Commercial realtor CBRE says Calgary’s downtown office space got a little less empty in the last quarter for the first time since the sector was gutted by the oilpatch downturn.
The organization says the vacancy rate dropped by 30 basis points to 27.4 per cent in the three months to the end of September, the first dip since the same quarter back in 2014 before the downturn hit.
The 10,600 square metres of positive absorption in Calgary still left the city with close to 1.1 million square metres of empty downtown office space, accounting for about 40 per cent of the empty downtown office space across Canada’s 10 largest cities.
The city’s downtown vacancy rate is also still by far the worst of any major Canadian city, with the national average hovering at about 11 per cent, while Toronto’s sits at four per cent and
Vancouver at five per cent.
There are other cities hit by high downtown office vacancies as well, though, with London, Ont., sitting at 21.5 per cent, Edmonton at 20.3 per cent, and Halifax at 16 per cent.
Calgary’s office market was hit by a combination of widespread layoffs in the oil and gas industry after the price of crude plunged, and overbuilding of office space during the boom years.
The city, however, looks to have finally hit the bottom for the market, says CBRE’s Greg Kwong, regional managing director of Alberta.
“Based on previous recessions that I’ve lived through, and certainly from the business community that I’m talking to, this kind of looks, feels, and smells like the bottom.”
He said the vacancy rate has stabilized after rising steadily over the past three years because most of the buildings started during the boom are now on the market, fewer companies added sublease space in the last quarter, and there look to be green shoots on hiring.
Kwong said, however, that he doesn’t see the positive third-quarter trend to mean any quick decrease in vacancy rates, predicting rates will stay in the high 20 per cent range for the next 12 to 18 months.