The office vacancy rate is a good symptom of the economic health of any city and the prognosis for Calgary is not good.
The latest Commercial Investor Report by Re/Max found that the office vacancy rate in Calgary has now reached 25% due to continued low oil prices. Companies are downsizing their work spaces while others with long-term leases are opting to sublease their spaces.
“The most significant impact of the downturn in oil prices at the end of 2014 has been seen in office space,” reads the report. “There was significant downsizing in 2015, and the impact of that continues to be felt in the downtown office market in particular.”
Due to the economic downturn Calgary has seen an increase in the manufacturing and retail sectors. This has likely been driven by “entrepreneurs who were previously employed in the oil industry and are putting their severance packages toward starting their own businesses: anything from fitness studios to dog day cares to welding shops.”
Edmonton’s office vacancy has also risen to 12% as a result of the provincial recession and is expected to increase as 1.8 million square feet of new inventory come onto the market beginning in 2017. However, the $2 billion ICE District, which houses the new Rogers Place arena and office towers, hotels, entertainment venues and more will revitalize the city’s downtown.
Both office markets are not expected to rebound until oil prices rise.
In contrast, Vancouver’s office vacancy rate is 9% in the city centre and 13% in the suburbs due to newly built spaces creating new inventory in the market.