Calgary’s Greater Downtown Plan got a first look by a city committee Wednesday morning, and will see a council decision by the end of the month.
The committee heard the plan hopes to refill a downtown that faces nearly a third of offices sitting vacant and a 63 per cent drop in land values. The 10-year plan addresses ways to attract more people to live, seek entertainment and do business downtown at all hours — all ways to bring the vacancy rate to low double digits.
Increasing residential property, making more liveable spaces and amenities, and improving the transportation network are some of the strategies within the plan designed to bring more people and businesses into vacant office spaces.
Also on Wednesday, a report from commercial real estate analysts CBRE showed Calgary’s downtown office vacancy increased by 2.8 per cent to 32.3 per cent in Q1 of 2021.
The CBRE noted the recent merger of Husky Energy and Cenovus added approximately 650,000 square feet of office space to the market and continued mergers and acquisitions “is anticipated to continue throughout the first half of 2021 and will drive sublease supply to new highs.”
But the quarterly report gave the office space a “positive outlook” thanks to what the organization believes is the bottoming out of the energy cycle and improved commodity pricing.
The committee heard from heads of partner organizations, private industry and community associations, nearly all unanimously supporting the plan.
Calgary Economic Development’s Mary Moran noted early concerns that the drop in oil prices that began in 2014 would result in a structural change.
“We brought forward a report in February of 2017 that stated that with the price of oil forecasting to jump up to about $80 within about three or four years, it would still take until early in the 2030s to get office space vacancy down to the mid-teens,” Moran said.
The report forecasts a $7-billion drop in downtown real estate value. City calculations now peg that loss at $16 billion since 2015.
“This movie has played out. That forecast was wrong. It is definitely a lot worse.”
CED set out to learn best practices from other cities like Detroit, Pittsburgh and Houston on revitalizing a city’s economy, particularly a downtown.
“The message that we consistently heard where taxes, talent and tolerance were going to be key ingredients for a recovery,” Moran said.
“We know that we can’t rely on the energy sector to fill out our real estate the way it did in the past. We have to look for innovative solutions.”
Calgary Municipal Land Corporation president and CEO Kate Thompson said projects like the East Village revitalization point to the breadth and depth of collaborative work needed for something like the greater downtown plan.
“The success of this plan will really rely on the cohesion between how projects are delivered and supported by the city and council to reach these common goals,” Thompson said.
In a pre-recorded video presented to the meeting, Marco Lopez, CEO of the former Solium Capital (now known as Shareworks by Morgan Stanley), said the plan’s aspects of attracting talent to the city are essential to grow and diversify the city’s economy.
“If we don’t have a vibrant downtown in Calgary, we end up with just a bunch of suburbs and it’s really hard to attract people and create a vision of why they want to come and live here and also why they want to continue to live here as they progress in their careers,” Lopez said.
In another video, MEG Energy CEO Derek Evans said the transition Calgary is facing now is “not unlike the transition that we went through when we were a ranching community and moved on to become more of an oil and gas one,” adding the challenge can be viewed as a blank slate on which to build foundations for future growth.
The Beltline Neighbourhoods Association and the dean of the University of Calgary’s School of Architecture Planning and Landscape also spoke in favour of the plan.
But one community association wanted to see some changes.
Farnaz Sadeghpour of the Downtown West Community Association voiced some opposition to the plan, seeking more development within the neighbourhood and to have a more present voice in the governance structure.
“We have our fair contribution of our taxes to the city and I think it’s just fair to ask for a fair voice at the table,” Sadeghpour said. “And I hope that this could be considered in the formation of the downtown leadership team.”
According to the 2016 census, Downtown West has populations greater than in the East Village, Chinatown and Beltline.
Ward 7 Coun. Druh Farrell said council knew soon after the oil price crash that the city was in a structural recession.
“We’ve had the luxury of allowing our downtown to provide a significant amount of financial resources,” the area councillor for Eau Claire, Chinatown and the East Village said.
Even after the $16 billion in lost property value, of which the city derives property taxes, the greater downtown area still contributes 14 per cent of the city’s property tax revenue despite taking up less than one per cent of the land mass.
“We’ve gotten away with not having to reinvest and we know now that that is not working. And we also know if we continue the way we have been, there will be massive financial implications,” Farrell said, pointing to the previous property tax shifts making businesses outside of the city shoulder more of the tax burden with subsequent double-digit increases.
Farrell also urged a new governance model for the future direction of downtown development.
Ward 8 Coun. Evan Woolley said council has been good in making decisions reacting to “massive structural shifts in our economy and a whole bunch of other challenges that we’ve faced.”
“But what we have before us now is something that is proactive and I think it is the plan that is going to take us into the next 10 years,” Woolley said.
“We really need to be intentional with this work.”
An amended version of the plan and a supplementary resource package will come to a strategic meeting of council on April 26.