The first three office-to-residential projects getting City of Calgary funding were announced Wednesday morning.
Aspen Properties’ Palliser One at 125 9 Avenue S.E., Cidex Group of Companies’ HAT @ Arts Commons at 205 9 Avenue S.E. and Peoplefirst Developments’ building at 909 5 Avenue S.W., all are set to receive about $31 million when the conversions are concluded.
The trio of projects will remove about 414,000 square feet of vacant office space from the market that has reached vacancy rates as high as 30 per cent in the past year, and create an estimated 401 homes.
The city estimates it needs to remove 6 million square feet of currently vacant office space in Calgary’s downtown to help stabilize property values over the next decade.
Mayor Jyoti Gondek called the trio of projects “transformational” in their ability to breathe new life into buildings and spaces that sat empty.
“This is a program that council got behind in my previous term and council got behind yet again in October of this year. We had a brand new council and we committed to not only the money that we had put into this in spring of last year, but we added more to this incentive program,” Gondek said.
Thom Mahler, director of the city’s downtown strategy team, said when the recently-elected city council increased the program to accelerate downtown revitalization from $45 million to $100 million, “it automatically increased the interest in the program.”
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“As the downtown picks up momentum, people are getting a sense things are changing,” he said. “We’re out of that really bad spot where we were a few years ago where all we were talking about was vacancy and plummeting property values. Now you can see we’re talking about real investments.”
Gondek said the city is leveraging $31.7 million of its own dollars to gain $117 million in private investment for downtown redevelopment.
The two projects on 9 Avenue S.E., are across the street from one another, “creating the beginnings of a residential ‘hub’ at a critical intersection,” a city press release said. Those projects are in close proximity to the Glenbow Museum, the Arts Commons, Stephen Avenue and the Calgary Tower.
Rob Blackwell, chief operating officer at Aspen Properties, said Palliser One will create A-class residences in the top half of the building from B-class office space.
According to Avison Young, the downward trend in B-class occupancy started in late 2019, with a corresponding “flight to quality” of higher-class offices.
The city’s offer of $75 per square foot for repurposing presented an opportunity for Aspen.
“We have an asset that’s underutilized and to get better utilization of it where you can try to rent it as offices or you can take it in a new path and forge a new direction,” Blackwell said.
Sarah Itani, business development manager with Cidex Group of Companies and native Calgarian, was excited to be part of the first green shoots of redevelopment in the downtown.
“There’s just so many amazing pockets of our core that really need new life to them, and we are humbled by being able to be a small fraction of that.”
The other project sits on the west end of downtown Calgary, in a building that has sat vacant for a decade. The developer plans on providing 40 per cent of the units as affordable housing, at 20 per cent below current market value.
“We’re going to include accessible units and will prioritize discounted units to local charitable organizations and in turn, providing affordable housing to those who need it most,” Maxim Olshevsky, managing director at Peoplefirst, said.
That project is located near the Eau Claire Promenade and planned improvements to the pedestrian area along 8 Street S.W.
Officials said eight other projects are in the process of being reviewed, with announcements for the oversubscribed program expected later in the year.
“The fact that this incentive program has been oversubscribed since its inception is further proof that our own investment as a city has sent a very clear signal to our private sector that Calgary will be strong into our future because we believe in ourselves,” Gondek said.
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