Confidence is growing in Lethbridge’s commercial real estate market, as the city was ranked by Avison Young as Alberta’s strongest municipal economy for 2017. Expansion projects in the city are capitalizing on Lethbridge’s enduring stability.
Avison Young’s 2017 market forecast made the claim in January, and real estate professionals and the city’s economic development office say it is holds true four months into the New Year. Unlike some areas in the Prairies, Lethbridge is less susceptible to boom-and-bust cycles linked to oil prices. Lethbridge is far more reliant on infrastructure and business investment growth and its booming agricultural industry, city officials say.
The Avison Young report noted that office and retail vacancy rates are declining, particularly in West Lethbridge. The University of Lethbridge is located in the area, bringing more new students in each semester.
“The majority of residential growth for the city has primarily occurred on the west side for the past several years, which has sparked commercial growth in these new neighbourhoods,” said Trevor Lewington, CEO of Economic Development Lethbridge.
With a growing population of millennials moving to Lethbridge for school, the retail market was strong in 2016 and is expected to remain that way into 2017. The City of Lethbridge has invested in the development of the Crossings, 60 acres of mixed-use land in West Lethbridge hosting grocery anchor tenant No Frills. The city recently spent more than $41 million on construction of Phase I of the Crossings Leisure Complex. Phase II is set to be completed by 2019 and has a budget of nearly $110 million.
“Until recently, there has not been any major commercial development for the retail and office sectors [in West Lethbridge],” said Jeremy Koot, senior associate at Bankers Commercial Real Estate. “As West Lethbridge continues to grow, so does [our] commercial development.”
The report notes businesses are considering moving or expanding their offices to West Lethbridge to capitalize on the increased population.
The 2016 Canada Census showed the city’s population had expanded 10.8 per cent to 92,729 since 2011, making it the fifth fastest growing city in Canada and third fastest in Alberta, trailing only Calgary and Edmonton. Most of the city’s growth has been in West Lethbridge.
When Lethbridge’s surrounding towns are rural areas are added, the trading population is 117,394.
Koot says the office and retail markets across the city are currently experiencing the strongest growth in sales so far in 2017, while industrial sales remain steady.
But West Lethbridge isn’t the only zone experiencing an uptick in infrastructure investment. Building permits across the city totalled nearly $1 billion over the last five years, and industrial and agricultural land in North Lethbridge is seeing a sizable piece of the action.
Industrial real estate is trending toward ownership versus leasing, spurring more development to existing industrial areas in North Lethbridge, particularly those with an agricultural component.
Industrial vacancy rates rose slightly in 2016 to 6.2 per cent from 4.8 per cent in 2015, but the rate is expected to decline to 4.4 per cent in 2017.
“Lethbridge is the southern Alberta hub for both traditional industries and emerging technologies,” said Lewington. “Lethbridge doers are leading change in agriculture, food sciences and manufacturing.”
Optimism in Lethbridge’s agriculture and manufacturing industries led to a large-scale expansion of Cavendish Farms in North Lethbridge, including construction of a $350 million food processing facility.
Koot believes the added jobs will push down the city’s already-low unemployment rate of 3.9 per cent. The city’s unemployment rate is 4 per cent less than the province-wide average.
The City of Lethbridge recently announced it would be expanding the Sherring Business and Industrial Park, developed in North Lethbridge in 2004, to accommodate a burgeoning food processing sector.
Lethbridge is also being considered an attractive place for entrepreneurs. The Canadian Federation of Independent Business’ latest Top Entrepreneurial Cities Report ranked Lethbridge 18th out of 121 jurisdictions.
The city also made the list of The Intelligent Community Forum’s (ICF) Smart21 Communities of 2016. The ICF considers nominations from nearly 400 communities around the world.
Lewington cites the programs and services offered by the economic development team as contributing to the city’s growing tech industry - and its awards.