Varcoe: Surging population, economy diversification helping Calgary

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Calgary’s water restrictions are largely over. A short-lived WestJet strike has ended.

Oil prices are trading above US$83 a barrel and Alberta crude production just hit a record level.

A big-ticket carbon capture project in Alberta by Shell Canada just got the green light. A new US$4-billion LNG facility is also moving ahead on the west coast, an Indigenous-led partnership that includes Calgary-based Pembina Pipeline.

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Add to the mix, the Trans Mountain expansion has started operating, and the new $500-million BMO Centre expansion is simply outstanding.

It’s a pretty good way to begin the Greatest Outdoor Show on Earth, as huge crowds attending the First Flip pancake breakfast in downtown Calgary attested to on Thursday.

“The mood hasn’t been like this for a long time,” said George Brookman, chair of digital imaging and print company WCD Inc. and past-chair of the Calgary Stampede, as he attended the breakfast.

”This is the most people (here), the most upbeat feeling, that I’ve had for at least six or eight years.”

Brookman noted the lineup for flapjacks and coffee was already two blocks long when he arrived at the event at 7 a.m.

“I always make the joke that whenever the price of oil is over $80, we’re going to have a good Stampede. But in reality, it’s a lot more than that,” he said.

Indeed, it is.

Calgary Chamber of Commerce CEO Deborah Yedlin said the city changed in the past decade after oil prices crashed. The economy is more diversified, although it’s still underpinned by energy.

Newcomers from other provinces and countries have also flocked to Calgary over the past two years, drawn by jobs, relatively affordable housing and quality-of-life factors.

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“It’s vibrant. I think there’s also a sense of relief that we’ve come through the water restrictions and we can enjoy Stampede the way we want to,” Yedlin said of the optimism.

“This is the busiest Stampede that I remember in 30 years.”

But it’s not just a gut feeling. Much of the economic data is clear, right across Alberta.

The city’s population jumped by more than 95,000, or 5.9 per cent, over a 12-month period that ended last July. During the same period, Edmonton’s population climbed by 4.1 per cent, or more than 60,000.

During the first three months of this year, Alberta continued to lead the country in population growth, as more people relocated here from outside Canada and from other provinces.

A survey released by the Angus Reid Institute this week says almost three in 10 Canadians are contemplating moving out of their province because of high housing prices.

If they decide to stay in Canada, Alberta is their top destination, with 18 per cent saying they’re considering Wildrose Country.

Population growth continues to feed the province’s economy, as Alberta outperforms other parts of the country.

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“To have Trans Mountain open . . . to have new (LNG) approvals happening on the West Coast, it feels like everything is clicking on all cylinders,” Premier Danielle Smith said in an interview Thursday on the sidelines of the breakfast.

“And it’s not just the traditional industry. There are investments in all the new industries . . . I feel like we’re on this cusp now, where anyone who has any career aspirations in any profession can relocate to Alberta.”

A recent forecast by ATB Economics says the province’s economy is expected to top the country with 2.5 per cent GDP growth this year, and 2.7 per cent in 2025.

Improved market access for oil producers with the startup of the Trans Mountain expansion, increased homebuilding and an initial easing of high interest rates should all play in the province’s favour, says ATB’s deputy chief economist Rob Roach.

Total Alberta oil production averaged a record 3.7 million barrels per day in May, an increase of 7.4 per cent from last year’s levels, ATB noted.

Major projects, such as Shell Canada approving its new Polaris carbon capture project last week northeast of Edmonton, and the Cedar LNG project moving ahead — with plans to export western Canadian natural gas to customers in Asia — are also positive indicators.

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Total employment is expected to increase by three per cent this year, although the jobless rate is forecast to climb, averaging 6.6 per cent in 2024 with the growing population, according to ATB.

“The Alberta economy — and the Calgary economy — is finding its stride again,” said Roach.

“It’s good, because it does feed on itself.”

Economists and business experts agree that unlike previous economic rebounds and growth phases, Alberta’s improving fortunes aren’t just driven by rising commodity prices.

Growth in the agriculture sector, aviation, construction, technology and the energy transition areas — including carbon capture, hydrogen and renewables — are all providing a stable base for expansion.

“The growth is high. It’s robust, but it’s not as crazy as it was back in the early 2000s. So it feels buoyant, it feels optimistic, but it feels more sustainable,” added Adam Legge, president of the Business Council of Alberta.

Meanwhile, a new report by commercial real estate firm CBRE shows Calgary’s downtown office vacancy rate sat at 30.3 per cent in the second quarter of the year — flat from the first quarter but down from 31.5 per cent a year earlier.

CBRE said sublease space continues to fall, dropping to 10.7 per cent, its lowest point since the fall of 2014. That figure peaked around 45 per cent in 2015, after global oil prices tumbled.

“With the sign of a stronger economy, companies are either taking their sublease space off the market and using it themselves . . . or their leases are expiring,” said Greg Kwong, CBRE’s regional managing director.

“It’s a good sign.”

In fact, there are plenty of positive signs as this year’s Stampede kicks off.

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

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