Is Vertical Farming a Green Solution to Office Vacancy?

With office vacancy accelerating across the country, property owners are increasingly eager to secure tenants to fill unoccupied space in their buildings. In many cases, that means repositioning or repurposing assets to achieve highest or best use and maintain steady rent revenue.

In Calgary, this trend is nothing new. The city, whose downtown core has historically been dominated by oil industry headquarters, has seen vacancy rise steadily over the decade since the oil price crash of 2014.

That’s one of the reasons why former Calgary office leasing broker Dan Houston started vertical farming company Agriplay. “I had a lot of friends in the industry who said, ‘We've got all these vacant spaces’,” Houston told LoopNet. “That was the impetus behind it on the commercial real estate side.”

Describing Agriplay’s product as “elevated urban farming”, Houston said the company has developed technology that allows vacant office space to be used to profitably grow up to 150 different crops of fresh produce for local markets.

In April 2022, Agriplay opened a showcase facility in partnership with Aspen Properties that occupies 65,000 square feet of underutilized office space in Aspen’s Calgary Tower Centre. A year later, the company is now set to launch an updated version of its AI-powered vertical growing system that Houston says uses only about 750 watts of power per 4-by-8-foot module, roughly the same energy burden as a personal computer.

A self-professed tech nerd, Houston said the idea for Agriplay sprouted from his collaboration on an AI-enabled proptech project with co-founder Adam Morand.

“We were creating a system that is actually the backbone of Agriplay,” Houston said. “A true smart-building system that allowed the building to get smarter and more efficient over time.”

The concept to use that smart-building technology to tackle food insecurity, he said, came from witnessing major produce shortages during Alberta’s cold winter months, which were further aggravated by supply-chain disruptions brought on by the war in Ukraine.

“Ninety-eight percent of the fruits and vegetables that we eat come from somewhere else,” Houston said. “It’s a big hole that needs to be filled.”

Enter Agriplay, which aims to solve two crises at once: office vacancy and food insecurity.

But when Houston and Morand started talking to experts in the vertical farming industry, they realized that the existing technology had been developed with industrial assets in mind, and that there were significant hurdles to overcome to be able to meet the energy requirements of an office building.

“The people that build vertical farming systems only build for the industrial asset class, because that's where all the vertical farming is,” Houston said. “No one has technology to convert anything that's not an industrial asset.”

But instead of being discouraged, Houston and his partners saw the lack of suitable technology as an opportunity.

Determined to develop a system that could be implemented into existing office, community and retail properties, Agriplay built a distressed-environment testing facility in northeast Calgary, where a team of engineers tackled the problem of growing healthy, profitable crops using the same amount of energy as a typical office. Houston told LoopNet that cherry tomatoes, cucumbers, watermelons, peas, peppers and a variety of leafy greens were among the 150 different crops the team tested.

“When people said, ‘no, that's not possible’ or ‘that doesn't exist’, we would just say, ‘okay, that's the thing we have to build,’” Houston said. “We built the tech stack from the bottom up.”

After nearly two years of research and development, Agriplay settled on a prototype: a soilless, precision-rainfall system that uses a Power-over-Ethernet (PoE) network to provide electricity to sensor-equipped, multi-spectrum LED lights, while also sending data to an AI-enabled backend that adapts growing conditions to the local environment.

The result, Houston said, is up to 90% less energy consumption than traditional vertical farming operations. That equates to slightly more power than a dense, open-desk office environment, he said, and slightly lower water consumption.

Houston noted that another advantage of Agriplay’s smart-building system is that it’s plug-and-play, making it easy to implement in any location, regardless of climate.

“It doesn’t matter if you're growing in 2 million square feet in L.A. or a 3,000-square-foot community center in Kugluktuk. Both of those come back into our cloud and our AI in the backend refines the model. You don't need to know how to grow strawberries. The system will tell you what to do.”

According to Houston, one of the major obstacles facing vertical farming is efficient delivery to market.

“If you're distributing over long distances, then all you've done is increase the cost of production of the food,” he said. “You're still on the same supply chain.”

“But if you do hyper-local and you just distribute to the city or to the community, then you can convert an office building and it can have multiple outputs to fill in the gaps, as long as you can grow more than one thing. It’s a huge, uncontested market.”

Houston said that most of the output from Agriplay’s vertical agriculture model is destined for the local wholesale market, and the company’s website provides a calculator to help estimate potential revenue for different crops.

And although installing the system does require initial capital expenditure, Houston says it also leaves owners with added value on their asset.

“Our system was designed with the landlord in mind,” Houston said. “We're essentially just a different use under the same office category. We snap in and when we're done, we snap out and you're left with upgraded base-building space. With the PoE network, your building now has a nervous system.”

He added that airflow and humidity management for Agriplay’s growing system is roughly equivalent to an average office tenant.

“We found that three to four air exchanges per hour, 22 degrees Celsius and 65% humidity — like you would get in almost every single office environment — grows 90% of anything that you'd ever want to grow,” he said.

Bolstered by support from Calgary Economic Development, the City of Calgary and Invest Alberta, Houston said Agriplay is now ready to go global with an updated version of its modular growing technology.

The company’s expansion model involves selling territorial licenses for individual markets to local operators who can then manage throughput costs and sub-licensing as they see fit. Licenses are divided on a province-by-province and state-by-state basis in Canada and the United States and on a country-by-country basis for the rest of the world.

“The playbook that we provide to our licensees allows them to operate the farm with a white label app that they can use themselves,” Houston said. “They've got all the hardware that they need. They just have to source out their seeds. And in some cases, we do that for them on the system. And then the system manages their growing profile all the way through.”

Houston said licensing agreements are in the works for every province and state in Canada and in the U.S., as well as in many countries overseas. “We've had some massive deals that we're going to be announcing over the next two or three months. The way that we see it is every single community needs to have a number of these.”

In a recent example, Chicago-based nonprofit FarmZER0 has secured licensing rights for the Chicago Metropolitan Area and is already in talks to lease 70,000 square feet of unoccupied downtown Chicago office space for agricultural use. CEO Russell Steinberg said the venture is planning to fill over 3 million square feet within the next year, eventually producing over 60 million pounds of produce per year, which accounts for about 10% of the city’s produce supply.

In Alberta, Agriplay created its own licensee, Alberta Food Security, that negotiates deals to lease — and sometimes buy — empty office space throughout the province. The company’s long-term goal is to convert 5 million square feet to agricultural use.

“Five million square feet equates to about 2% of that 98% that we import,” Houston said. “You can fill every office vacancy that exists with a farm like this, and you would still need more space to meet that demand.”