Positive traction

Real estate officials expect conditions to support turnaround in downtrodden commercial market

Calgary’s commercial real estate market is showing signs it is finally moving on from tough economic conditions that sent vacancy rates soaring and rents plummeting over the past two years, say officials.

‘‘There is a sense in the market that the worst is behind us and that conditions will gradually improve,” said Joe Binfet, managing director/broker of Colliers International in Calgary.

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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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Asking vs. achieved

Suburban office vacancies encouraging landlords to be flexible

Calgary’s downtown office vacancies might have been getting all the attention so far this year, but commercial real estate experts point out it’s not alone as the city’s suburban office market continues to experience similar challenges.

“We’re in the doldrums right now,” said Ian Robertson, associate specializing in the suburban office market for Barclay Street Real Estate. “There’s too much space chasing too few tenants. So it’s a bit of a malaise.

“We saw this coming. It took a while for landlords or the market to accept what was happening. But now we accept the reality of where we’re at.”

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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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