Alberta economy has 'healthy pulse' as Calgary's office space glut finally stabilizes, reports say

There were two pieces of welcome news for Alberta in a pair of reports released Wednesday — a prediction of strong economic growth across the province and a forecast that Calgary’s sky-high office vacancy rate is finally stabilizing.

2018 'will mark the year that the province fully recovers the ground it lost,' Conference Board of Canada says

Calgary's high vacancy rate for its downtown office towers is set to stabilize in 2018, says a report released by CBRE on Wednesday. (Evelyne Asselin/CBC)

There were two pieces of welcome news for Alberta in a pair of reports released Wednesday — a prediction of strong economic growth across the province and a forecast that Calgary's sky-high office vacancy rate is finally stabilizing.

The Conference Board of Canada's provincial outlook for winter 2018 says Alberta is poised to have one of the fastest growing provincial economies this year, at a predicted pace of 2.8 per cent, as job creation accelerates

The board says Alberta's ongoing economic recovery will firm up as oil and gas drilling is expected to improve or maintain last year's activity levels.

It also forecasts the provincial unemployment rate will drop to close to six per cent by the end of this year after peaking at 10.2 per cent in 2016.

"While this year's economic growth will pale in comparison to the sizzling 6.2 per cent growth seen in 2017, it will hold a great deal of significance to Albertans, as it will mark the year that the province fully recovers the ground it lost during its most recent recession," the report says.

Wage growth for Albertans is predicted to be three per cent.

"That is a far cry from pre-recession levels, but it will still be tied for third highest among the provinces," the board's report says, calling it "a telling sign that Alberta's economy has a healthy pulse."

Positive outlook for Alberta real estate

There was also good news in the latest report from CBRE, the largest commercial real estate and investment firm in the world.

In its 2018 Canadian Real Estate Market Outlook, it says vacancy rates will finally stabilize in Calgary, after two years of worsening numbers, as the recovery in Alberta takes hold.

CBRE is forecasting Calgary's downtown office vacancy rates will stay flat at 27.9 per cent this year. 

While major energy companies are expected to continue shedding space as they decrease their footprints by consolidating space, "green shoots popping up" will result in some office-space reabsorption, mostly in the 15,000-square-foot range, the report says.

CBRE says Calgary's industrial park office space market will be a bright spot in 2018, with the availability rate in that sector expected come down from 9.8 per cent in the fourth quarter of 2016 to 7.9 per cent in 2018. 

The report says there is optimism and confidence in the future of Calgary's industrial real estate market.

In downtown Edmonton, new projects such as the Enbridge Centre, Edmonton Tower and the still-under-construction Stantec Tower, have had a positive impact on the economy, CBRE says.

"After a quiet few years, Edmonton's core is gaining vigour and buzz, and the downtown skyline is getting a facelift following years of limited development," the report says.