Fort St. John Lands On The 2013 Top BC Investment Towns List

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icon1Fort St. John

The Energetic City

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Fort St. John, BC
British Columbia s Oil and Gas capital is estimated to have one of the largest natural gas deposits in North America most of it still largely untapped. With the fairly recent attention being focused on the region as a viable source of shale based natural gas, we will definitely see a boost to the economy as exploration and production in the area increases. As new drilling techniques for shale are discovered, the area may become even more lucrative to oil and gas companies. And according to the Conference Board of Canada (Natural Gas Report 2012) there is now more money being invested into the development of the Canadian Natural Gas Industry than is being invested into the development of the oil industry. The investment in both sectors will primarily affect North East BC and Alberta.

Not a one-industry town, Fort St. John also has resources in forestry and agriculture. As the natural wealth of the region is opened to the eyes of more and more industries we will begin to see the potential and want to experience the cash flow the region can create. The region holds very strong cash flow opportunities for investors who are willing to do their diligence and are cognizant of the challenges of managing their properties from afar.

icon1Location

Located in the heart of Peace River country and only 214 kilometres west of Grande Prairie, Fort St. John is definitely feeling the boom cycle of the oil and gas industry. Mile 47 on the Alaska Highway (Highway 97), the City has links to the United States, eastern Alberta s oil towns, and resource-rich areas of the rest of northeastern BC. Fort St. John is less than an hour away from the Montney Formation.

Like Dawson Creek, located just 75 km to the south, Fort St. John s location allows it to act as a major service centre to the cities and towns of northeastern BC. As the largest urban centre in northern BC, the city provides services for approximately 64,000 people in its outlying areas.

icon1Population and Income

As of the last census, the population of Fort St. John was 18,609 in 2011. This is an increase of 6.9% from 2006, when the population was 17,4021. This was almost the same amount of growth the province experienced, which was 7.0%2. As the international demand for oil and gas grows, Fort St. John s population will continue to swell in size.

While most of the country is faced with an aging population, Fort St. John is a very young city. The median age in the city is 30.6 years3, one of the youngest median ages in the province. A full 11.3 years younger than the median age of BC, this clearly showcases the amount of young people migrating to the area in hopes of making a profit off of the oil and gas industry. This is important for real estate investors as younger people have more active housing demands and also contribute readily to the taxation base through employment taxes and more consumption of goods. This lends itself well to keeping the local economy healthy. Also, a younger median age means more babies will be born, which of course, often stimulates the housing economy as new parents move into bigger or more appropriate homes to accommodate their enlarging family.

The unemployment rate in the Northeast of BC is also well below the provincial average. As of July 2012, the unemployment rate for Northeast of BC was only 4.3%, while the province of BC s unemployment rate was 6.9%4.

icon1Residential Construction Activity

As Fort St. John continues its rapid expansion, the city will have to work hard to keep its infrastructure (both residential and commercial) on par with demand. However, this need may not be as great as one would expect. The main driver in Fort St. John s economy is the oil and gas sector, and many of the workers come from Alberta and either keep their base in that province, or live in temporary housing in the Fort St. John region. Either way, they are not counted in the official population numbers. Because of this, the city feels that it will not be impacted harshly regarding a need for extra housing to accommodate workers; however, locals feel differently. The council of Fort St. John doesn t expect to see a huge rush in new residential development as most of the workforce is transient – flying in for their jobs and later flying back out5.This may change, however, as companies become less willing to fly employees out to job sites and back home again since the economic downturn.

The council of Fort St. John may not expect to see a huge rush in residential development due to the interest in the oil and gas industry, but the Legislative Assembly of British Columbia still recognizes some housing issues that the city faces:

  • Increasing in-migration of resource workers due to increased employment has had upward pressure on prices – this is impacting low income families and seniors.
  • Shifting local demographics means less housing turnover. Young people are not moving out of FSJ after high school. Seniors are staying longer and not as many are moving away.
  • Community needs more diversity of housing types and price points. Limited housing for households earning $45,000 annually.
  • Region dealing with serious labour shortages of home builders, plumbers and construction trades. This could due to a number of older houses needing renovations and installation of energy efficient solutions, such as heating.
  • Chronic shortage of rental housing; what was a seasonal problem has become a year-round issue. Some reports of rent gouging .
  • Land supply may become an issue as City is hemmed in by ALR land.

After a period of lower building permit values in 2009 and 2010, the total value of building permits in Fort St. John seem to still be finding their ground. 2011 saw a total value of $71,270,000, while 2012 dipped a bit to $63,329,000. The January-March comparison seems to be showing another decline, with the January-March 2013 value so far being $7,745,000. This year-to-date value is a 30.1% drop from the 2012 s January-March values, which saw $11,081,000. Fort St. John saw quite a jump in the value of residential building permits, from $37,429,000 in 2011 to $55,445,000 in 2012. However, the year-to-date values show a drop of 18.5%, from $8,298,000 in January-March 2012 to $6,761,000 in January-March 2013.

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While many Alberta workers may fly in and out, Fort St. John has still seen an increase in housing starts in the last decade as more people move to the region. In the late 80 s and early 90 s, housing starts averaged well under 100 units per year. Residential construction has increased in the past ten years to hit a record breaking 382 housing starts in 2007. Housing starts decreased slightly during the recession, falling to 100 residential units in 2009. However, as the economy begins to improve, housing starts have once again risen. 160 residential units began construction in 2010 and 152 in 20116. CMHC reports that 239 houses began construction in 20127.

The Sunset Ridge Housing Development started in 2010 and is now complete. It expands over 30 hectares and accommodates 300 homes. The development is complete with access to a park, lake, and walking trails and has spectacular views of the surrounding areas8.

Another completed development in Fort St. John is Garrison Landing, which features a combination of single-family, multi-family, and multiple housing high density residences. It has been designed to feature green space and be pedestrian friendly9.

icon1Housing Market Activity

The BC Northern Real Estate Board, which serves the areas of Prince George, Prince Rupert, Kitimat, Quesnel, 100 Mile House, Fort Nelson, and Fort St. John, reported a decline of 9.4% in overall unit sales in the first quarter of 2013. However, Fort St. John continues to retain the highest median sale price of any other community serviced by the BC Northern Real Estate Board, with $380,000 and this year-over-year price has risen 8.6%10. You can note that the fewer sales in 2013 are due to nothing being available to buy – people are not moving out of the area so ripe with jobs. The following table looks at the side-by-side comparison of how Fort St. John compares to other cities and towns in the Northeast of BC:

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icon1Rental Market Activity

People are moving to the region in droves because of the high wages and ease of getting work and this is compounding an already existing constricted housing supply problem. Rents are rising and prices are beginning to follow suit. The major demand for housing in the region is currently rental product but as the labour market in the region matures, we expect this demand to shift to single-family, owner-occupied housing. Investors have been clamoring to get a piece of the region but have found it very difficult there is nothing to buy!

In fact, the economic fundamentals of the marketplace are very similar to the fundamentals of Fort McMurray, Alberta 10 – 15 years ago. The shale-gas industry is in its infancy in North Eastern BC, just as the oil-sands business was in its infancy 15 years ago in Alberta.

The average rental rate for a private apartment in Fort St. John saw a slight increase from $840 in October 2011 to $898 in October 2012, while the average rental rate for a private townhouse also saw an increase from $987 to $1,04811.

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It is important to keep in mind that while the average rents from CMHC provide a platform from which to compare across cities; investors have found the organization s reported rents much lower than what is found on the streets , as they sample from only purpose-built apartment rental owners instead of private rentals (people who own units that are rented out).

A quick look at some commonly-used rental websites such as Kijiji and Craigslist showed that rental properties in Fort St John are few and far between. Single room rentals are common and savvy residents have even begun renting out RVs. Studio apartments were renting for as much as $1,500 and 2 bedroom houses were commanding as much as $2,500 in rent each month.

Private apartment vacancy rates in Fort St. John saw an overall drop between October 2011 and October 2012, from 5.9% to 3.6%. However, the vacancy rates for townhouses saw an increase on average, from 2.7% in October 2011 to 6.1% in October 201212.

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With the Site C Dam project, the Horn River and Montney shale gas formations, and other large infrastructure projects such as the new hospital, Fort St. John is entering a boom that will dramatically lower vacancy rates and raise average rents.

icon1 Economics

When it comes to natural resources, the Peace River Region has it all. The region produces 38% of British Columbia s hydroelectric power, 90% of the province s grain, and contains some of the largest gas fields in North America. It is estimated that the Region has over 10,000 wells drilled, employs approximately 2,300 workers in the forestry industry, and sees about 300,000 tourists a year13.

It is the oil and gas sector that really drives Fort St. John s economy. The city is pitted directly between two recently discovered tight gas fields in northeastern BC. Both the Montney Formation to the southeast of the city and the Horn River Basin to the North of the City offer exciting possibilities of population and economic growth for Fort St. John. The two basins alone hold 30% of all of North America s natural gas. The interests of several Canadian and US oil and gas companies have already been piqued, and the region is starting to see a huge profit from land investment in the Peace River region14.

The potential investment in the region stems primarily from two sources:

1. The development of a Liquefied Natural Gas (LNG) industry in BC where gas will be extracted from NE BC, piped to the west coast, liquefied and shipped to the Asian marketplace.
2. A rise in domestic natural gas demand primarily driven by the Oil Sands industry demanding Natural Gas Liquids extracted from the Montney Basin to be added as diluents to the bitumen.

The economic activity around this region is not anticipated to wane. Vic Lewson, Executive Director of Resource Development and Geoscience, BC Energy, Mines and Petroleum Resources believes that the Horn River and Montney Basins will continue to produce for over 40 years due to the area s vastness. Shell Energy North America, Canadian Natural, and Talisman Energy have all recently opened head offices in the area as a commitment to the longevity of LNG here.

The city boasts hundreds of companies specializing in large and small pipelines, trucking (hopefully with fleet safety systems installed in their trucks), seismic research, and well site construction, which provides key support to the oil and gas industry. Fort St. John’s natural gas production already exceeds provincial demand and most oil and gas is being exported to markets across Canada and the United States15.

The Peace River region has some of the largest oil and gas fields in all of North America, with over 450 billion cubic metres of marketable gas reserves already identified and an estimated 650 billion cubic metres yet to be discovered. Fort St. John welcomes approximately 200 new businesses to the city each year, almost one third of them oil and gas related16. As BC s energy capital, Fort St. John also boasts the highest disposable income out of any city in BC, 16% above the provincial average17. Air Liquide and Ferus Inc. have recently invested $60 million and $40 million respectively into this region. CalFrac Chemical Storage and Head Office is another multi-million project that is creating 150 jobs.

However, there currently exists a major labour shortage in NE BC that is causing average wages to sky-rocket and driving workers to migrate to the region. As development continues in response to the increased demand for Gas from LNG and the Oil Sands industry this labour shortage is expected to become a labour crisis. The proposed projects continue in spite of the labour shortage:

According to the Petroleum Human Resources Council of BC, the demand for natural gas operations employment in Northeastern BC into 2020, even using their more conservative estimate, will increase and will usurp the needs of northwestern BC. Depending on the scenario, the region will need to add between 6,165 and 21,300 to meet the production demand created by LNG facilities planned for northwestern BC18.

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A utilities project called Hackney Hills Wind Park has been proposed by Aeolis Wind Power Corporation and is in the pre-application phased under the Environmental Assessment Act. The estimated cost is $400 million and proposed a 1000 MW wind park just east of Fort St. John19.

There is also the proposed Prince Rupert Gas Transmission Project by TransCanada Corp. which would see a natural gas pipeline along the North Coast. The estimated $500 million project would start in 2015 and finish in late 2018 and see the building, owning, and operating of a 750km natural gas pipeline from Fort St. John to an export facility near Prince Rupert20. It is estimated that it would create 2,500 jobs. Spectra Energy is proposing a $1 billion pipeline from Dawson Creek estimated to begin in early 2014 and complete in 2015.

One of the other sectors Fort St. John relies upon for a stable economy is agriculture. With over 16 million hectares of farmland, it s easy to see why. The Peace River Region produces more barley, wheat, and grass seed than any other area in BC. The North Peace Region in particular supports approximately 1,700 farms which account for a revenue of approximately $77 million a year21.

The forestry sector also plays a large role in the economy of the city. In 2009, the city was named the Forest Capital of British Columbia by the Association of BC Forest Professionals. Fort St. John s forestry industry employs over 700 people and contributes $98 million to the local economy each year22. The timber supply surrounding Fort St. John is in excess of 4.5 million hectares, providing jobs for over 350 logging and trucking contractors23. With the opening of the Peace Valley oriented strand board (OSB) facility in 2006, the forestry industry will only become more important. Anyone purchasing property in a town that has forestry as a major economic contributor must also read How Global Warming and the Pine Beetle could Devastate the B.C. Interior s Real Estate Market published by the Real Estate Investment Network and available for free at www.realestateinvestingincanada.com.

The city would also benefit from a proposed retail development by G8 Properties. The development, called Station 44 Power Centre, would cost an estimated $500 million for the commercial development portion of phase one. The entire development would be on 220 acres on the Alaska Highway near Fort St. John and would include a power centre with big box stores on over 80 acres of the site. The remainder of the site would include mixed density residential and a truck centre. The entire project would be slated for completion in 202324.

icon1 Infrastructure

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The quickly increasing population has the city trying to meet the current infrastructure needs. One urgent need that is currently being addressed is the lack of hospital facilities. The existing hospital has only 44 beds and fails to meet the needs of the growing population and job base of Fort St. John and its neighbouring communities. In July 2008, the provincial government accepted the city s proposal of a new hospital. The new Fort St. John Hospital is being constructed on a 40-acre parcel of land donated by the city. The Fort St. John Hospital and Residential Care project includes a 55-bed acute care hospital and an additional 123 beds for a residential care facility, which will replace the aging North Peace Care Centre. Construction on the $300 million project began in 2009 and is now open25.

In May 2010, it was announced by the provincial government that the project had been given the go-ahead for the Peace River Site C Dam. The need for energy in the province is expected to increase by 40% in the next 20 years26. The new dam would provide electricity for an additional 460,000 homes and would be located approximately 7 kilometres southwest of Fort St. John, on the Peace River27. This major utilities project is currently in stage three of the environmental and regulatory review, which includes a coordinated joint panel and environmental review featuring input from environmental assessment agencies on a provincial and federal level. The estimated $7.9 billion project would be a clean energy project and add a third dam and hydroelectric generating station on the Peace River while helping to meet the future electricity needs of the region. It is set to start in 2014 and finish in 2021. The highly controversial project will produce approximately 35,000 direct and indirect jobs during its construction28. While housing prices are not expected to increase dramatically in the next couple of years, the city will slowly begin to experience a ripple effect from the construction of the dam. The ripple is expected to begin in rental properties and starter homes before working its way up to higher-valued properties29. The new dam will provide electricity for an additional 460,000 homes and will be located approximately 5 minutes southwest of Fort St. John, on the Peace River.

The Shell Reclaimed Water Project is a $17 million investment that provides 4,000 cubic metres of water a day and supports up to 12,000 households. Additionally, the BC Hydro Transmission Project is a $250 million dollar project creating 110 construction jobs and estimated to complete in 2015.

An airport expansion is also being debated. According to the airport s website, 2011 was a record total number of passengers traveling through the airport at approximately 1.4 million, which was 4% more than the previous year and a growth rate of twice the national average30. In 2011, the airport released an official 10-year improvement plan, which includes the expansion of the Airport Terminal Building, a new Airport Access Road, expanded vehicle parking facilities, passenger-loading jet bridges, additional apron space, ramp services and cargo building, airfield upgrades & rehabilitation, conversion to LED lighting31.

With the ongoing and proposed development in the area, Fort St. John has recently attracted the attention one of Canada s largest airline carriers, WestJet. Beginning in June 2013, WestJet commenced the first daily flights in Canada with its new carrier, Encore. It believes that the market for flights to Fort St. John is currently undersupplied and expects the demand for flights to Fort St. John to grow significantly.

icon1Top Investment Town

When it comes to natural gas exploration, Fort St. John is located at the center of it all. Job creation, in-migration, and economic activity have picked up in recent years, straining the infrastructure and service industries in the city. With several major projects set to be completed in Fort St. John during the next decade, the city will witness rapid population growth. The upgrades to the airport and the opening of the Site C dam project in 2020 will re-establish the city as a hub for northeastern BC. The ripple effect created by these two major projects will increase rents and home prices in the region, making it even more desirable to investors and businesses.

It is important to keep in mind that as natural gas and oil prices fluctuate, so too will the northeast British Columbia economy. Property investors in this region must not only be experts in real estate – they must also become students of the many macro- and micro-cycles that play out in the natural gas industry.

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Economic Development Fort St. John
10631 – 100th St
Fort St. John, BC V1J 1K9
Tel: 250-787-8150
Fax: 250-787-8181
E-mail: citymanager@fortstjohn.ca
Web: www.fortstjohn.ca


1 City of Fort St. John. (2011). Census Profile Fort St. John (City). http://www12.statcan.gc.ca/census-recensement/
2011/dp-pd/prof/details/page.cfm?Lang=E&Geo1;=CSD&Code1;=5955034&Geo2;=CD&Code2;=5955&Data;=Count&SearchText;=fort%20st.%20john&SearchType;=Begins&SearchPR;=01&B1;=All&Custom;=&TABID;=1
2 Statistics Canada. (2011). Census Profile British Columbia. http://www12.statcan.gc.ca/census-recensement/2011/dp-pd/prof/details/page.cfm?Lang=E&Geo1;=PR&Code1;=59&Geo2;=PR&Code2;=01&Data;=Count&SearchText;=british%20columbia&SearchType;=Begins&SearchPR;=01&B1;=All&Custom;=&TABID;=1
3 City of Fort St. John. (2011). Census Profile Fort St. John (City). http://www12.statcan.gc.ca/census-recensement/2011/dp-pd/prof/details/page.cfm?Lang=E&Geo1;=CSD&Code1;=5955034&Geo2;=CD&Code2;=5955&Data;=Count&SearchText;=fort%20st.%20john&SearchType;=Begins&SearchPR;=01&B1;=All&Custom;=&TABID;=1
4 BC Stats Quarterly Regional Statistics Northeast, DR (July 2012)
5 Krugal, L. (2008). Fort St. John Won t be Another Ft McMurray in Edmonton Sun. http://oilsandstruth.org/fort-st-johnquotwon039t-be-another-ft-mcmurrayquot.
6 BC Stats Housing Starts, Urban Areas and Communities http://www.bcstats.gov.bc.ca/StatisticsBySubject/Economy/BuildingPermitsHousingStartsandSales.aspx
7 CMHC. (2013). Housing Now BC Region. http://www.cmhc-schl.gc.ca/odpub/esub/64151/64151_2013_Q01.pdf?fr=1368566221796
8 Invest in Northeast British Columbia. http://investnortheastbc.ca/major-projects-investment-opportunities/map-view/fort-st-john-2/sunset-ridge-housing-subdivision
9 Invest in Northeast British Columbia. http://investnortheastbc.ca/major-projects-investment-opportunities/map-view/fort-st-john-2/garrison-landing-housing-development
10 Canadian Real Estate Board (May 2013). Residential Activity. http://creastats.crea.ca/cari/mls/mls01_residential.htm
11 CMHC Monthly Housing Statistics (April 2013). http://www.cmhcschl.gc.ca/odpub/esub/61512/61512_2013_M04.pdf?fr=1368067311886
12 Ibid.
13 North Peace Economic Development Commission. (2010). The Advantage. http://www.npedc.ca/advantage
14 Business Edge Magazine. (2008). Fort St. John Looks to Avoid Boomtown Negatives (July; Vol. 5, No. 14). http://www.businessedge.ca/article.cfm/newsID/18299.cfm.
15 City of Fort St. John. (2009). Economic Profile. http://www.fortstjohn.ca/index.php?option=com_content&view;=article&id;=212&Itemid;=102
16 Oil and Gas Inquirer. (2006). Sounds Of Success For Energetic City . http://www.oilandgasinquirer.com/profiler.asp?article=%2Fprofiler%2F060601%2FFortStJohn-gps06.pdf
17 City of Fort St. John. (2006). Sounds Of Success For Energetic City . http://www.oilandgasinquirer.com/profiler.asp?article=%2Fprofiler%2F060601%2FFortStJohn-gps06.pdf
18 Petroleum Human Resources Council of BC. (February 2013). Labour Demand Outlook for BC s Natural Gas Industry. http://www.petrohrsc.ca/media/39665/2013-02-21_ final_bc_natural_gas_labour_demand_to_2020_report.pdf
19 BC Stats. Major Projects Inventory (December 2012). http://www.jtst.gov.bc.ca/ministry/major_projects_inventory/pdfs/December_2012.pdf
20 BC Stats. Major Projects Inventory (December 2012). http://www.jtst.gov.bc.ca/ministry/major_projects_inventory/pdfs/December_2012.pdf
21 City of Fort St. John. (2009). Economic Profile. http://www.fortstjohn.ca/index.php?option=com_content&view;=article&id;=212&Itemid;=102
22 City of Fort St. John. (2010). 2009 Forest Capital of BC. http://www.fortstjohn.ca/index.php?option=com_content&view;=article&id;=349&Itemid;=195
23 City of Fort St. John. (2009). Economic Profile. http://www.fortstjohn.ca/index.php?option=com_content&view;=article&id;=212&Itemid;=102
24 BC Stats. Major Projects Inventory (December 2012). http://www.jtst.gov.bc.ca/ministry/major_projects_inventory/pdfs/December_2012.pdf
25 BC Stats. Major Projects Inventory (December 2012). http://www.jtst.gov.bc.ca/ministry/major_projects_inventory/pdfs/December_2012.pdf
26 McEwan, Tim. (April 26, 2010). How Site C will turn northern B.C. into an economic powerhouse . http://www.vancouversun.com/technology/Site+will+turn+northern+into+economic+powerhouse/2951520/story.html
27 BC Hydro. (2008). Peace River Site C Hydro Project. http://www.bchydro.com/etc/medialib/internet/documents/policies/pdf/site_c_peace_river_site_c_hydro_project_householder_may.Par.0001.File.site_c_peace_river_site_c_hydro_project_householder_may.pdf.
28 McEwan, Tim. (April 26, 2010). How Site C will turn northern B.C. into an economic powerhouse . http://www.vancouversun.com/technology/Site+will+turn+northern+into+economic+powerhouse/2951520/story.html
29 Robinson, Melanie. (April 29, 2010). Real Estate, Economy to benefit if Site C project goes ahead . http://www.northeastnews.ca/index.php?option=com_content&view;=article&id;=554:real-estate-economy-to-benefit-if-site-c-project-goes-ahead&catid;=10:news&Itemid;=12
30 http://www.stjohnsairport.com/index/index.cfm?id=43
31 http://www.stjohnsairport.com/press/pressrel_detail.cfm?id=26

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