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Downtown Calgary office vacancy rate at record high, report says

Calgary’s downtown office vacancy rate almost doubled in the wake of the collapse in the price of oil, according to a report released Tuesday by Calgary Economic Development.

Calgary Economic Development annual report finds energy firms using sub-lease deals to upgrade spaces

The economic downturn has resulted in a huge increase in the vacancy rate for office space in downtown Calgary. (Evelyne Asselin/CBC)

Calgary's downtown office vacancy rate almost doubled in the wake of the collapse in the price of oil, according to a report released Tuesday by Calgary Economic Development (CED).

According to real estate firm CB Richard Ellis, vacancy rates went from 9.8 per cent at the end of 2014 to 17.6 per cent in December 2015, as oil and gas companies downsized and new towers opened, CED's 2015 report says.

"The ripple effect left record high office vacancy rates, a softening real estate market and a decline in new building permits," said CED president Mary Moran and chair Steve Allan in the report's introduction.

Newly shrunk energy firms are now taking advantage of attractive sub-lease rates, the report goes on to say, and many companies are using the downturn as a chance to upgrade, as 3.5 million square feet of new office space comes onto the market.

Owners of older office buildings are exploring the possibility of retrofitting for residential or other uses, the report says.

"With the collapse in oil prices and continuing low gas prices, the current economic downturn has ushered in a new era for Calgary," Moran and Allan said.

The value of building permits fell by 4.1 per cent from 2014 to 2015 after having more than doubled in the past five years, the report found.

But CED says the fact that the value of building permits surpassed $7 billion for the third straight year shows there is still optimism in the air.

Despite recent economic challenges, Mary Moran, president and CEO of Calgary Economic Development, believes the city remains a relatively attractive place for business 3:51

Forty per cent fewer people moved to Calgary between 2014 and 2015, according to the report, and the construction of new single-family homes slowed by a similar percentage.

Nonetheless, 21,057 people did make Calgary their new home, the report says.  

Calgary and Alberta may be facing economic headwinds through 2016 and fundamental changes in the years to come, but Moran and Allan also said there's good reason for optimism.

"Our business community and people endured challenging times in 2015 but Calgary remains, in a relative sense, an attractive location to open a business, a great city to make a living and, especially, a great place to make a life," they said.

"Our young and well educated population is merging innovative ideas with our legendary entrepreneurial energy to lay the foundation for future growth."

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