Calgary's downtown office vacancy rate trending in right direction: report

Downtown's office vacancy high, but falling Calgary's downtown office vacancy rate is higher than the rest of the country, but it is starting to trend downward.

There are fewer offices in downtown Calgary sitting empty than this time last year, according to a new report from commercial real estate services leader CBRE.

The report, released on Tuesday, says 677,000 square feet of vacant space was taken off the market.

"I think we're moving now towards a healthier market. It's going to take years but at least we're heading in that direction," said Greg Kwong, CBRE Alberta regional managing director.

CBRE says the national downtown vacancy rate hit a record high of 19.4 per cent at the end of 2023.

Meanwhile, Calgary's rate sat at 30.2 per cent -- an improvement from the city's all-time high of 33.7 per cent in 2022.

"What we love to take out of these numbers is that people, companies are hiring again and people are working, coming downtown because every major vibrant city always has a vibrant downtown core," Kwong said.

He says a slight resurgence of the energy sector and the growth of tech companies are helping.

The City of Calgary's Downtown Development Incentive Program is also having an impact.

It offers $75 per square foot to building owners willing to convert underused office space to apartments.

"It's really important for the city because we do have a housing crisis right now," said Sheryl McMullen, who manages the program.

"By repurposing vacant office space, it's actually one of the quickest delivery mechanisms to get new homes available."

The program launched in 2021 in response to tanking oil and the pandemic.

So far, it has approved 13 office-to-residential conversion projects.

"What that represents is about 1.67 million square feet of vacant office space that's going to be repurposed and that's going to create almost 1,500 homes for Calgarians," McMullen said.

Four more projects are under review.

The Calgary Downtown Association says more people living downtown is good news for the economy.

"That intensification of that density coming downtown, there's a need for amenities," said Mark Garner, the association's executive director.

"So, you're going to start to see more dry cleaners, you'll start to see corner convenience stores, you'll start to see more restaurants."

The city's first approved conversion project, the Cornerstone, is set to open early this year, adding 112 apartments.