Mary Moran is president and CEO of Calgary Economic Development. She spoke with Calgary’s Business about the state of economic affairs in the city.
Calgary’s Business: What’s the purpose of the recently-announced $100-million Opportunity Calgary Investment Fund and how will it work?
Moran: The purpose of it is to do catalytic things that will help us accelerate our diversification strategy. It can include a couple of things. It can include smaller projects that will be catalytic in the industries that we focus on. It could be in attracting companies to Calgary. It could be used for infrastructure projects. … We’re leaving it pretty wide open at the top. There’s some guiding principles that we use. There’s some criteria but the idea is for it to create economic prosperity in the form of job creation, office space absorption, tax lift and if there is a social return on investment it’s even better.
CB: What’s your sense of the general mood of Calgary these days when it comes to the economy?
Moran: There’s so many looming things. When it comes to the mood in Calgary, I think we’re very pragmatic and realistic about that we still have a lot of challenges ahead of us, including 13 million square feet of office space (vacant). I think the people who are in the know, know that the downtown core represents 40 per cent of the non-residential tax base for the city. So that’s a big hit to the city. The office space and the talent are probably the two pressing issues for people.
When it comes to energy companies, obviously the pipeline is a big looming issue for sure and people want to see that done. Overall, the energy industry has figured out how to operate in this new environment and some of them are posting bigger profits than they were in the boom. But the cost to that has been office space and talent. So we’ve got to figure out those two great assets we need to do something different with and here’s the window to do it.
CB: How important is it for the city to diversify its economy so it’s not always at the mercy of oil prices?
Moran: It’s quite critical. There are great opportunities to do that. If you think about some of our sectors where we have the right to win we need to diversify to them and within them. There’s some diversification that can take place within the energy industry particularly around clean technologies that will support oil and gas but also obviously renewables.
Similarly agriculture. I don’t think we’ve leveraged it as much as we can to help diversify the economy even in Calgary. Then of course transportation and logistics. We have the right to win in all of those sectors. So we have to diversify to them and in them. But the most important part, out of all the looming issues, I’m most worried about technology and innovation. Technology and innovation isn’t a sector anymore. It’s a way of doing business and it’s a way of ensuring that you’re more competitive globally. So we’ve got to embrace the modernization of these industries and I think we have a huge opportunity to do that.
CB: Which industries are ripe for growth in the city?
Moran: Agriculture is very ripe for growth. But we need to get the province and the federal government aligned in seeing that this is an opportunity. That includes agri-food as well as agri-tech. Those are both great export products that we haven’t leveraged as much as we possibly can. There are some companies that have done exceptionally well. … We haven’t put agriculture, or agri-tech, or agri-food in this community as much as we possibly need to. We need alignment by the province and the feds to support that and we haven’t seen that kind of commitment. Our products are great. They’re high quality and they’re products that the world wants.
Transportation and logistics, we have a bit more co-ordinated between the airport and the City of Calgary but there’s such significant opportunities, particularly around a smart inland port. This is about technologies that will help logistics but it’s also things like autonomous vehicles. Alberta has one of the largest line of sight testing grounds in the world. We’ve got to leverage that as an opportunity. Those are the kind of right to win.
I look at energy, agriculture and transportation and logistics as the right to win and those are all really important sectors that are addressing world needs, so whether it be food, transportation, heat and fuel to help the transportation needs of the world, they’re basic needs of humans so they’re going to continue to grow and continue to be high demand. But we’ve got to get more competitive by overlaying technology on top of them.
But there’s also growing and emerging sectors including creative industries, including tourism. I still think there’s an opportunity to grow tourism more than we have in the last decade. Then of course there’s financial services. Life sciences and health is one as a community we’ve got to get better at advancing some of the opportunities because there’s amazing things happening at the university and we’ve got to really work closely with them to try pursue companies that might help form a cluster around some of the great things happening around the university.
CB: Is there any solution to the high downtown office vacancy rate besides waiting it out until the economy picks up again?
Moran: If you look at any innovation district in the world, what happens is it evolves very naturally with a smattering of innovation companies that are in that area. And we need more innovation companies or technology companies in the downtown core. It’s a great use of office space but it’s a different type of leasing than what we’ve seen.
Jurisdictions that have made strong innovation typically do 30-day leases to help small companies do step-up and we’re so skewed to large companies, large floor plates, long leases but that’s not the future of Calgary anymore. The concentration of having enterprise companies down with small startups and scale-up technology companies is probably the best opportunity we have. It will be a longer road. We know that it’s probably going to be somewhere between eight to 10 years from now until we see all of that office space taken.
We’re so perfectly set up to have a concentration of tech companies downtown and a concentration of tech companies working with enterprise companies that need the solutions that tech companies are creating. We’re so advantaged from that perspective because we have all the other natural assets – restaurants, bars, gyms, parks. That’s not a hard sell. … What we need to do is integrate energy companies, agriculture companies and technology companies all in the downtown core.
– Mario Toneguzzi
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