With a high office vacancy rate in downtown Calgary, office tower property owners are trying to attract tenants with new building designs and uses.
Sierra Place was built at the corner of 7 Avenue and 7 Street S.W. in 1958.
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It’s always been an office building, but the property owner is changing it into residential apartments.
Greg Moore with Artis Real Estate Investment Trust says the building is 50 per cent vacant and it’s been tough to find and keep tenants.
“We looked at how long the recovery is going to be in Calgary and how long it’s going to take to get a normalized market downtown,” Moore said. “We’re about five to 10 years from that happening, so we looked at what the highest and best use of the property is going forward.
“We can get more cash flow from the property as a multi residential building than as an office building.”
The slumping economy has forced many companies to leave downtown office buildings.
The vacancy rate in the core is 27 per cent, so building owners are getting creative to fill floors.
Aspen Properties owns the old Encana Place at 9 Avenue and 1 Street S.W.
When the company was redeveloping the newly named “Edison,” they used office design ideas from Silicon Valley.
Executive chairman of the board Scott Hutcheson said they’re focusing on amenities and lifestyle perks to attract companies who employ millennials.
“We’ve got some really cool amenities that have been developed into that building in order to react to the type of tenant that will be occupying those buildings in the future,” Hutcheson said.
“Fifty per cent of those in our offices in the downtown in Calgary are going to be millennials by 2020.”
“So that type of product is different than the traditional office product and the millennials are asking for it.”
The amenities include a basketball court, golf simulator and putting green. The whole building is dog friendly, with a dog spa and outdoor dog park.
Since the redevelopment started 12 months ago, The Edison is 55 per cent leased.
Greg Kwong with CBRE commercial real estate said between July and October this year, more new offices were leased in the core than vacated for the first time in three years.
“I don’t know if it’s a trend at this point,” he said. “It’s too early to tell but certainly any type of ‘green-shoot’ positive news is good news at this point.”
Those are encouraging numbers for Moore and Sierra Place.
Construction to convert his office building to residential space starts in early 2018.
“You want to see more people living downtown, some more densification. Work, live, play. I think this site here is great for that.”