It certainly isn’t cost that’s keeping businesses away; average rental rates have plunged 28 per cent in the past year to an average $20.97 per square foot for the highest class of office space.
Calgary’s market is not typical of the national picture. CBRE’s report shows that overall demand for office space increased with 491,000 sq. ft. of net absorption despite almost 2.0 million sq. ft. of new supply delivered in the quarter. This demand for offices was driven by Toronto and Vancouver.
CBRE’s executive managing director Paul Morasutti commented that the disparity almost makes the national rate redundant: “We saw over 100 basis points decreases in vacancy for Vancouver and Winnipeg, small upticks in Toronto and Edmonton and a 260 basis points increase for Calgary, all in the same quarter. In short, it was a good, bad and ugly quarter for the downtown office market.”
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The vacancy rate for downtown offices in Calgary has hit its highest rate for 30 years. A report from real estate firm CBRE Canada shows that at the end of the first quarter of 2016 vacancies were at 20.2 per cent; the last time the rate was higher was in the 1980’s when it reached 22 per cent. In the same quarter of 2015 the vacancy rate was 11.8 per cent.