Calgary might be feeling the full effects of the oil crash thanks to office vacancy rates that are very high, while rents continue to plummet.
Bloomberg is reporting office vacancy rates in the city are as high as 14 per cent in the third quarter, the highest it’s been in five years.
Rents are the lowest they’ve been in nearly 10 years.
Many energy company tenants are sub-leasing for half the price of their lease in a desperate bid to off-set the costs.
“We’re at the highest point of uncertainty right now,” Alexi Olcheski with Avison Young in Calgary told Bloomberg.
“It is a bloodbath.”
CBRE Group said 2.7 million square feet of office space is being subleased by companies, which doesn’t include two million square feet of leased space that currently sits empty.
Bloomberg said listings suggest both Athabasca Oil Corp. and Penn West Petroleum Ltd. are looking to sublease space in the city. Athabasca eliminated 25 per cent of their workforce recently, while Penn West struggles to maintain a workforce of 800 people, down from more than 2,200 in 2012.
Offloading office space is in “overdrive” at the moment, with Olcheski seeing his first quadruple sublease in his career history – that is, a sublease was made several leases removed from the main energy leaseholder.
Despite all the empty space, five new office towers are being constructed in Calgary, each with at least 430,000 square feet of space. They will be completed within the next three years and some are only 36 per cent leased.