Calgary

Calgary's downtown in a building boom despite downturn

Calgary's office vacancy rate is high and climbing, but millions of square feet of new office space is coming online over the next two years.

In the midst of thousands of layoffs, cranes continue to dominate the skyline

Calgary's downtown office vacancy rate is predicted to climb higher in the next two years as new office construction is completed. (Jennifer Lee/CBC)

Calgarians have suffered tens of thousands of layoffs over the past year yet there are still cranes towering over the downtown skyline.

Todd Throndson of Avison Young Calgary, a real estate services firm, explained the trend to the Calgary Eyeopener's David Gray.

"A lot of the buildings that are under construction right now were committed to a couple years ago," he said. "The market was a lot different and there was a lot more confidence."

Throndson said Calgary's downtown office space will grow by four million square feet by the first quarter of 2018.

Suburban office space is being built too, he added, with approximately 2.3 million square feet coming onto the market in the next 12 to 18 months.

Office rental prices likely to come down

Calgary's current vacancy rate is 16.3 per cent, about double what Throndson says is a fair marketplace for office space.

He predicts that will rise up to 21.5 per cent in the first quarter of 2018, when Calgary's downtown will reach the height of new office space available.

He says those who are building office space now might enjoy an advantage in attracting tenants a few years in the future.

"You'll be one of the few buildings that can offer the most modern space to the marketplace."

Despite the high vacancy rate and grim economic forecasts for Calgary, Throndson says very few building projects have been stopped, and investors remain optimistic about Calgary's long term future.

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