Calgary posts record office vacancy rate but new report points to better times ahead
Calgary continues to have the highest downtown office vacancy rate in North America, but a new report shows there are reasons for optimism.
According to Avison Youngâs latest report on the cityâs commercial real estate market, the downtown sat at a 29.9 per cent office vacancy in the third quarter of the year, up from 29.2 per cent in the previous quarter. Overall, the vacancy rate across the city came in at 26.1 per cent.
The report also showed a total of 19 buildings sitting empty â" five of them in the downtown.
âCalgary obviously came into the pandemic in a challenging position,â Avisonâs research manager Susan Thompson told Global News.
âBut there really is a case for optimism in Calgaryâs office market,â she added.
Thompson said many signs point to better times ahead, including the fact that while the vacancy rate was higher, it was the smallest quarterly increase over the course of the pandemic. Another sign, she said, was the decrease in the subleasing of prime, or high-class office space, by major companies.
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âCompanies are starting to gravitate to that premium space, so thatâs telling us thereâs activity out there,â Thompson said.
There was also increased activity in foot traffic and the return to the workplace in the city, although it is still well below pre-pandemic numbers, according to Avison. Still, Thompson said that is encouraging.
âCalgary really is returning to the office.â
Read more: Calgaryâs downtown office vacancy rate hits new high of 29.2%
Local businesses can hardly wait for that return. Marcelloâs Market & Deli hasnât seen a lunch ârushâ in 20 months.
âIn 2019, we would see 1,000 people come in between 11 a.m. and 1 p.m.,â owner Brian Baisi said. âWeâre probably seeing closer to 100 â" maybe 80 now.â
Marcelloâs Market & Deli faces challenging times. Global CalgaryBaisi said his business was just starting to bounce back from Calgaryâs economic downturn when the pandemic hit.
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Now, itâs barely treading water.
âWeâre consistently down 70 per cent â" if not worse â" depending on what state weâre in,â he added. âWith the work-from-home order, weâre down 74 per cent.â
Still, he said he is prepared to wait it out.
âIt will be lean, but I think if weâve survived the last 20 months weâre for sure going to survive the next two to three years,â Baisi said.
âIt will be an uphill battle but weâll make it.â
Read more: Calgary âexperimentâ looks to transform vacant office tower into affordable housing
When will Calgary get back to business?Thompson told Global News that real estate decisions take a long time to play out and Calgary will likely see further softness in the office market for another year or two.
Still, she reiterated signs are promising and she expected to return to pre-pandemic levels in about two to three years.
© 2021 Global News, a division of Corus Entertainment Inc.
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