Calgary’s downtown office vacancy rate has declined for the first time since the start of the COVID-19 pandemic.
Commercial real estate firm Avison Young says the city’s downtown office vacancy rate ticked down in the fourth quarter of 2021, to 29.7 per cent from 29.9 per cent.
Calgary’s downtown real estate market has been at record high levels since the fourth quarter of 2019.
Nearly 1.3 million square metres of office space in the city’s core sits empty.
“We’ve been in a downturn for five, six years now, the COVID-19 pandemic only added to those challenges,” Avison Young Alberta insight manager Susan Thompson told Global News. “This is the first quarter where we’ve seen vacancy decrease in two years.”
But Avison Young says the tide is turning. It says leasing activity is picking up as public health restrictions ease and companies figure out their return to office strategies.
Scott Hutcheson, executive director of Aspen Properties, said most companies “believe that there is a reason to have (an) office,” following two years of uncertainty over the future of return to an in-person work setting.
“The office space and how we work will certainly be different post-COVID with more flexibility given to our employees,” Hutcheson said. “The CEOs are just figuring that out now, because they can figure that out. We’re seeing results where they can start to commit to the future of a downtown lease.”
Avison Young says there is still a long road to recovery for Calgary’s office market but it expects the overall trend in the next 12 to 24 months to be positive.
The report estimates the downtown office vacancy rate will drop to 27.9 per cent by 2024.
“We have finally turned that corner,” Thompson explained. “There is positivity in the office market, and every indicator tells us that it’s going to continue.”
But experts noted there is still a long way to go in the recovery.
Despite oil prices rebounding, Calgary Economic Development said the future absorption of office space won’t come ” in one fell swoop” from large companies, but rather from smaller spaces and leases.
“What you’re going to see is a lot of smaller ones, that 15,000, 20,000, 7,000 — those smaller ones start to add up,” CED interim CEO Brad Parry said.
“You’ll start to see more of those singles and doubles start to add up in the win that we’re going to have here.”
—With files from Adam MacVicar, Global News