More than a third of office space was vacant in downtown Calgary during the second quarter of this year, a record, according to a new report from commercial real estate company CBRE.
It was also the highest vacancy rate in all of Canada, said the company’s regional general manager, Greg Kwong.
Kwong said the problem dates back to 2015, when the price of oil crashed and companies were forced to lay off staff and in some cases close their doors completely.
The city has also added office space in recent years as construction projects went online. Meanwhile, the rise in oil prices has not yet translated into more office work, he said.
“It’s a reflection of the energy sector still trying to tidy up its ship and calibrate itself for the next 20 or 30 years, whether it’s capital spending, employee deployment and the mergers and acquisitions that are taking place,” he said. to say.
The report says the “consolidation of the energy sector” of office space continues to influence office vacancies in the city center.
Commercial real estate vacancies have reached an all-time high in downtown Calgary with a new online supply and continued consolidation of the energy sector. (CBRE)
Hybrid work strategies with more office workers staying home for part of the week have also reduced demand for office space in the city center, the report says.
With the vacancy rate reaching 33.7%, Alex Whalley, an associate professor of economics and business at the University of Calgary, says future growth is more likely to come from outside the oil and gas sector.
“Calgary’s tech sector is starting to grow, but it’s still much smaller than energy,” he says. “So it will be something we need to watch out for to see how this sector does over time.”
According to the report, homeowners who have invested in improvements and renovations to older buildings and services are reaping the benefits, with those properties outpacing the properties of homeowners who have not.
The city is also pushing to turn empty office buildings into residential spaces, announcing last week that two more downtown office buildings will be converted into condominiums.
In total, the city council has committed $ 100 million to the Calgary Center Development Incentive Program, which focuses on removing excess office space through conversions.
Mark Garner, executive director of the Calgary Downtown Association, believes things are changing, but that improvement takes time.
“We need to make sure it’s a kind of economy balanced with the employment cluster as well as this tourist destination and get the community back to the city center,” he said.