Kevin Hughes, CBRE senior vice-president. (Courtesy CBRE)

Supply chain disruptions due to the recent rains and flooding in B.C. has focused attention on Edmonton’s industrial sector as a potential alternative due to its connection to the Port of Prince Rupert and the ability to help solve backlog and constraint issues.

Commercial real estate firm CBRE says the Port of Prince Rupert is the closest North American port to Asia, is well-connected to Edmonton by rail and Edmonton is also the first major city through which goods travel to and from the port – a strategic advantage for the region.

Kevin Hughes, CBRE senior vice-president, said Vancouver is also constrained with its lack of service to industrial land and the lack of large blocks of industrial space in the West Coast city.

“When is that spillover going to come into Alberta and when is it going to positively impact the Edmonton area? Calgary’s historically been the benefactor of the big distribution tenants coming to Alberta and they feel that’s the market to set up shop in,” said Hughes.

COVID creates a new outlook

“Things have changed. COVID has amplified the demand for big-bay industrial space in this market and the Port of Prince Rupert I think is virtually an unknown benefit to the Alberta region, specifically Edmonton because of its access.

“It’s a deepwater port. It’s the closest port to Asia and I think it really does have a bright future considering how tight that distribution market is in Vancouver. When you’re full, companies have to look for other options and other opportunities.”

Beyond geographic benefits, CBRE said Prince Rupert has some of the lowest “dwell times” on the West Coast. On average, ships are taking 18 days to unload at Los Angeles, 16 days at Long Beach and 13 days at Seattle.

Prince Rupert’s dwell time is 3.5 days, meaning goods shipped through this port can save time and money for companies exporting to and importing from Asian markets.

“Edmonton could also help save Christmas thanks to the available industrial space and development land that has all but been exhausted in most other Canadian cities,” said CBRE in a news release.

Distribution space available in Edmonton

Hughes said the Edmonton region has a considerable supply of big-box distribution space available for lease today.

In the third quarter, nearly 600,000 square feet of build-to-suit warehouse space was completed for Uline in Edmonton’s Anthony Henday Business Park, where an additional 200,000 square feet of distribution space has also come online.

Hughes said there is a flurry of new industrial projects, such as a 2.9 million-square-foot robotic warehouse being built by Panattoni for Amazon in Acheson’s Highland Business Park, the first multi-floor industrial distribution facility in Edmonton and one of the largest single-phase industrial facilities in Canada.

At Leduc Business Park, Ford Motors built a 400,000-square-foot parts distribution facility.

He said the next two quarters should also see a steady stream of new warehouse space come to market, with several big developments set to complete.

Large-bay industrial space is more affordable than Vancouver by a considerable margin, with average net rents at $8.75 per square foot in Edmonton compared to $15 in Vancouver.

“Edmonton suddenly stands out as Canada’s best-positioned inland port and we’re ready to step up and help out,” said Dave Young, managing director for CBRE in Edmonton.

Demand “something I’ve never seen”

Hughes said Edmonton’s industrial market has the connections and capacity to take on a substantial amount of Western Canada-focused logistics and fulfillment traffic.

“We could help Vancouver weather this immediate crisis by easing its logistics load for the holiday season. And going forward we believe Edmonton offers clear advantages over many other North American cities, including Calgary, which has up to this point been the first choice for those establishing an industrial footprint in Alberta,” Hughes added.

“QuadReal is just finishing a 200,000-square-foot building – a spec building. Not only are we fully subscribed, we got two times the interest of the square footage and that’s a 200,000-square-foot building.

“So we expect that to be fully leased in a short period of time and normally in this market for spec buildings it takes several months if not a year to fully lease a spec warehouse.

“(This is) something I’ve never seen in 28 years working in this industry, this level of demand. We believe we’re just on the cusp of this growth for the next several years.”

He also believes the pandemic has left developers scrambling to keep up with demand, having “stalled development” and construction activity for varying lengths of time.

That was both due to uncertainty within the industry as well as the various lockdowns and current labour and supply chain issues.

“Now that we see what’s happening with the supply chain globally, these developers know that this isn’t going away and there’s going to be surging demand for big-bay distribution space.”

Prince Rupert port has capacity

On its website, the Prince Rupert Port Authority said it is fully engaged in supporting the response to the devastating impacts of the flooding in Southern British Columbia and is ready to help the communities and supply chains being impacted by it.

“The Port of Prince Rupert remains fully operational and is not experiencing any impact to port or rail operations related to the extreme weather events in Southern British Columbia. The Port of Prince Rupert is one of Canada’s critical gateways for supply chains, facilitating $60 billion in trade annually and is ready to activate its full capacity,” the note reads.

“A number of terminals within the Port of Prince Rupert currently have the ability to handle additional cargo and are actively engaged with shippers and CN to assist in facilitating the movement of critical goods, supplies and trade.”

The Port of Prince Rupert, located within the traditional territory of the Tsimshian First Nation, was originally built as the terminus for the Grand Trunk Pacific Railway.

The Fairview Terminal was expanded in 2017, increasing the Port’s handling capacity to 1.3 million containers a year — making it the second-largest container facility in Canada.

According to the CBRE’s Q3 2021 industrial real estate market report, the development pipeline in the Edmonton market is a record high of 4.5 million square feet.

The availability rate is 8.4 per cent and the year-to-date absorption of just over 1.8 million square feet is the highest Q3 year-to-date total since 2013.