The sight of empty commercial space and dark tower floors isn’t new to Alberta or unique to the COVID-19 pandemic. But with more people working from home, offices downsizing and many businesses folding, realtors are expecting already sky-high vacancy rates will continue to rise.
The latest report from July pegs Calgary’s office market has a vacancy rate of 22 per cent. It’s worse in the downtown, where 25 per cent of commercial real estate is up for grabs.
“The office market isn’t going away,” said Susan Thompson, a research manager at commercial real estate services firm Avison Young.
“Companies are still going to need to operate from somewhere to allow employees to do business, to collaborate. What it looks like, though, may change. Low-rise space is probably going to become popular, with less reliance on elevators. Suburban space may actually become more popular because then you’re not trying to put as many people into a dense downtown core.”
And there’s evidence landlords are also taking a creative approach, with some Alberta companies eyeing all that empty office space as an opportunity for reinvention.
Strategic Group has been one of Alberta’s first to enter the market into office conversions.
It spent $25 million renovating what was once the Stephenson Building in Calgary and re-purposing it as “Cube” — a residential rental apartment building with 65 apartment units.
Ken Toews is vice-president of development with Strategic and said while conversions can be challenging, each project can divert thousands of tonnes of demolition material that would otherwise go to landfills.
“It’s really rewarding because the people really love the buildings, they love the environmental aspect, and we’ve been able to come up with some really good plans and make living really easy,” said Toews.
“We need to revitalize downtown Calgary, and we would like to be part of that plan.”
The company has also converted other office buildings into non-residential uses, including a self-storage facility and the new Avenida Food Hall in Calgary. It’s also in the process of redeveloping Calgary’s iconic Barron Building downtown.
Strategic currently has five projects around Alberta finished or nearing completion. The sixth is in the planning stages.