Developers of The Bow building in Calgary’s downtown core won’t be going ahead with a planned second tower at this time.
Instead of building the proposed second tower, which was to be part of The Bow development project, the owners of the property will be building a public plaza.
The site of the old York Hotel at the corner of 7th Ave SE and Centre St is owned by H&R Real Estate Investment Trust, Encana and Cenovus.
The new public plaza will include a wood deck in the southwest corner of the block, there will be benches for people to sit and enjoy the outdoors. Trees and planters will consume about 5,000 to 6,000 sq. ft. of the area for public use. Along 6th Ave SE, more sidewalk will be added along with a seating area. Even with the public plaza, a tower can still be built on that site if the owners decide to do so in the future.
Originally the space was planned to be home to a smaller building of 200,000 sq. ft. that had offices, retail, arts and cultural space. It was planned to be a seven-storey complex that would have been built using bricks from the historic YorkHotel building.
The move to delay the development comes as vacancy in Calgary’s commercial core is on the rise. According to a report from Colliers International, Calgary is moving away from the ultra-tight market witnessed in 2010, 2011, and 2012 where the vacancy rate dropped as low as 3.5 per cent and towards more balanced conditions.
“With four consecutive quarters of negative absorption through 2013 totaling 1.58 million sq. ft., 3.6 per cent was added to the vacancy rate which now stands at 7.28 per cent,” stated the report from Colliers. “This represents the greatest amount of annual negative absorption the Calgary downtown office market has ever experienced.”
According to Colliers, a balanced office market is typically a market whose vacancy rate falls between 8 per cent and 10 per cent. While Calgary’s vacancy rate currently sits at 7.3 per cent, the upcoming addition of new space has yet to be accounted for.
Helping to drive vacancy upwards, recent decisions made by companies to relocate to the suburban office markets will add significant space to the downtown market. Imperial Oil’s move alone will free up approximately 740,000 sq. ft. in Fifth Avenue Place in 2016.
A far greater factor will be the upcoming addition of eight new office towers in the downtown core. Expected to be completed in 2018, the eight new towers will bring over 5 million sq. ft. of new office space; of which 1.6 million sq. ft. remains uncommitted and available for lease in addition to the resulting backfill vacancies in existing buildings.