CALGARY, ALTA. — With the goal of revitalizing Calgary’s downtown, city officials are now offering financial incentives to encourage development.
The Downtown Calgary Development Incentive Program supports downtown office conversions, office replacement and new residential development to combat downtown office vacancy.
The program is starting with an initial $45 million in funding for downtown office building owners who want to convert space for other uses. The initial phase of the program will run from August to December 2021 and will focus on office to residential conversion, with a priority placed on the downtown core, which has the highest levels of office vacancy.
“The City is excited to launch this program in order to begin to make an impact on downtown office vacancy and support vibrant downtown communities,” said Thom Mahler, program lead for Calgary’S Downtown Strategy, in a press release. “This is an issue with wide-reaching impacts. High downtown office vacancy means low downtown property values which creates property tax burdens to residential and commercial properties outside the downtown core. This program is part of the city’s effort to stop that shift.”
Downtown office vacancy is approximated at 14 million square feet or 32.59 per cent. Downtown office property values have declined by $16 billion (60 per cent) since 2015, resulting in a tax shift that officials say impacts the municipality’s finances as well as residential, commercial and industrial property taxes throughout the city.
“Converting office to residential uses is complex and expensive, with incentives being required to stimulate investment,” said Trent Edwards, co-chair of Calgary’s Economic Development’s Real Estate Sector Advisory Committee. “Similar public investments have also been made in cities such as Denver, Nashville, Austin, Pittsburgh, Houston and Detroit to successfully improve vibrancy, private investment and tax base. The status quo or ‘do-nothing’ scenario for Calgary’s downtown office vacancy rate is the biggest risk to downtown vibrancy, Calgary’s economic competitiveness, and the city’s fiscal sustainability.”
Officials stated roughly six million square feet of office space needs to be removed from the market through leasing, conversion, adaptive reuse and/or demolition to help address downtown office vacancy and stabilize downtown office property values over the next decade.
Property owners within the Greater Downtown Plan area (downtown core, Eau Claire, Chinatown, downtown west, East Village,and the Beltline) can apply for funding between until Sept. 15. A priority will be placed on properties within the downtown core. The program is offering a grant for office to residential conversions of $75 per square foot, based on the original gross building area of existing office space that will be converted. The grant will be up to a maximum of $10 million per property unless city council approves a greater amount for a particular application.