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Alberta cities pursue annexations to support industrial growth

Calgary, Edmonton focus on jobs space over residential as city boundaries expand
Calgary-Rocky View Annexation (2022)
Calgary is looking to the long-term growth of its industrial sector with a proposed annexation of 4,143 acres from Rocky View County.

Residential growth is squeezing Alberta’s industrial land supply, prompting Alberta’s largest cities to pursue their first annexations in years.

Calgary is moving ahead with plans to annex 4,143 acres southeast of the city in Rocky View County for industrial development. It’s the first annexation bid since 2007, when approximately 25,000 acres of Rocky View County were added to the city. (An interim annexation proposal was withdrawn in 2017.)

According to the city, the latest bid will ensure “an adequate long-term land supply to accommodate the evolving needs of industrial developers.” This reflects the city’s economic development plan that calls for it to be an industrial hub.

“These and other lands represent an opportunity to build that mandate,” said Josh White, Calgary’s director of city and regional planning. “This is a really key corridor for us to do that.”

The area lies north of the Canadian Pacific Railway mainline and is largely farmland. But the lands are expected to become an industrial hub as a result of CP’s acquisition of Kansas City Southern and the need for additional logistics infrastructure.

“It’s always been part of the plan for these lands to be annexed at some point in time for the city of Calgary’s industrial lands strategy,” White said. “This is the opportune time.”

The city identified the area for future development in 2006, as part of an intermunicipal development plan signed with the county in 2007. Once annexed, the lands would be developed in accordance with city protocols. Some of the terms, such as tax rates, would be spelled out in the annexation agreement with the county.

The city formally began the annexation process in September with a letter of intent to Alberta's Land and Property Rights Tribunal.

White says the annexation will simply set the stage for future development, though shovels could be in the ground in five to 10 years.

“Development can proceed without undue delay. That’s the groundwork we’re laying,” he said. “It’s not just to have X number of years of land supply. It’s to fulfill an opportunity.”

Yet rebounding demand in the Alberta’s industrial market make it timely. Commercial brokerage CBRE Ltd. reports that Calgary saw 1.9 million square feet of industrial space leased in the first quarter, resulting in the availability rate falling 110 basis points, the strongest activity of any market in Canada.

“They could have easily delayed this annexation three, five years out, but there is strong growth in our industrial sector,” said Greg Kwong, executive vice-president and regional managing director with CBRE in Calgary. “[But] this annexation isn’t designed to capture the next one to two years of demand. This is a five to 20-year plan for this land they’re looking at.”

A similar long-term vision prompted Edmonton to move forward three years ago with the annexation of 20,411 acres on its southern boundary from Leduc County and Beaumont. The addition was the city’s first expansion since 1982.

The move responded to the city’s growth southwards but also the need to ensure a diversified tax base. While the city has seen significant growth in its residential tax base, Ken Mamczasz, a senior advisor specializing in urban planning and economy with the city’s economic investment services branch, said that non-residential sources of property tax are also important.

“You can’t just have residential and you can’t have just non-residential on the tax roll. Those two have to work together, and we eye that ratio. And that ratio has actually been tipping more in favour of residential in the last 10 years,” he said. “So we’re concerned in trying to keep that balance, enough business to support the residential.”

This will become even more of a concern, with Edmonton expecting to reach a population of 2 million by 2040.

“All those people are going to need supplies, they’re going to need services and they’re going to need a place to work, and all those contribute to the growth of industrial,” Mamczasz said.

But there are two sides to an annexation, and if additional land diversifies one city’s tax base it can also take away opportunities from another. This led to a smaller annexation in 2019 than originally proposed.

“At one point they were looking at a big swathe that included North Nisku, and were analyzing what the benefits or drawbacks would be of taking in the whole airport area,” Mamczasz said. “[It] didn’t happen. … This left a lot of the prime industrial and commercial lands for the county.”

While industrial land has been in demand across the country, and facing significant pressure in cities with constrained geographies such as Vancouver, Mamczasz said it’s a critical resource. It’s also an asset that cities can actively manage for broader civic benefits.

“We can attract more businesses. You can’t really attract more universities,” he said. “Commercial will service the market as it needs to. As residential grows, commercial will grow. But industrial is something we need to work hard to attract, because it’s something you can influence.”