What does the give-every-kid-a-ribbon mentality have to do with Edmonton’s commercial real estate market?
It may seem like a stretch, but stick with us for a moment. We’re predicating our argument on the observation that kids today seem to get a ribbon (or medal, or trophy) for virtually any activity they participate in. As an example, a team of kids play in a hockey tournament and everyone – wins and losses be damned – gets a participation ribbon.
Our problem with this ideology is that it does little to prepare kids for adult life. While ribbons are bountiful for children, kids soon realize that there is genuine and unrelenting competition to get into higher levels of sport. An athlete doesn’t get a ribbon if they’re not good enough to make the high school team, they simply get cut. This is followed by the bitter reality that universities and colleges only admit the best and brightest (or the richest). Upon graduating, entering the work force is another stark reminder that jobs aren’t handed out to every person searching for one. And even those lucky to earn a job soon realize that isn’t a ribbon-earning endeavour either. Only a few get promoted, while the rest are left yearning for their childhood glory years when everyone “won”.
Perhaps certain child psychologists and educators believe that young children need constant encouragement, and a ribbon is merely a symbolic gesture to compel them to stay interested and continue on that path. Life will get hard soon enough, just take your blue ribbon and come back next year, or so the logic might go.
Whatever your opinion about the merits of ribbon-giving for kids, it should be empirically clear that this mentality has to end somewhere around puberty.
Should being the operative word.
That’s because there are traces of this mentality everywhere we look. Some organizations, groups and companies resist embracing competition, and even worse, they naively pretend that others aren’t competitive either. “If I’m not fit, and you’re not fit, we should both survive.”
Enter the City of Edmonton
A couple years ago, when Mayor Iveson said he was “much more optimistic about the future of a united Edmonton metropolitan region”, there’s an intonation that Edmonton would get a ribbon, figuratively speaking, when any surrounding municipality has a win. Aurora Cannabis opens a 800,000 square foot operation in Leduc? Win for Edmonton! Champion Pet Food moves from Morinville to Acheson? Another win for Edmonton! Ford moves their parts distribution centre from west Edmonton to Leduc? Still a win for Edmonton!
Unfortunately, this line of thinking fails to take into account how fiercely competitive the surrounding municipalities are and how aggressively they’re looking to attract business to their specific area. Is it really a win for Edmonton if a company chooses Nisku, or Acheson, or Sherwood Park? Does the region actually win, or is it the equivalent of giving out participation ribbons?
Now to be fair, there are valid reasons for why a company would want to locate in Edmonton. Perhaps the company wants to locate in close proximity to customers or suppliers, or maybe the company depends on and utilizes Edmonton’s transportation network. Or even more simply, the company may simply want an Edmonton address. That may sound like a stretch, but for companies that deal with customers or suppliers in other global markets, there is ostensibly an assurance that comes with being located in a “big” city. Not that Edmonton has powerful global recognition, but it is undeniably more well known than one of the surrounding municipalities.
However, there are recent developments that will continue making areas outside of Edmonton more attractive.
1. Edmonton is starting to push the boundaries of city limits. Notwithstanding the recent annexation, Edmonton is already bordering onto Nisku’s business park. The site where Amazon chose to build a 1M square foot distribution facility is actually located in a park called Border Business Park. Except it’s on the south side of the “border”, and accordingly Amazon will pay less than 1/2 of the taxes they would if they were on the north side of that road. Edmonton has grown to a point that these surrounding municipalities no longer feel so far away. In some cases they’re literally on the other side of the road.
2. Recent transportation developments have made travel times to these areas much more convenient. If a company is transporting something from the airport to Acheson, as an example, Anthony Henday Drive can shorten that travel time considerably. In fact, Sherwood Park, St. Albert, Acheson and Nisku / Leduc can all circle Edmonton with that road, and largely circumvent Edmonton in the process (literally and figuratively).
3. As mentioned, property taxes in all of the surrounding municipalities are significantly cheaper than in Edmonton. The 2019 figures aren’t out yet, but the differences from 2018 are huge:
Get back to business
The City of Edmonton needs to find a way to be more competitive. Cut back on the red tape and bureaucracy that is stifling business and driving companies out of the city. Run operations more efficiently so we do not need to burden companies and tax payers with unsustainable property tax increases. Roll up the sleeves and get to work, or more and more companies will locate outside city limits.
Stop giving out ribbons.
Chad GriffithsPartner, SIOR, CCIM
Chad is a partner with NAI Commercial Real Estate and focuses on the Greater Edmonton area. Chad entered the industry in 2004 and has completed over 400 commercial transactions with clients ranging from small, local companies to large institutional owners. Chad has been a top 15 producer with NAI Canada-wide since 2013.
Ryan BrownPartner, BCom, SIOR
Ryan is a partner with NAI Commercial Real Estate in Edmonton and is currently ranked nationally as one of NAI's top advisors. Having executed in excess of $100 Million worth of sales transactions and over 2 Million square feet of lease transactions, Ryan has developed a firm understanding of asset evaluation and an aptitude for building design, functionality, and long-term practicality.
Darcie is a licensed Commercial Real Estate Agent in the Province of Alberta with a focus on the Edmonton market and its surrounding areas. Darcie accomplishes custom solutions for her clients through her personable nature and results driven attitude. Darcie can help if you are looking to invest in commercial real estate or are looking for representation for a sale or lease transactions.
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