The stock market was rolling through rougher times in late 2011, but that has had little effect on the office space market in Calgary, where new space continues to be gobbled up in the city's bustling downtown.
According to Colliers International, office space in Calgary's core is getting tighter and more expensive, despite more space coming on line.
Colliers says the third quarter of 2011 saw occupancy grow downtown by 617,000 square feet, pushing the availability rate down to 6.1 per cent from 7.7 per cent at the end of June.
Large blocks of contiguous space are becoming increasingly rare, and even the forecast opening of the Bow tower in 2012 won't produce a space glut. Far from it. In fact, when Cenovus Energy and EnCana move over to the Bow (Canada's tallest office tower west of Toronto), much of the space they now occupy will simply pass to new tenants.
"Despite the nearing completion of the Bow, the inclusion of EnCana's and Cenovus's remaining backfill space will have little impact on the overall vacancy rate, as most of their backfill space has already been leased or optioned to other tenants," Colliers said.
The company was predicting vacancy to decline below 5 per cent by the end of 2011, and its update raised the possibility of a major space crunch in the future, given that any major new projects will require years to complete.
"If absorption in the market continues at the rate it has over the past year-and-a-half, limited space availability [similar to the 2006 situation when the vacancy rate declined to less than 1 per cent] is a real possibility," Colliers warned.
from Western Investor January 2012
