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Amazon among major movers in Calgary industrial scene

E-commerce giant Amazon has taken 600,000 square feet at Nose Creek Business Park for a giant distribution centre as Calgary’s industrial sector continues to recover.

The new Alberta facility will be located in Balzac, part of Rocky View County just north of Calgary, where Walmart already has a $115 million distribution centre. Nose Creek is adjacent to the 22-acre CrossIron Mills shopping centre. 

 “The Calgary region is the major transportation and logistics hub and the leading inland port in Western Canada, so it is a natural fit for Amazon to locate one of its fulfillment centres here,” said Calgary Economic Development CEO Mary Moran.

Amazon’s new facility is being built on a 42-acre site and will open this fall.

Meanwhile, Enterra Feed Corp. has leased 184,800 square feet at Nose Creek and Whirlpool Canada has leased 422,000 square feet in the Calgary Logistics Park at Conrich.

“Business confidence continues to improve in step with Calgary’s economic growth,” noted Avison Young in its recent 2018 Industrial Market Report.

Noting “vastly improved leasing activity,” the agency said Calgary’s industrial vacancy rate had declined to 7.8 per cent as of the first quarter of 2018, down from 8.5 per cent a year earlier.

In the past year, total absorption of industrial space has increased to 1.8 million square feet and the average net lease rate has risen to just over $9 per square foot, up from $8 per square foot at the same time last year.

Even speculative industrial development has returned, adding to the 2.5 million square feet of industrial construction now underway in the city. However, only about 250,000 square feet was completed as of the first quarter, the lowest level in nearly a decade. 

“There continues to be demand and capital ready for existing Calgary industrial assets,” Avison Young confirmed after extensive surveys of industry players. Calgary capitalization rates are “much higher” than in Vancouver or Toronto, the agency added. 

The current forecast is for Calgary industrial vacancies to continue to tighten as demand strengthens and new construction remains well below historical averages.