Calgary’s office market faces more years of pain if the oil and gas sector can’t improve access to energy products by pipelines, rail or other means, Altus Group data curator Sandy McNair told BNN in an interview Tuesday.
The city’s office property market today has 14.2 million square feet of space available for lease, leading to a 20.2 per cent vacancy rate – a level not seen since Calgary’s office supply glut in 1983, McNair said.
Just a decade ago, the vacancy rate was 1.2 per cent with about 475,000 square feet of office space available across Calgary.
“It’s been a huge change in 10 years,” McNair said. “But Calgary has always been the roller coaster market. It’s been the one with the highest highs and the lowest lows.”
This time around – with the effect of a collapse in oil prices hitting the city – the pain of the office market is “very unevenly distributed,” McNair said. According to Altus, a commercial real estate consulting company, 97 buildings out of 550 in Calgary have more than one acre of space available. On average, these buildings have more than three acres of space available in each.
“In fact, there are eight buildings in Calgary that have more than five acres of available space in them right now,” he said. “That’s an awful amount of space in relatively small number of buildings.”
A recovery in Calgary’s office market mostly depends on a turnaround for the energy industry, McNair said. He identified energy players’ reduction in costs, environmental stewardship and improving energy products’ “access to tidewater” as the keys to decreasing the office market’s vacancy rate.
While Calgary has discussed diversifying its economy “since the 70s and 80s,” McNair said it may not do much to relieve the city’s commercial property market.
“At its core, this is an energy market,” McNair said. “Whether you’re an accountant, a lawyer, or in the service industry, the energy industry pulses through the veins of Calgary.”
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