Office vacancies drop for the first time in years in Calgary’s downtown core
Calgary’s downtown office vacancy rates are finally seeing a positive move downwards.
CBRE’s first quarter 2022 numbers show Calgary actually bucked the Canadian trend and saw more space being absorbed.
“I shouldn’t say the bleeding has stopped, but I think we put a bandage over the wound,” CBRE’s managing director in Alberta Greg Kwong told Global News.
According to the real estate services and investment firm’s numbers, the downtown office market recorded 63,000 square feet of positive net absorption in Q1 2022.
This reduced the overall vacancy rate by 40 bps to 32.8 per cent, marking the first quarter of positive market fundamentals since the beginning of the COVID-19 pandemic in Q1 2020.
Kwong said there is also a renewed energy in the city, something not seen in quite a while.
“Mainly I think it’s the slight recovery in the oil patch,” he said. “With oil trading above $100 a barrel, there’s lots of cash out there.
“Companies are a little bit more optimistic, people are starting to come back to work.”
The return to normal can’t come soon enough for many businesses in the core.
After some blowout years following his opening in 2012, hairstylist David Gandour didn’t expect the cuts to his business during the pandemic.
“It’s been pretty dead, pretty slow,” he told Global News. “Most of my neighbours here have been closed.”
Gandour owns Denim & Smith Barbershops in the Bow Building. It used to house some of Alberta’s energy giants, but when some of those giants emptied out, so did his salon.
“My business is down about 70 per cent the last two years.”
Gandour said he is trying to be excited about the new downtown office vacancy numbers, but he is also concerned that they may not extend past the first quarter of the year.
“I’m hopeful,” he said. “But it’s not a light switch that people come back to work and it’s busy again.”
CBRE pointed out it is certainly busy when it comes to Calgary’s industrial leasing space, which reached an eight-year low for vacancy rates.
More than 1.9 million square feet of net positive absorption of industrial space occurred in Q1, marking the fifth consecutive quarter where over a million square feet was absorbed.
Kwong said it had been a busy decade for that space and COVID actually helped accelerate it, providing a lot of incentive for e-commerce companies to open up in Calgary and the surrounding area.
“From Amazon to Canadian Tire to Lowe’s, every major retailer is either here or looking for space right now,” he said.
CBRE added that local and out-of-province businesses are also looking to purchase and take advantage of lingering low interest rates while trying to avoid record-high new building costs.
That has driven up rental rates to a 13-year high of $8.90 per square foot.
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