FRANK O’BRIEN
Other
News that a giant LNG plant – that would need 1,000 workers to build – is being considered for the northern port city of Prince Rupert has come hard on the heels of a record-setting year at the second-largest coal and container port on B.C.’s west coast.
But while the economic buzz is building, you can still buy condominium apartments for $30,000, housing sales haven’t budged in four years, hundreds of people have fled and retail and office space is going dark across the the city. “Downtown is like a hockey player’s teeth,” quipped one jaded commercial real estate agent.
“I have been here for 30 years and I have been hearing about the potential boom for 20 of those,” said Lynn Chivers, a realtor with Randall North Real Estate Services in the city of 12,500. According to Chivers, “There has been only one year when you could have flipped a house for a profit.” Indeed. The average detached house price in Prince Rupert is now around $175,000, virtually unchanged from 2008, and you can still find a decent house for even less.
Cheap housing is one of the lures for the port city, agreed Michael Gurney, manager of corporate communications with the Prince Rupert Port Authority; he moved up from Vancouver last May. But as Gurney outlines the port’s stunning performance and potential, the suggestion is that the low prices – and the economic lull – won’t last for long.
Port expansion
The port has already undergone an expansion that has doubled its capacity to 24 million tonnes and there are plans to double that again within nine years under its $300 million expansion plan.
The Fairview container terminal will grow from handling 750,000 containers a year to 1.2 million, and then onto two million annually. Plans are in place for four bulk terminal sites, each capable of handling 10 million tonnes of cargo. On Ridley Island, there is more than 1,000 acres of tidewater industrial land ready for the foundation of an import-export logistics park for warehousing, transloading and reloading customers.
“We are open to inquiries for any type of industrial use,” Gurney said, noting that the industrial land can be leased for up to 100 years.
King coal
At the port’s Ridley terminal, work is high-balling on a multimillion-dollar, four-year port and rail upgrade that will double coal exports to 24 million tonnes a year, which would rank Ridley as the No. 1 coal export terminal in Canada, ahead of Delta in Vancouver’s Lower Mainland, which handled 20 million tonnes last year. Ridley takes in coal from B.C., Alberta and even the United States, an indication of how efficient its rail-and-port system is run. It is cheaper to ship coal from Wyoming to China through Ridley than from any U.S. port.
Also in line is a 150-acre general cargo terminal and a barge and short-sea shipping terminal.
Already, 1,500 people work at the port – many making six-figure incomes – and the current $80 million in salaries and wages would balloon to $310 million annually when the expansions are complete. Sums up Don Krusel, president of the Prince Rupert Port Authority, “That’s a big and bold list,” as the port becomes Canada’s major route to China, the world’s second-largest economy.
Yet the port expansion is only part of Prince Rupert’s potential.
LNG dream
As this article was being put together, two economic bombshells landed in Prince Rupert. First was the announcement that the city has been short-listed by British natural gas giant BG Group PLC for a large liquefied natural gas (LNG) plant. David Byford, a Houston, Texas-based spokesman for BG, confirmed an agreement is in place with the Prince Rupert Port Authority to “consider the feasibility” of the LNG plant.
No decision should be expected for two years, but if the plant is approved it would mean 1,000 construction jobs for 24 months and then up to 200 full-time employees, estimates Derek Baker of the Prince Rupert Port Edward Economic Development office.
Prince Rupert‘s main – and tough – competitor for BG’s LNG plant is Kitimat, where Royal Dutch Shell has already bought the old Methanex plant for an LNG terminal.
The second bombshell was lobbed by an Enbridge spokesman who told reporters during an Asian tour with Prime Minister Stephen Harper that Enbridge may “reconsider” Prince Rupert, rather than Kitimat, as the terminus for its $6.6 billion Northern Gateway pipeline.
That news would not be greeted with general glee in Rupert. In February more than 600 residents marched in a protest against the pipeline and subsequent oil tankers anywhere on the northwest coast.
Bargain real estate
So, as so often in the past (the history includes the shutdown of the Skeena saw mill, the fall of the Japanese export market, a collapse in coal prices and forestry), investing in Prince Rupert real estate remains something of gamble.
But this time it should be a sure bet, said Gordon Kobza of Realty Executives, the top commercial real estate agent in Prince Rupert.
“We are close enough to the bottom to see our toes,” Kobza said, and the real estate prices and potential bear this out. At Rupert Square, the city’s flagship mall, Wal-Mart has taken over the former Zeller’s space and will take an extra floor when it opens later this year. Mall managers, which will see the exit of the Fields’ store this fall, are offering lease rates from $9 triple net.
Residents are in dire need of more retail, Kobza said, pointing out there is “no DQ, no A&W, no KFC and no Boston Pizza. This town needs everything.”
On Prince Rupert’s main retail strip, sales signs and dark stores are common, and prices are through the floor. The site of the former daily newspaper (which folded last year) is up for sale at $299,000 for a large downtown lot and two buildings. A block away, Kobza has listed a newer two-storey retail and office building, 50 per cent leased, at $550,000. “This was $700,000 two years ago,” he said.
“You can buy a condo here for $40,000, even less,” said Baker, also a recent newcomer to Prince Rupert. Rents are around $500 to $600 for a two-bedroom house or condo. As Kobza notes, many of the rentals are owned by investors who rushed in during the last mini-boom back in 2004. “They still own them,” he said ruefully. This explains why there has been no new multi-family construction in the city for three years.
But even Chivers sees that changing. She said the real housing demand in Prince Rupert now is new “executive”-level detached houses priced above $200,000 – the kind of homes that resource executives and engineers like – but this segment is in short supply.
It will take some time to convince some Prince Rupert residents and investors that the economy has truly turned around. As the latest census shows, many people have already turned their backs on what has been consistently a someday boom town. Between 2006 and 2011, the population of Prince Rupert fell to 12,508 as more than 300 residents packed up and moved on. The 2.4 per cent decline is the biggest in all of B.C. and the fifth-highest in Canada.
“This time is different, “Kobza said.
With China, the prime minister of Canada, the premier of B.C. and resource behemoths from around the globe all rooting for success in the northwest, he could be right. The prince in waiting may have finally arrived.
from Western Investor March 2012