January 4, 2019 2:31 pm

Plunging Calgary office values linked to high oil and gas unemployment

WATCH ABOVE: Wed, Nov 14, 2018: With high office vacancy rates in Calgary's downtown core, the city continues to shift the tax burden to businesses elsewhere. Adam MacVicar reports.

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A commercial realtor says a 32 per cent decline in Calgary’s downtown office building property assessment this year will likely translate into lower costs for some tenants, but he doesn’t expect much improvement in the vacancy rate.

Greg Kwong, Alberta managing director for realtor CBRE, says companies will have to start replacing the thousands of energy industry workers laid off following the oil price crash of late 2014 before the city’s downtown vacancy rate will recover from its year-end level of 26.4 per cent.

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READ MORE: Downtown Calgary struggles with commercial vacancies while ‘burbs’ boom

Calgary Chamber of Commerce spokesman Mark Cooper says lower values in the downtown means property taxes are likely going to have to rise for businesses throughout the city to make up the difference.

He says investor confidence needed for job creation in Calgary is low thanks to Alberta oil prices which failed to keep up with last year’s global oil price rally due to discounts blamed on a lack of export pipeline capacity.

READ MORE: Downtown Calgary office building owners get creative to fill floors

The city says the total assessed value of downtown office properties fell by $5 billion over the past year and now makes up only 18 per cent of the total non-residential base, down from about 32 per cent in 2015.

It says the crescent-shaped Bow Tower, home to oil companies Cenovus Energy Inc. and Encana Corp., lost 18.6 per cent of its value in 2018, falling to about $779 million. In 2015, it was valued at $1.43 billion.

READ MORE: Has Calgary’s downtown office vacancy rate finally hit bottom? Experts say maybe

Residential property assessments in Calgary are down one per cent compared with the previous year and retail assessments were little changed.

WATCH: Calgary’s downtown continues to struggle with high vacancies. Tomasia DaSilva reports. (Aired Sept. 2018)

© 2019 The Canadian Press

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