How Real Estate is Critical to the Future of Alberta’s Hydrogen Economy

The Northern Alberta hydrogen industry is a hive of activity at the moment, and it’s helping to diversify and fortify Edmonton’s industrial real estate market.

CBRE’s Gregg Maimann and his team are on the vanguard of the action, carving out a niche for themselves in the new hydrogen economy.

“Our economy is being buoyed by local, regional and international companies related to the hydrogen and non-traditional petrochemical industry,” he says.

“It’s giving us an undercurrent of strength in the industrial market, which has been softening a bit after a record run through the pandemic.

“Real estate is key to setting up and propelling the hydrogen economy forward.”

Tenants supporting the new hydrogen activities are boosting demand for mid-to-small-sized industrial spaces, Maimann says.

“And they’re making the Edmonton industrial market more resilient than in other Canadian cities right now and helping to drive our local economy.”

Land for Specialized Logistics

Maimann has been assisting energy companies in securing land to build plants and distribution centres that will supply their facilities over the long term.

He just sold 152 acres in Northeast Edmonton to U.S.-based Air Products, which manufactures hydrogen net zero fuel stations and infrastructure. The company is in the midst of building a multi-billion dollar facility on that sizeable swath and Maimann says it’s having a multiplier effect as those dollars are pumped into the local economy.

Air Products isn’t the only group making moves in Northern Alberta. Suncor and ATCO are also building plants Northeast of Edmonton for hydrogen and petrochemical activity not related to straight oil and gas production.

Maimann is working on a 150,000 sq. ft. build-to-suit distribution and long lead time logistics centre to serve hydrogen and petrochemical plants. The distribution centre will stock parts to ensure companies like Suncor, Dow and Air Products’ plants can sustain decades of maintenance, repair and operation.

“There’s a big bright future in this,” he says. “And companies are starting to position themselves as the ones to facilitate, find, buy and warehouse these items. It’s a specialized form of logistics.”

A Long Green Runway

Hydrogen, whether it’s used to heat homes or run trucks, trains, boats and cars, and whether it’s being combusted or used in a fuel cell, is a “very green fuel” says Maimann. “Hydrogen is real and it’s here and it’s starting to have some economic impact.”

Hydrogen gas produced through the plants has to be captured and shipped to filling stations. So there is additional infrastructure required to get the hydrogen into planes and boats and trains and onward where it has to go.  

This facet is “a whole industry there on its own,” Maimann says. “We’re just in the front of it and it’s exciting. Hydrogen represents a turning point for the Edmonton economy.”

Celanese chemical facility, which Maimann's team sold for $32 million.

A Piece of the Action

Maimann’s team is regularly fielding business inquiries from out-of-province. Extra-provincial capital that is actively seeking investment opportunities is intrigued by what’s going on with Alberta’s hydrogen economy. Investors also like the province’s low corporate taxes, he notes.

Much of the interest stems from the Greater Vancouver Area. Investors and landlords are eyeing the differential in cap rates and rates of return between Vancouver and Edmonton. “It can be a 200 basis points difference,” says Maimann.  

Case in point: Kevin Hughes and Maimann just sold a 60-acre industrial park in west Edmonton to BC-based investors. “They can’t find six acres in the GVA let alone 60, and this is fully serviced and build-ready.”

Industrial land continues to sell, which is an encouraging bellwether. “When land is trading it speaks to the health of the commercial real estate market and investor belief in future growth,” says Maimann. “And land is still trading here, both small parcels and sometimes large swaths.”

The site northeast of Edmonton where a 150,000 sq. ft. distribution facility will be built to supply parts to companies like Air Products, Suncor and Dow.

Hydrogen Point People

With Edmonton at the leading edge of the hydrogen economy, Maimann and his team have positioned themselves as the point people when it comes to site selection and land development for the petrochemical industry, having sold three plants in past years.

Site selection for these facilities is complicated, as they require access to potable and processed water, as well as input and output pipelines to take product in and out. They also need a hydrogen pipeline, and a carbon capture and sequestration pipeline, among other specialized requirements.

“This is not your standard industrial transaction. You’re not just looking for a piece of dirt,” says Maimann. “It needs full utilities and the proper heavy industrial zoning.”

“With our experience in this space, we’re probably the best qualified to help businesses get a foothold and ramp up,” he adds.

“It also helps that we are truly passionate about this growing segment of the economy. My team and I are here to help clients sort out their real estate requirements so they can focus on building out the energy source of the future.”