Downtown Calgary struggles with commercial vacancies while ‘burbs’ boom
Calgary’s downtown core continues to see near-record-level office vacancy numbers more than three years after the downturn started.
According to commercial real estate services and investment firm CBRE Ltd., vacancies were still high in the second quarter of 2018, with an overall office vacancy rate of 27.8 per cent.
“When you look at pure vacancy, yeah, that’s a problem,” CBRE’s Alberta retail manager Greg Kwong said. “There’s no denying that.”
But according to Kwong, that’s not the entire picture. He said leasing activity is actually picking up, especially outside the downtown core.
Commercial real estate investment in Calgary in the second quarter of 2018 reached a record high — $2.5 billion. That’s a 59 per cent jump from the previous record of $1.6 billion at the end of 2012.
“Investors are saying either, ‘I’ve got to get back into Calgary,’ or, ‘I have to increase any portfolio in Calgary,'” Kwong said.
The sectors seeing the most activity, according to the CBRE, are industrial and retail, especially in Calgary’s growing communities.
Kwong said that makes sense, because whenever a new community is developed people need to shop, and retailers along with other businesses follow the houses.
The growth of investment in the suburbs and industrial areas of Calgary has forced the city to make some changes when it comes to tax distribution.
It has had to shift the tax burden to those businesses outside the core, to make up for the loss of market value downtown.
WATCH: Calgary’s downtown continues to struggle with high vacancies. Tomasia DaSilva reports.
Still, city officials are confident downtown Calgary will bounce back in some shape or form.
“I think the vibrancy will be different than in the last go round,” City of Calgary’s manager of urban strategy Thom Mahler said.
“Our vibrancy was heavily attributed to the office tenants. The oil and gas industry — which had huge expenditures for restaurants, business — hosting all of those things. That’s not going to be back in the same measure.”
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