Industrial real estate action in northeast British Columbia appears to belie a Central 1 Credit Union caution of an economic slowdown across the north.
Citing a slumping coal sector and “uncertainty” surrounding the future of the liquefied natural gas (LNG) industry, Central 1 is forecasting the northern economy faces “a period of lower expansion this year and next.”
The northeast is anchored by Fort St. John, the second largest city in northern B.C., and includes Dawson Creek, Tumbler Ridge and Fort Nelson.
“We saw a slowdown earlier this year, but the last six weeks are the busiest we have been in years,” said Ron Rodgers, owner and managing broker of North East BC Realty Ltd of Fort St. John.
As an example, he points to the near sellout of a 16-parcel industrial park just outside of Fort St. John where the 10 of the 4.5-acre serviced lots have sold this year and four more are pending. The parcels are listed at $769,000 each, and a second phase will likely see a 15% price markup, Rodgers said. He noted that two years ago such lots – which are not linked to city sewer or water lines– would have sold for less than $500,000.
Industrial land buyers, Rodgers said, are primarily existing businesses linked to natural gas drilling. The gas-drilling season in the region is most active in the winter when frozen ground allows easier access to the natural gas fields of the northeast, he noted. “Everyone is gearing up for winter.”
Fort St. John has also seen a new $9 million Holiday Inn Express hotel completed this year and a second hotel is under construction, Rodgers noted.
The city is within 7 kilometres from the site of BC Hydro’s $7.9 billion Site C dam, which has yet to achieve a greenlight.
It is the uncertainty over such future mega-projects that cloud the northern economic outlook. In all, $26 billion in major project are proposed in the north, but only about a third include even estimated start dates, Central 1 notes. “The caveat, however, is that none of these projects are yet for certain,” noted Mitchel Chilcott, CEO of North Peace Savings and Credit Union.
"Despite positive natural gas and forestry production, [northeast B.C.] growth will be limited by modest gains in the agriculture sector, an exceptionally weak market for coal and reduced commodity exploration," said Central 1 economist Bryan Yu, author of the report Economic Prospects for Northeast B.C. "Some uncertainty over the future of liquefied natural gas projects in other areas of the province may also dampen natural gas drilling and exploration."
Kathy Miller, an agent with Re/Max Action Realty in Fort St. John said industrial land remains the strongest real estate market, but she cautioned that the retail and office sectors are challenging.
“We have a 25% office vacancy rate in Fort St. John,” Miller said, “and there is a lot of empty retail downtown.”
