With no new supply forecasted for 2013, Calgary’s currently continually thriving commercial market might have to look beyond downtown for real estate.
According to a 2013 market outlook by CB Richard Ellis (CBRE), Calgary’s sq. ft. absorption for the end of the year is a forecasted 2.13 million sq. ft. with an expectation of decreasing to 0.04 million sq. ft. in 2013 because of the lack of new product.
“There are two downtown office projects under construction which will contribute a combined 1.7 million sq. ft. to inventory,” the report said. “The 841,000 sq. ft. Eighth Avenue Place West Tower is slated for completion in 2015 and will come to market fully leased while Calgary City Centre, at 820,000 sq. ft. will be completed in 2015.
This past year saw the completion and subsequent staff moves of Cenovus Energy and Encana into the 1.9 million sq. ft. Bow Building. The building, currently the tallest in the city, will lose that title in a few years time once construction is finished on a new tower by Brookfield Properties.
Currently dubbed 225 Sixth or Brookfield Tower, the structure is set to be 247-metres high, 11 metres taller than The Bow. Brookfield Tower will be accompanied by a shorter tower joined together by a glass pavilion with all of the above to be constructed on land formerly occupied by the old Herald Building at 7th Ave. and 2nd St. SW.
With a low downtown vacancy rate in Calgary, commercial properties will be looking beyond the downtown core for developments.
“In 2013, more than 1 million sq. ft. or 20 per cent of inventory will be delivered to the suburban Beltline submarket situated in the downtown fringe which should capture some of the pent-up demand in the downtown core,” said the CBRE report.
With a vacancy rate of 9.5 per cent in 2011, Calgary’s suburban vacancy paints a different picture with a forecast of 11.3 per cent vacancy for this year and 11.5 per cent next year. Examples of companies taking advantage of the suburban commercial market in Calgary include Imperial Oil and Canada Pacific recently announcing they are moving from their downtown locations to Quarry Park and Ogden respectively.
With the strength of the Alberta and Calgary markets, the CBRE noted an “interesting dynamic” in the split between Western Canada compared to Central and Eastern Canada.
“In 2012, office absorption in Vancouver, Calgary, Edmonton and Winnipeg is expected to total 3.5 million sq. ft. or 76.6 per cent of the country’s total increase in occupied space. This is remarkable as these markets only account for 32.2 per cent of the national office inventory.”