Calgary’s downtown offices will continue to clear out: report
Posted Dec 30, 2015 7:35 am.
This article is more than 5 years old.
A new report says Calgary’s downtown office vacancy rate will soon reach highs similar to what it experienced during the 2009 recession. CBRE Limited is out with its 2016 Canada Commercial Real Estate Market Outlook. It says Calgary will see an 18.4 per cent vacancy rate in the core next year.
The commercial real estate watcher says investors are paying attention to the price of oil, but they’re a bit hesitant for now to keep offices open. It says the bulk of downsizing appears to have already happened, so rising vacancy rates should slow down, although they will peak in the third quarter of 2016.
In a recent interview with 660 NEWS, Regional Managing Director Greg Kwong says if you believe in history, you can expect a dramatic rebound that follows the resource sector bouncing back within a few years.
“Conservatively, that’s probably going to be the second or third quarter of 2017 where we see an eight, nine, maybe 10 per cent vacancy rate. And that’s manageable,” he said.
There is one big advantage. All the empty offices make way for cheaper space, with a rate of $18.81 per sq. ft. according to the report. In a year end interview, Mayor Naheed Nenshi described Calgary as having a ‘one-time only limited sale.’ Companies who thought they were priced out of the downtown market are now considering space in the city centre. He noted developers who have construction crews working right now, hit the jackpot.
“They could build at the bottom of the economic cycle and lease at the top of the cycle. So we basically have people making $100 million and $1 billion bets that there will be a top of the cycle by the time those buildings come out of the ground. And I like those bets,” says Nenshi.
CBRE says it’s also changing the face of downtown. Kwong says high end fashion retailers and some restaurants are getting wiped out, but strong retailers are moving in.
