Office vacancy in downtown Calgary rose in the fourth quarter of 2021, reaching a new record high for the city.
CBRE reported this week that the office vacancy rates for downtown Calgary increased to 33.2% in fourth quarter of last year. The suburban market also rose to 25.9% over the same period.
Since the onset of the COVID-19 pandemic, Calgary’s office market has seen an increase in vacancies, and this marks the seventh consecutive quarter of negative fundamentals, hitting the new benchmark high of 33.2%.
Calgary’s overall office vacancy rate — downtown and suburban, combined — in the fourth quarter of 2021 hovered at 30.4%. The city’s Beltline neighbourhood continues to have the highest office vacancy rate in the suburbs with 33.1%.
However, according to CBRE, there are signs of optimism, as the increase in quarter four was made less severe by the recall of a large sublease. Another conversion project, which saw the removal of the vacant Paramount Building from office inventory, also helped mitigate the vacancy rate.
And, despite the pandemic’s ongoing impacts on the workplace, average asking lease rates in Calgary continued to rise, increasing to $16.50 per sq ft.
When it comes to industrial space, CBRE states that Calgary’s availability has dropped to 5.4% from 9.2% in the previous quarter.
According to the report, Calgary’s industrial market saw a historical annual 7.3 million sq ft of net positive absorption in 2021. With the current demand for large-format space in Alberta and Calgary’s position as a western distribution hub, availability and rental rates are forecast to test the market in early 2022 as demand outpaces supply.
When it comes to office users’ decision-making processes when leasing space, considerations such as greater lease flexibility and more amenity options for employees have become more important.
While Calgary’s office vacancy rate has risen, three other Canadian cities boast the lowest downtown vacancy rates in North America.
Vancouver is continuing its pre-pandemic trend of having the lowest downtown office vacancy rate across the continent at 7.2%, followed by Toronto at 9.7% and Ottawa at 9.9%.
And as for Alberta’s capital city? Edmonton’s downtown vacancy rate isn’t quite as high as Calgary’s but it’s still up there, hovering at 21.1% in the fourth quarter of 2021.
With files from Kenneth Chan