The Regional Municipality of Wood Buffalo (RMWB) and the Urban Service Area of Fort McMurray represent the uncontested energy heartland of Canada. With a 2015 census population of 125,000 people, the RMWB is renowned for its vibrant workforce, its can-do attitude and history of resilience in the face of change.
In the wake of a material correction in the price of oil that began in 2014, energy producers in Alberta and their service providers have been quick to rationalize production costs to match the economics of tight oil production. Reported cost savings in the Fort McMurray region are in the neighbourhood of 20% as inefficiencies are removed and service provider costs are trimmed.
The impact of this cost control in a market accustomed to annual capital spending by resource companies in excess of $25 billion per year is a rationalization of operating costs in Fort McMurray – accommodation costs are down for hotel/rental/home ownership; businesses have more and cheaper leasing options; development land is becoming available; and service providers are aggressively pursuing new opportunities.
The status quo has been upset. This period of reset is a chance for a new normal to emerge – one that supports business creation and growth in Fort McMurray. With 97% of Canada’s oil reserves, half of Canada’s oil production and 1.7 trillion barrels of oil in place, the oil sands are not going to disappear from the global energy scene anytime soon.
How can established businesses capitalize on this period of change to improve performance?
Firstly, now is an excellent time to rationalize real estate to find the perfect fit never available in the past – leave your space that is underparked, too large, too small, or has low ceilings, bad access, no yard, and so on, and explore the fresh options available.
Secondly, realize the benefits of a tenants’ market – examine your operating costs; negotiate space improvements that will make you more efficient; move into a fully furnished space; upgrade to new construction for the same cost as your existing, 30-year-old building; find a yard you have always needed, or change out your neighbours to attract new customers.
Regardless of which side of the equation you are on, opportunities are fleeting.