."
It wasn't quite that easy at the start when it came to lining up a water supply. Unable to convince the City of Calgary, which already supplies water to Airdrie, that it should stretch its water network into Rocky View at Balzac, the county eventually secured water through Western Irrigation District.
Asked for what advice she might give to other urban fringe municipalities, Habberfield talks about three things: being respectful of what the neighbours want - in this case Airdrie and Calgary; ensuring you can service what you develop; and finding developers with deep pockets.
Horse track
Development at Balzac isn't slated to cost Rocky View anything in its 2010 municipal budget, but front-ending costs for what's coming in Balzac Commercial Campus, Wagon Wheel Industrial Park, Nose Creek Business Park and Points North Business Park has added to the county's long-term debt.
Rocky View's debt hit $55 million at the end of 2008, up from only $5.4 million at the end of 2004. Its reserves fell by $8.7 million in 2008 to $35.4 million. Still, its debt load was less than half of what the province allowed at the end of 2008, and new warehouses, fabrication plants and offices are opening, under construction, or in the works. Among the retail giants plunging into East Balzac is Costco. Walmart is building a warehouse/distribution hub at Balzac.
There's a little more uncertainty with the neighbour to the immediate east of CrossIron Mills. That property is controlled by the United Horsemen of Alberta, which has proposed a world-class racing and entertainment centre for the land - everything from thoroughbred horse racing to a 3,000-seat theatre and modern grandstand.
The project has stalled with the UHA's filing for protection from its creditors under the Companies' Creditors Arrangement Act while it reorganizes and tries to remain in business. It recently announced on its website that it had reached an agreement with Ivanhoe Cambridge to shed its $52 million debt to Ivanhoe in exchange for its western lands of 125.7 acres at Balzac.
That deal will allow UHA to sell more of its non-essential land to further reduce its debt. Colliers International is now listing serviced UHA-controlled lands east of the proposed racing entertainment centre for between $550,000 and $750,000 per acre. All of the for-sale parcels are collectively priced at over $18 million. UHA was scheduled to be back in court in mid-February.
"These efforts will result in UHA having a very clean balance sheet and will allow us to continue on with our phased business plan," wrote UHA president Darcy Marler in a posting to the website. "We are now in a much better position to contact potential investors and lenders."
While the ponies may be a few years and court hearings from running east of CrossIron Mills, many of Habberfield's former Airdrie students are working and shopping in Balzac. Moller says roughly half the employees working at CrossIron Mills come from Airdrie and the rural area around the mall.
And the mall is only part of what exists for employees. Skilled jobs in metal manufacturing await. So do transportation and logistics positions and careers with future business park employers.
Says Habberfield: "It's much bigger than just the mall."
– David Husdal
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