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Industrial real estate a hot spot in fast-growing Lethbridge

Potatoes and pot are on the table in Lethbridge as the fast-growing southern Alberta city sees a growing appetite for industrial development. 

Outside of Calgary, Lethbridge is the biggest city in southern Alberta. It’s also one of the brightest places in Canada, with 320 days of sunshine a year. 

“We really promote Lethbridge as a bright choice,” said Erin Crane, director of investment attraction at Economic Development Lethbridge. “Bright, to us, means intelligent,” she continued, noting the two post-secondary institutions and Agriculture and Agri-Food Canada’s largest research facility. The city also has Canada’s highest per capita number of PhDs for a place of its size.

Lethbridge, about two hours from Calgary, has some unique attributes, including historical attractions like Indian Battle Park, cultural destinations like the Southern Alberta Art Gallery, and the iconic, century-old Lethbridge Viaduct (better known as the High Level Bridge). 

It is the industrial and manufacturing sector that is Lethbridge’s touchstone this year, however.

Under construction is the $360 million Cavendish Farms frozen-potato processing plant, the largest private investment in the city’s history. Premier Rachel Notley was among officials for the official groundbreaking last year.

Located on 278 acres in Sherring Industrial Park, the plant is slated for completion in 2019.

A government news release said construction is expected to create up to 400 jobs, and upon completion the plant will require about 9,000 acres of potatoes. 

With cash income projected at $3,500 to $4,000 per acre, potatoes are among the highest-value crops grown in the region.

“The record investment Cavendish Farms is making in Lethbridge is good for our farmers and producers, good for the entire community and good for our growing economy,” said Notley. The province has committed $20 million for civic infrastructure improvements to accommodate what is being called a “state-of- the-art” production facility. 

Infrastructure upgrades include the water system in the Sheering Industrial Park. 

Meanwhile, cannabis grower Fifty First Parallel has bought five acres of land in a Lethbridge industrial park where it plans to build a three-phase facility capable of producing about 12,600 kilograms of marijuana per year by 2020. 

At full operation, it is expected to employ about 150 people.

Fifty First Parallel has partnered with Colorado-based LivWell Enlightened Health on the Lethbridge build. 

Marijuana is to be legalized federally this summer, and Alberta will allow cannabis to be sold by private retailers. 

Lethbridge’s industrial market outlook continues to be optimistic thanks to a strong performance in 2017 and the economic recovery of the province at large, according to a study by Avison Young.

The commercial agency noted the city’s industrial vacancy fell 1.6 per cent year-over-year to 4.6 per cent in the first quarter of 2018. During the same period, 102,000 square feet of new inventory was added with strong interest from the small-to-mid-sized industrial condominium market. 

Rental rates edged up to $8.15 per square foot in the first quarter of 2018 from $8.02 per square foot one year earlier. 

“Stable vacancy and rental rates make the Lethbridge market very predictable for investors and owner-users,” Avison Young noted.

The agriculture and food-processing industry has also shown significant interest in Lethbridge. 

Aside from the new Cavendish plant, additional interest from greenhouse operators, food processers and the distribution sector is expected to result in 170,000 square feet of new construction starting early in 2019. These new users, and supporting businesses in the agricultural space, have created a shortage of inventory in specific categories, including medium-to-large unit sizes and those offering loading docks or storage yards.

Preleasing continues to be strong; however investors have avoided additional large-scale speculative construction. The 125,000 square feet of new space under construction as of the first quarter consists predominantly of small-unit and condominium-style developments with 88,000 square feet preleased or sold. 

As one of the fastest-growing cities in Alberta in 2017, Lethbridge is on pace to achieve a population of 100,000 during 2018 with an anticipated population growth rate of 2 per cent. The industrial market is driving job creation and contributing to overall stability and growth in the region, according to Avison Young.