No quick recovery in sight for Calgary’s commercial vacancy

by Ephraim Vecina on 07 Jan 2019

Calgary might begin offering lower costs for commercial tenants this year due to a significant 32% decline in the downtown area’s office building values in 2019, but observers argued that this would not necessarily lead to improved occupancy.

As of the end of 2018, Calgary’s vacancy stood at 26.4%.

While lower rents could magnetize more tenants, employers in Calgary will still have to find a way to replace the thousands of petroleum industry workers who lost their jobs in the wake of the oil price crashes of recent years.

“The disease is unemployment, it’s not property values,” CBRE Alberta managing director Greg Kwong told BNN Bloomberg. “It’s not going to change dramatically until we get people back to work.”

Read more: Investment in Alberta not all it appears to be

Moreover, the lower office building property assessment might lead to even higher business taxes, according to Mark Cooper of the Calgary Chamber of Commerce.

“We’ve seen the vibrancy stripped from the downtown core due to the rising vacancy rates because of the downturn and now we risk losing businesses outside of the core that are being weighed down by these unsustainable tax increases and other regulatory burdens,” Cooper explained, adding that these factors should also be considered on top of already higher operating costs due to minimum wage increases and other labour law changes.

 

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