Despite improving occupancy rates, Calgary’s commercial property market is still dotted with empty office high-rises, Avison Young stated in its new market analysis.
Emblematic of the phenomenon is the 600,000-square-foot 801 Seventh Avenue S.W., which was previously named the Nexen Building. Ever since the relocation of all of its employees to The Bow, the Nexen Building has remained dormant and unused.
Other notable vacancies are the old Chamber of Commerce building at 100 Sixth Ave. S.W., the Lougheed building at 604 First St. S.W., and the old SNC-Lavalin building at 909 Fifth Ave. S.W.
“That's actually quite unusual in any office market to see an entire major office building empty,” Avison Young research manager Susan Thompson told CBC News.
The city’s overall office vacancy in the downtown market stood at 24.2% as of Q4 2019.
“We tend to see a flight to quality in office buildings during a downturn because there are tenants that are still doing well and they may have similar or even better budgets than they did before the downturn started,” Thompson explained.
“So they can now consider either better quality buildings or better locations.”
The city’s office activity declined to its lowest point since 2015 (at just $338M, falling 65% year-over-year), according to Altus Group.
However, the overall market saw 120 commercial transactions worth $1 billion collectively during the fourth quarter alone. This pushed up the year’s total to $2.7 billion.
Much of the strength came from the industrial sector, which represented a substantial share of Calgary’s 2019 volume, with 104 transactions worth $932 million (24% higher annually).
“While the overall market remained sluggish in 2019, industrial continues to lead the way into the new year. Improved growth rates for the provincial economy in 2020 should translate into more activity in Calgary’s commercial market,” Altus Group data solutions manager Ben Tatterton said.