A new report from Avison Young shows the economic downturn has caused more downtown offices in Calgary to sit empty, but experts believe the shift may not necessarily be a bad thing.
The report has revealed four buildings in the city’s downtown core now sit completely vacant and another five are mostly unfilled, which is unusual for Alberta’s largest city.
While those statistics may seem alarming, Calgary Economic Development said it could actually be a positive way to attract potential tenants.
“When you have contiguous space all together, sometimes it’s easier to sell, particularly to companies that are moving in here and have high growth potential,” said Mary Moran, the CEO of Calgary Economic Development.
The report revealed that smaller companies, with a staff of 50 or less, are moving in and taking over space once dominated by oil and gas giants.
The shift means that offices are getting innovative by creating smaller spaces and moving away from multiple floors occupied by one company.
The tech sector has recently shown interest in moving into Calgary’s downtown which would help diversify and make business more dynamic in the city.
Calgary Economic Development said while this is good news, the city has an excessive amount of office space compared to other cities with a similar population base.
“In fact, if you put it on a per capita basis, we should have a population of about four-million people to support the amount of office space that we have,” explained Moran.
She added that this is just the beginning, given that Calgary is seeing big companies like Suncor announce layoffs and that this issue isn’t going away any time soon.
Calgary’s downtown office vacancy rate has jumped to 25.7 per cent, with the entire city sitting at a vacancy rate of 23.5 per cent.
Aside from downtown, most vacant office space is in the Beltline, which has two of its 109 office buildings completely empty while four are more than three-quarters empty.
The report said with Calgary’s unemployment rate being the highest in Canada and construction at a low point, the rest of the industrial market will need to continue weathering this storm.