After several quarters of alarmingly high vacancy levels, downtown Calgary’s office market is apparently beating its oversupply problem as more and more tenants are helping with space reabsorption.
In its report last month, brokerage firm CBRE Ltd. stated that an influx of new occupants has pushed the Calgary office vacancy rate to 26.5% during the first quarter of the year, markedly lower than the 27.8% peak seen on Q2 2018.
The downtown area enjoyed 289,515 square feet of positive net absorption in its office spaces during Q1 2019. CBRE stated that this was the most notable positive absorption in five years.
Some of the improvement could be attributed to the region’s oil and gas sectors finally managing to stanch the bleeding of their workforces.
“They’ve just stopped the four or five hundred people being laid off like we saw a year or two years ago, where large companies like Cenovus and Suncor and basically all the major oil companies were laying off in droves — we don’t see that happening right now,” CBRE Alberta regional managing director Greg Kwong told CBC News.
However, the city’s outskirts did not fare as well, with less than 15,000 sq. ft. of net absorption during the first quarter.
“Due to comparable gross rents between Calgary’s suburban and downtown markets, suburban landlords continue to face the threat of large tenants moving into the core in order to take advantage of superior amenities,” the CBRE report explained.