Calgary’s immovable skyline

No new downtown office towers for at least five years, say experts

Despite the number of construction projects currently on the go, it is unlikely Calgary’s downtown office market will see any new towers for quite some time.

Todd Throndson, managing director and principal for Avison Young in Calgary, says the millions of square feet of recently created new space, three new towers coming on line and a soaring vacancy rate will sideline any plans for more towers.

He says it will take several years – at least five – before the existing vacancy will be absorbed and a landlord will be prepared to take on the risk of constructing a new tower. Today, Calgary’s vacancy rate is about 25 per cent.

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Core issues

Downtown office commercial market to see higher vacancy rates in 2017

Despite setting a third-quarter record with a reported $11.2 billion in sales, Calgary’s commercial real estate sector will likely see vacancy rates continue to soar this year and next, predicts real estate firm CBRE Ltd.

CBRE Calgary-based managing director Greg Kwong said the downtown market will feel it the hardest, with vacancy rates that are expected to close in on 30 per cent.

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Downtown office vacancy rates expected to climb

Lower-class spaces feeling brunt of energy downturn

Vacancy rates in Calgary’s downtown office market have hit historic highs in 2016, and commercial real estate experts are forecasting further declines moving forward.

According to a second-quarter market report by Colliers International in Calgary, the overall vacancy rate in the core has jumped to more than 22 per cent from 20.5 per cent the previous quarter – the equivalent of 618,716 square feet of office space.

Vacancy rates between classes varied, but were steepest in the B-class at 31.8 per cent and C-class at 28.1 per cent. AA- and A-class vacancies were also up from the previous quarter at 17.6 and 18.9 per cent, respectively.

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Brunt of the ‘turn

Commercial vacancy rates near all-time highs, according to reports

A new report is summarizing Calgary’s downtown office market in one word: scary.

CBRE Ltd. first-quarter results released earlier this month show that the vacancy rate in Calgary’s core ballooned to 20.2 per cent during the first quarter of 2016. That’s up from 11.8 per cent the same time last year, and 17.6 per cent from the fourth quarter of 2015.

Greg Kwong, who heads up the commercial real estate firm CBRE Ltd’s office in the heart of the oilpatch, expects the worse is still to come for Calgary’s office market as the local economy sputters in response to depressed oil prices.

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Five things about Calgary’s commercial office market

By the numbers

With much of the news coming out of Calgary’s commercial market negative, especially for many of those that once toiled away in one of the city’s many office towers, the future of downtown Calgary is, in many ways, up in the air. Adding to the uncertainty are several new office towers set to be added to downtown Calgary in the coming months. CREB®Now looks at some of the numbers coming out of Calgary’s evolving skyline.

16%
Inversely tied to the declining price of oil, the vacancy rate in Calgary’s office market has increased from around six per cent in 2014 to a once unfathomable 18 per cent in 2016, according to commercial real estate firm Colliers International.

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