Western Canada gets an early Valentine’s Day gift which could give both the economy and commercial property performance a lift.
A new executive order signed in the US finally gives the greenlight for the TransCanada Keystone XL pipeline. There may still be a lot of work to do, but Canadian property investors could be among the big winners when it does happen.
After years of battling and then giving up hope of the pipeline becoming a reality, a new January 2017 order has revived the big plans. Not everyone is going to be happy about it, and there are still questions and challenges to be worked through, but there could be big benefits as well.
The pipeline which is to run from Alberta to Houston has been controversial. However, the share prices of both TransCanada Corp. and Energy Transfer Partners LP were up in a positive reflection of the news, as of January 26th. Forecasts are that the pipeline will create many jobs and add billions of dollars in GDP.
Among the challenges to implementation are working out the details of construction and sourcing materials, organizing contractors, finalizing financial benefits for both the US and Canada, and of course overcoming environmental protests. There is significant resistance from environmental groups. Yet, they may no longer have the allies or public sentiment needed to block the pipeline from proceeding.
While there are certainly pros and cons of the pipeline, and a long road to it being operational, most Western Canadians and commercial real estate investors within the zone of development should find benefit from it.
There are expected to be short term, immediate benefits from economic confidence and a rush to accommodate the real estate needs of supporting businesses, as well as long term economic benefits which should supporting commercial leasing activity and property values. Both current property owners and investors who are now making plays in Alberta could find this news and ensuing activity helps elevate their portfolio performance.
It appears that the Keystone XL pipeline may almost be unstoppable now. At least providing substantial progress is made during the next four years. While we may not love everything about the potential impacts of such infrastructure and energy developments, there is an upside. This should certainly be factored in to investors’ plans as they look to restructure and expand their portfolios ahead.