Real estate investors have Kitimat back on the radar but the prices and the potential are both much higher now that during the last boom in the northeast centre for the biggest infrastructure project in Canada.
Pitzel said industrial real estate will lead demand but prices are already at peak levels and there is very little on the market. Nearly everything not owned by aluminum giant Rio Tinto Alcan is being tightly held by owners, he said.
Prices reflect the supply-demand curve. Of Kitimat’s three industrial properties for sale June 26, prices equated to well over $1 million per acre. An example is 331 Enterprise Way, listed at $829,500 for a 0.38-acre site with a 2,528-square-foot industrial building.
Pitzel said the expansion of the Rio Tinto Alcan plant a decade ago drove real estate prices high and they have not come down.
Raw industrial land starts at $650,000 per acre, if you can find it, he said. Pitzel expects a lot of buyers and investors will be looking for industrial as the $40 billion LNG Canada export terminal and related liquefied natural gas pipelines gets the final go-ahead.
“We will start construction this year,” LNG Canada CEO Andy Calitz told a Vancouver resource conference in May. “I reaffirm that commitment today.”
On June 26 TransCanada Corporation confirmed it had signed agreements to provide $620 million in contracts with First Nations along the corridor for the natural gas pipeline needed to feed the LNG Canada plant. On June 19, TransCanada announced that it had conditionally awarded contracts to several joint ventures to build the Coastal GasLink pipeline: Those contracts are valued at $2.8 billion.
Even with all this, however, real estate agents doubt Kitimat will see a lot of action until the ink is dry on the final investment decision. After all, as Pitzel noted, previous LNG hype had not lived up to reality.
Nowhere is this more apparent than in the multi-family rental sector.
“[Rental] vacancy rates in Kitimat are still high with some properties reaching 50 per cent,” said Bruce Long, a multi-family specialist with Macdonald Commercial in Vancouver.
Long said typical per-door prices for Kitimat rental apartment buildings are in the $100,000 range, but few are on the market.
“Although we are seeing increased interest in Kitimat from our multi-family investors, most owners are not yet ready to sell. Everyone is confident that rental demand will increase and Kitimat will see better times ahead,” Long said.
A new 4,500- to 6,500-person work camp being prepped for LNG Canada workers by Civeo Corp. could siphon off some of the rental demand in the city, however.
“But even if only 10 per cent of the workers want to live in town, that would make a big difference,” Pitzel said.