Investment Competitiveness Study City of Edmonton ______
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Investment Competitiveness Study City of Edmonton ________________________ Watson & Associates Economists Ltd. 905-272-3600 December 18, 2018 [email protected] Table of Contents Page Executive Summary ....................................................................................................... i 1. Introduction ......................................................................................................... 1 1.1 Terms of Reference ................................................................................... 1 1.2 Context ...................................................................................................... 1 1.3 Data Sources ............................................................................................. 4 2. Macro-Economic Trends Influencing Development on Industrial Lands ................................................................................................................... 5 2.1 Provincial and Regional Context ................................................................ 5 2.1.1 Edmonton Metropolitan Region Employment Trends and Cluster Analysis ............................................................................ 7 2.2 City of Edmonton Economic Structure ..................................................... 10 2.2.1 Employment Base and Industry Clusters .................................... 10 2.2.2 City of Edmonton Employment Growth Trends ........................... 12 2.2.3 City of Edmonton Business Growth Trends ................................ 14 2.2.4 Edmonton CMA GDP Growth ..................................................... 15 2.2.5 City of Edmonton Competitive Share Analysis ............................ 16 2.3 Regional Economic Growth Drivers ......................................................... 18 2.3.1 Long-Term Energy Sector Growth Potential ............................... 18 2.3.2 Diversification of Economy .......................................................... 21 2.3.3 Strong Regional Long-Term Population and Employment Growth ........................................................................................ 21 2.3.4 Major Infrastructure Projects ....................................................... 22 2.3.5 Edmonton International Airport (EIA) .......................................... 23 2.3.6 Petrochemical and Basic Chemical Cluster ................................ 24 2.4 Observations ............................................................................................ 25 3. Regional Industrial Market Analysis ............................................................... 27 3.1 Regional Market Area .............................................................................. 27 3.2 Industrial Market Growth Trends .............................................................. 29 Watson & Associates Economists Ltd. \\10.0.0.41\hdrive\Edmonton\2018 Competitiveness Study\Report\Edmonton 2018 Investment Competitiveness Study.docx Table of Contents (Cont’d) Page 3.3 Industrial Vacancy Rates and Market Rents ............................................ 31 3.4 Profile of Key Industrial Areas within Edmonton Metropolitan Region ..................................................................................................... 33 4. City of Edmonton Industrial Market Profile .................................................... 39 4.1 Edmonton’s Industrial Districts ................................................................. 40 4.1.1 Northwest Industrial District ........................................................ 40 4.1.2 South/Southeast Industrial District .............................................. 42 4.1.3 Northeast Industrial District ......................................................... 43 4.1.4 Edmonton Energy and Technology Park .................................... 44 4.2 Development Activity on Industrial Lands ................................................ 45 4.3 Industrial Lands Absorption Trends ......................................................... 47 4.4 Underutilized Developed Industrial Lands ................................................ 53 4.4.1 Intensification Supply Potential ................................................... 53 4.4.2 Evaluation of Intensification Potential ......................................... 54 4.5 Vacant Industrial Land Inventory ............................................................. 55 4.5.1 Vacant Industrial Lands Analysis ................................................ 55 4.5.2 Shovel-ready Industrial Land Supply .......................................... 66 5. Regional Industrial Competitiveness and Investment Readiness Analysis ............................................................................................................. 69 5.1 Locational Attributes and Access to Transportation Infrastructure ........... 69 5.2 Non-Residential Development Growth Trends ......................................... 70 5.3 Residential and Non-Residential Tax Assessment Ratios ....................... 72 5.4 Industrial Land Supply Opportunities ....................................................... 74 5.5 Cost of Development Parameters for Industrial Lands Development ...... 77 5.5.1 Price of Serviced Vacant Industrial Lands .................................. 78 5.5.2 Off-site Levies per Hectare on Industrial Lands .......................... 79 5.5.3 Non-residential Tax Rates........................................................... 80 5.6 Servicing Standards of Select Industrial Areas ........................................ 82 5.7 Observations: Competitive Position of City of Edmonton Industrial Lands Relative to Surrounding Market Area ............................................ 85 6. Detailed Development Cost Competitiveness Analysis ................................ 86 6.1 Overview .................................................................................................. 86 6.2 Development Cost/Annualized Cost Comparative Analysis Framework ............................................................................................... 87 6.3 Development/Annualized Cost Comparative Assessment ....................... 89 6.4 Observations ............................................................................................ 94 7. Assessment of Edmonton’s Industrial Districts ............................................ 95 7.1 Industry Sector Requirements ................................................................. 95 Watson & Associates Economists Ltd. \\10.0.0.41\hdrive\Edmonton\2018 Competitiveness Study\Report\Edmonton 2018 Investment Competitiveness Study.docx Table of Contents (Cont’d) Page 7.2 Industrial Areas Strengths, Weaknesses, Opportunities and Challenges Analysis ................................................................................ 97 7.3 Assessment of Competitiveness and Investment Readiness of Industrial Districts .................................................................................. 100 7.4 Observations .......................................................................................... 113 8. Forecast Employment Growth and Industrial Land Needs, 2018 to 2028 ................................................................................................................. 113 8.1 Forecast Employment Growth, 2018 to 2028 ......................................... 113 8.2 Growth Outlook by Industry Sector ........................................................ 117 8.2.1 Oil and Gas ............................................................................... 118 8.2.2 Manufacturing ........................................................................... 118 8.2.3 Goods Movement (Wholesale Trade, Transportation, Warehousing and Logistics) ...................................................... 119 8.2.4 Construction .............................................................................. 121 8.2.5 Office Employment on Industrial Lands .................................... 121 8.2.6 Employment Supportive Uses in Industrial Areas ..................... 122 8.3 Forecast Industrial Land Demand, 2018 to 2028 ................................... 122 8.3.1 Forecast Employment Growth on Industrial Lands ................... 124 8.3.2 Share of Employment Growth on Industrial Lands Allocated by Industrial District ................................................................... 124 8.3.3 Forecast Employment Density on Industrial Lands ................... 125 8.3.4 Industrial Land Demand by Industrial District, 2018-2028 ......... 127 8.3.5 Industrial Land Needs within the City of Edmonton, 2018 to 2028 .......................................................................................... 129 8.4 Forecast Industrial Land Demand by Sector/Land Use.......................... 130 8.4.1 South/Southeast Industrial District ............................................ 130 8.4.2 Northwest Industrial District ...................................................... 130 8.4.3 Northeast Industrial District ....................................................... 131 8.4.4 Edmonton Energy and Technology Park .................................. 131 8.5 Regional Market Capture ....................................................................... 132 8.5.1 Northwest Industrial District ...................................................... 132 8.5.2 South/Southeast Industrial District ............................................ 133 8.5.3 Northeast Industrial Area (Light/Medium Industrial)