While investment in farm equipment has pulled back, Manitoba-based AgWest Ltd. is digging in with the development of two new 20,000-square-foot stores in Brandon and Russell.
AgWest currently leases space in both communities, and the new stores will mark a significant expansion over its existing locations.
The new Brandon facility is located in the new Trans-Canada Industrial Park southwest of Brandon, a project of Keller Developments with 15 lots ranging from three to eight acres.
“The owner is definitely getting a premium for the lots in there because there is no alternative that we can find in Brandon for this kind of commercial application,” AgWest finance director Derrick Webster said.
The new building will offer seven service bays versus the four at its current location.
In Russell, the new facility will be triple the size of its existing premises and takes advantage of a lot the municipality had available.
“It wasn’t too difficult,” he said, noting that the price was discounted if construction proceeded within two years of purchase. “They want the development.”
Total project costs are estimated to be in the range of $10 million to $20 million, a reflection of going rates for construction outside the major centres.
The capital investment is unusual for AgWest, which prefers to lease premises and channel its capital to having equipment on hand for customers.
“The challenge in, particularly ag, is that we’re primarily in rural areas,” he said. “We looked at leasebacks, and the risk level was just too high for investors.”
Smaller communities seldom have companies ready to backfill space if something happens to the original company, so investors were less keen to take on Russell than Brandon. This prompted AgWest to undertake both, building identical buildings in both locations to save on design costs.
The Russell location will serve local growers, preventing them from having to seek service at AgWest’s locations in Saskatchewan.
“It’s a significant upgrade to handle the volume of business that’s coming our way,” Webster said.
Founded in Portage la Prairie in 1991, AgWest was acquired two years ago by Mechan International, part of Netherlands-based Zweegers Equipment Group. Since then, it has continued to grow, most recently adding two Saskatchewan dealerships in Weyburn and Yorkton previously run by Agriterra Equipment. The acquisitions brought its total number of locations to eight.
Construction of the two new Manitoba locations will complete by December.
