CALGARY, ALTA. – After a year of instability, Calgary’s office market is demonstrating resilience and adaptability according to a new report.
Avison Young’s latest look at the Calgary downtown office climate stated vacancy in Class AA space remains relatively low with a “flight to quality movement continuing to gain momentum.”
“This trend significantly influences the decisions of the city’s largest energy sector tenants, and future absorption swings are likely to be affected by several pending legacy lease expirations on the horizon,” an Avison Young release said.
Office investment activity picked up with several transactions at the end of 2023 with more office use upside than residential conversion potential, the release said, and the City of Calgary also closed the funding stage of its residential conversion program, announcing the final properties included under the initial scope.
Vacancy declined in the Beltline area which experienced two consecutive quarters of positive absorption contributing to a reduction from the record high vacancy rates seen in Q2 of 2023.
“However, this submarket still faces challenges as it competes with both downtown and the suburbs, offering only a middle ground between affordability and convenience,” the release said.
Suburban markets showed perseverance with three consecutive quarters of positive absorption and declining vacancy rates in both the north and south submarkets.
“In the face of continuing economic headwinds, Calgary will continue to rely on its core strengths to navigate through 2024. The market’s resilience is reinforced by positive migration trends and robust energy prices, while its adaptability, demonstrated by the repurposing of office space, is forward thinking and positions the market well for the future,” the release concluded.