Space, favourable tax rates and a maturing community are drawing industrial users to Leduc County, south of Edmonton.
While the industrial parks of Nisku and Leduc have long served Alberta businesses, the growing population in the Edmonton metropolitan area is transforming the tenant mix from primary industry and support services to logistics and distribution.
Major developers including Remington Development Corp., York Realty Inc. and Hopewell Real Estate Services Inc. are building or planning new facilities serving the likes of Amazon, FedEx as well as home-grown companies such as Little Potato Co.
“A lot of those occupiers who are now in the Nisku, Leduc submarket are not necessarily tied to oil and gas, and the large occupiers are attracting those support businesses who want to be close to them – trucking, mechanics and even some manufacturing,” said David St. Cyr, a principal with Avison Young in Edmonton. “This area of Edmonton has really caught their attention because of the amenities that are built into it, and the tax rate is important.”
Among the amenities are the Premium Outlet Collection at Edmonton International Airport, opened in 2018; the Century Mile Racetrack and Casino, opened in 2019, and civic amenities such as the Leduc Recreation Centre, a 300,000-square-foot facility completed in 2009.
“There’s plans for a new high school in Leduc. These communities are starting to have the amenities,” St. Cyr said. “When you look at a map of Edmonton, those rooftops keep pushing south, so your access to labour from the city to go out to Nisku Leduc is also pretty attractive.”
The tax rates are also compelling, both for homeowners in Leduc County as well as industrial owners. An industrial facility assessed at $5 million in Edmonton would pay $120,000 in property taxes each year, but in Leduc, the bill is just $50,000.
Edmonton’s status as a rail hub has long supported its appeal to industrial users, and a direct rail line from Prince Rupert is renewing that appeal. Leduc being home to an international airport and the province’s key north-south highway system has also helped make it centre ice in the centre of the province.
The location is critical as a growing population has increased the need for intraprovincial distribution.
“It’s not just the city of Edmonton that’s grown, it’s all those surrounding areas, the northern half of Alberta,” St. Cyr said. “That need for distribution space was accelerated by the pandemic, where a lot of things moved online and we started ordering more things through direct delivery.”
Demand has been so great that the latest quarterly report from Avison Young indicates that industrial vacancies in the region now average 4.7 per cent. Space in the 50,000 to 200,000-square-foot range has been particularly impacted.
“If you have a need for this space, it’s really hard to find,” St. Cyr said.
This is driving new development in areas like the Nisku-Leduc submarket, where “an exceptional amount” of space has been built. The vacancy rate is 8.1 per cent on an inventory of 19.8 million square feet.
Avison Young reports that a total of 4.9 million square feet of industrial space is currently under construction across the Edmonton market. When the new Amazon facility in Acheson Business Park west of the city is removed, the volume falls to 2 million square feet. Of this, 760,000 square feet or 38 per cent is in Nisku-Leduc.
“Demand has fuelled construction in this area,” St. Cyr said, noting that Remington is seeing strong demand for space in Discovery Business Park (formerly in Leduc County but recently absorbed within Edmonton's civic boundaries). “They’re getting enough uptake where they’re still continuing to build, and they’re getting enough interest on the preleasing side.”
York Realty is also in the planning stages for Pioneer Skies Business Park, a follow-up to its Monarch Business Park.