In its latest analysis released on September 28, real estate company Re/Max found that nearly 25 per cent of Calgary’s office spaces are unoccupied, reflecting the troubled condition of the Albertan city’s real estate across all categories.
The 2016 Re/Max Commercial Investor Report stated that the continuous weak performance of petroleum assets is making itself felt on Calgary’s lease segment.
“As a result of companies downsizing, lease-holders in long-term leases are looking to sublease, and in order to do so have to price below market rate. This is having the most impact on office space, but is affecting retail as well,” according to the report, as quoted by CBC News
While “a slow but eventual recovery is expected,” the occupancy rate is not likely to improve if demand does not intensify—a prospect that remains dim in light of the mass outbound emigration of skilled professionals over the past few quarters.
“More office space is continuing to come on the market, while at the same time, the overall trend is for companies to shift to a smaller footprint.”
Approximately 5.2 million square feet of negative absorption has been observed in Calgary’s office space from mid-2014 to mid-2016, Adam Hayes of Cresa Calgary said.
“To put it in perspective … that is about equal to the pace at which space was occupied and leased in 2011 to 2013, when Calgary was on its last bull run,” Hayes explained. “As opposed to how many floors are available, people are starting to talk about how many acres are available in the building,”
“The vacancy rate over the next 12 to 18 months, as far as we can tell, is going nowhere but up.”
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