Calgary a 'hotbed' of office construction in Canada, report says
More than 7 million square feet built in last 5 years, another 5 million on the way
A new report says Calgary is a hotbed for office construction.
The city is second only to Toronto in that category of development, according to PricewaterhouseCoopers’ Canadian Emerging Trends Real Estate report.
More than seven million square feet of new office space has been built in Calgary in the past five years. And there’s another five million in the works, three quarters of it pre-leased, and the market vacancy rate is only 2.5 per cent, the report says.
“Calgary remains the strongest market in Canada. Employment continues to rise, with more than 28,000 jobs created in the past year and the unemployment rate holding steady at 5.4 per cent,” the report states.
Joe Binfet, managing director of Colliers International in Calgary, says what sets Calgary apart is that it’s a head-office hub.
“Calgary's somewhat unique in that we have a lot of large space users in our market. We have companies that take a hundred thousand square feet at a time,” he said.
“And unless you build new inventory, there's not a lot of options for these companies in terms of office space. So that's one of the main drivers for development of new office space.”
But with the price of oil continuing to slide, it’s unclear how long this building boom will last, said Re/Max Canada broker Clark Coyston.
"The bottom line is we are still an energy city and we are very dependent on oil prices being substantially higher than what it is right now,” he said.
As companies move into new buildings, their old offices could remain vacant, leading to a surplus of space that could force rental rates down, he said.
“While the new development is being driven by tenant demand, the market will likely go through a period of adjustment as tenants exit existing locations. It will take time for the vacated space to lease back up,” the report states.
The report is below. On mobile? Click here.