We sat with Agriplay Ventures Inc. (Website, LinkedIn) President Dan Houston to discuss the company’s recent development and his future outlook on the industry. All images used in the article are provided and owned by Agriplay.
Based in Calgary, Alberta, Canada, Agriplay vows to re-purpose underutilized commercial real-estate into productive vertical farms. By using versatile and modular technology to enable solutions designed by their team or sourced from partnering companies, Agriplay enables the growth of various produce in urban areas.
So why commercial real estate?
“While industrial properties are the most common real estate used in vertical farming, it has its issues. It requires a long-term commitment, lack of scalability, is relatively scarce, important planning goes into it, forces companies to fit yourself in the market rather than fitting what the market needs.” Mentions Dan Houston, President of Agriplay.
Commercial real estate has opportunities as COVID has forced many companies to rely on remote working and adapt their management, thus requiring much less space than pre-pandemic. Calgary’s commercial real-estate has also been hit by the previous market crash in oil & gas.
Indeed, investments in commercial real estate have decreased in recent years, reaching CAD 709 million in the first quarter of 2022 compared to CAD 907 million in the same quarter in 2021, according to altusgroup.com. It creates opportunities for Agriplay as landlords seek solutions to avoid letting their property too long on the market.
“The more landlord keeps their properties on the market the more likely the value of that property will fall as the outlook for most commercial real estate properties is not favorable. In one of the properties we are converting, the value when we entered was CAD 49 per square foot, once the installation is complete, that value will jump to CAD 289 per square foot,” adds Dan.
Growth thanks to a flexible process
Research and development require a long time as companies usually take a year or more to get the first versions of their product out of their laboratories or research centers. Agriplay’s lead time from innovation to inception is reduced to a few months.
“We started developing our LEDs in December, and today we are already at our 7th version,” Dan Houston states “3 versions were already on the market by that time.”
This process is not only used in developing new technologies but also in re-purposing real estate.
“We are planning a new facility of 470,000 square feet of growing space, and we can get that up and fully running in about 24 months. Moreover, as we grow on a floor-by-floor basis, we can start growing once the first floor is ready. We lose less time than the facilities requiring 8-12 months of market study and 18 to 36 months of construction during which you can’t grow.”
“Our flexibility along with our business model and the incentives we get from the City of Calgary enables us to reduce our capital expenditures (CAPEX) to lower levels compared to traditional vertical farms.” adds Dan “As our CAPEX is low, we can reach profitable levels relatively quickly.”
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