Backed by continued expansion in the energy sector and lack of available space, rents in Calgary’s downtown office market saw a massive surge in 2012.

According to commercial real estate firm Cushman & Wakefield’s Office Space Across the World 2013 report, rents in the city’s central core rose by nearly a third last year, and trailed only Bogata, Rio de Janeiro and Sao Paulo for rental growth in the Americas.

“The continued shortage of high-quality space has been putting upward pressure on prime rents in Calgary, which increased by almost 30 per cent,” stated the report. “Calgary’s office market is driven by the oil and gas sectors and with the potential for weaker oil prices in 2013, occupier demand could slow.”

Continuing to paint a relatively bright picture of Calgary’s commercial market, a separate report from REALpac showed while the city’s commercial property market generated healthy total returns in 2012, it fell short of those returns seen in the previous year.

“Overall, the six largest commercial property markets generated healthy total returns in 2012,” stated REALpac’s IPD Canada Annual Property Index. “Of the six largest markets, Edmonton was the only metro that saw accelerating growth in value. Calgary, Toronto, Montreal, Vancouver and Ottawa all produced healthy but lower returns in 2012 when compared to 2011.”

Canada-wide, Canadian commercial real estate delivered another strong performance in 2012, with an annual total return of 14.1 per cent. Looking at the 13 year history of the REALpac / IPD Canada Annual Property Index, 2012 was the fifth highest annual total return ever.

In other commercial news, the city has agreed to fund a $350,000 study to better understand retail trends in Calgary. With many bigbox developments in Calgary coming under fire, including the massive East Hills complex set, and with the city’s own GM of planning coming out in favour of a more pedestrian friendly mixed use model for retail, it remains to be seen how the nearly 11 million sq. ft. of retail development scheduled for the city will take shape.