The developers behind several industrial parks in the Red Deer area had to be smiling on Wednesday, when crude oil prices topped $100 for the first time in months.
Demand for such property withered in 2008, as energy prices — and Central Alberta’s economy — were dragged down by the global recession.
“It’s been really tough since then to get any excitement around industrial development at all,” said Guy Pelletier, Melcor Developments Ltd.’s vice-president for the Red Deer region.
Melcor is project manager and a major partner in McKenzie Industrial Business Park, which is being developed northeast of the McKenzie Road and Range Road 273 (40th Avenue) intersection in Red Deer County. A dearth of interest in land there appears to be coming to an end.
“We’ve had a couple of realtors actually just this week contact us with some client activity,” said Pelletier.
Ralph Salomons, whose company Ralph Salomons Commercial Inc. is the selling agent for McKenzie Park and other industrial lands in the region, agrees.
“There’s significantly more interest in land.”
Last year, said Salomons, there were plenty of industrial buildings on the market.
“Those buildings have all been purchased,” he noted, adding that buyers are now shopping for land to build on.
Salomons is even seeing the resumption of a practice that used to be commonplace but disappeared with the economic downturn.
“We’ve got people building on speculation again.”
Melcor is performing groundwork at McKenzie Park in anticipation of sales.
It also plans to construct its own 65,000-square-foot industrial building for rent to one or multiple tenants.
“That project is going through the development permit process at the county right now,” said Pelletier, adding that if all goes well, work could begin in the spring and the building be ready for occupancy next fall.
A short distance north in Clearview Industrial Park, prospective buyers are also scouting around, said Daniel Goldstrom, an agent with NAI Commercial who is marketing the property.
He has one deal that’s conditional upon development permit approval and two others that are pending.
“Lots of tire-kicking,” said Goldstrom.
“Probably double what we had last year.”
Some inquiries are from local energy companies seeking to increase the size of their premises, he said. Others are coming from out of town.
Services are just being installed in the City of Red Deer’s Queens Business Park, which is west of Hwy 2 and south of Hwy 11A.
But Howard Thompson, manager of the city’s Land and Economic Development Department, is optimistic buildings will soon start to rise in Queens.
“We are getting more calls at the office here,” he said, noting that the city is currently considering about a half-dozen proposals from potential buyers.
“There’s everything from head office to warehousing to energy-related.”
Renewed activity in the energy sector, said Thompson, is a big reason for the growing interest in industrial land.
“That’s the total drive behind it.”
Salomons said there’s lingering caution given the economic uncertainties in the United States and Europe. But a scent of optimism is in the air.
“If things continue, it will be a very good year.”