Calgary's downtown looks to recover as more businesses move to hybrid work model post-pandemic

Downtown office vacancy highest in Calgary COVID-19 changed so many downtown cores. The hybrid work model is popular but it's a drag on the economy for a city like Calgary.

As more businesses move to the hybrid work model, it's taking a toll on Calgary's economy.

Alex Halat says the COVID-19 pandemic changed his perspective on how to use his company's office space.

"It taught us that we don't need to necessarily have big, lavish offices and an abundance of space. It taught us that a lot of our staff have the ability now to work from home," he told CTV News.

So, Halat and his team at Star Valley Oilfield Services decided to downsize, going from 13 offices to nine, and moving from the core to a building in the west end for cheaper rent and a better space.

"You build a nice little living room, a nice boardroom with a big TV, now you have the ability to host events for your customers, so it's been great. It's been a win-win. Staff love coming to the office," he said.

According to a July report from CBRE Research, Calgary has the highest downtown office vacancy rate in the country at 31.5 per cent.

That's compared to the national average of 18.9 per cent.

However, Calgary was also one of two markets to report decreased vacancy this quarter.

That's thanks to office building conversions, and growing businesses setting up shop in the core.

"Calgary more than anywhere else across the country has had an opportunity to totally reimagine what our downtown looks like," said Ruhee Ismail-Teja, director of policy and communications at the Calgary Chamber of Commerce.

"The city has put in a ton of investment into downtown office-to-residential conversions and we're starting to see the fruits of that."

But Colliers Canada says the national office vacancy rate could rise as hybrid work becomes more popular.

According to a report it released on Tuesday, the average number of days companies are mandating employees to work at the office rose from 2.5 in late 2022 to three last quarter.

Mark Garner, executive director of the Calgary Downtown Association wants that number to go back up to five to help local businesses that rely on office workers to eat out and shop at their establishments.

"For those corporations to understand, based on the new hybrid model they're implementing, the economics that has on the downtown core and that they play an integral role of bringing the economics back," Garner said.

The Colliers report says commercial tenants are 10 per cent more likely to renew a lease for each additional day their employees work at the office.

It adds companies are most likely to keep their current square footage of space if staff work in-office four days a week.

Meanwhile, Halat is optimistic about the future of Calgary's downtown.

"I think downtown Calgary is moving in the right direction. The landlords in the city are all working in the right direction in terms of revitalizing downtown and bringing everyone back downtown," he said.