On August 12th, the real estate firm, Avison Young,
published a report detailing the current office market in Calgary.
The report made the impact of the continued depressed energy market fairly clear, highlighting that since mid-year 2014, the office vacancy rate in Calgary rose to 11.5 percent from 8.3 percent.
Much of that has to do with “defensive strategies” that energy companies operating in Calgary are undertaking as a way to either reduce expenditures or stay afloat. Companies that are laying off staff and/or placing unused office space on the sublease market has in turn increased the amount of sublease product on the Calgary market. As noted by Avison Young’s mid-year report, “sublease space, as a percentage of downtown vacancy, rose nine percentage points year-over-year to 40 percent.”
There is little doubt that the real estate market in Calgary is feeling the impact of the downturn in the oil sector. But, to think that the growth Calgary has enjoyed over the past several years has completely stalled or that the city is not continuing down its road toward greater urbanization would be very off-point.
The fact is that
Calgary’s downtown core continues to enjoy an influx of residents and a movement toward increased urbanization. Moreover, developers in the city continue to remain confident in Calgary’s near-term prospects and are, simply put, continuing to build.
FRAM Building Group, a real estate development company with developments in Canada and the United States, remains steadfast in its development footprint in Calgary. The company is actively pursuing a
nine-floor office project in the East Village of Calgary, which could be available by fall of 2017.
Similarly undeterred,
Calgary’s Strategic Group has plans for a major mixed-use development several blocks away in the city’s downtown core.
Strategic Group’s project, known as ONE, will be a $130-million, 32-storey development of 100,000 square feet of Class A office space and 227 one and two bedroom rental residences, plus retail space. Promising to renew a neighborhood eyesore, Strategic Group’s development will be located at the corner of 1st Street S.E. and 10th Avenue, at a site that has been vacant for the past several years.
In a sign of refreshing confidence in Calgary’s future, Riaz Mamdani, Strategic Group’s CEO, commented to
the Calgary Herald in May of this year that, “Despite the current economic uncertainty, we [Strategic Group] have confidence in the city and we have confidence in the particular project that we’re building.”
Outside of the Calgary Herald article, Riaz Mamdani has also continued to reaffirm his confidence in the resilience of Calgary’s market and the greater Alberta market, commenting that, “Calgary enjoyed a record number of people moving to the city in 2013 and 2014. There’s a reason why Canadians move to Calgary to live and work — the city is highly livable, it has an increasingly vibrant downtown core, and Calgary boasts one of the most exciting entrepreneurial scenes in Canada. They are plenty of more positives to list. These are the reasons why, despite a softening in the market, I’m confident in Calgary’s future.”
In July, it was reported that second quarter sales in Calgary’s condo market proved to be significantly better than first quarter sales this year. That’s a positive statistic for sure and one that demonstrates the city’s continued resilience.