What was once feared as a looming oversupply of premier office space in Calgary has turned into a potential shortage as the downtown Class AA office vacancy rate has plunged to 2.1 per cent and the overall vacancy rate is now down to 8.1 per cent, compared to 9.8 per cent in the first quarter of this year, according to Avison Young, Calgary.
This is the lowest office vacancy rate in the city since early in 2009, and the leasing activity is strongest at the high end of the market. The overall Class A vacancy rate fell to 5.9 per cent in the second quarter, down from 7.3 per cent in the first three months of 2011. The only new private office tower under construction downtown is the Bow Tower, and it is already fully leased.
Sublease space is also being snapped up, an example being Apache Canada taking up 209,000 square feet of sublease space recently in the TD Canada Trust Tower. In all, more than 450,000 square feet of sublease space was leased up in the second quarter, Avison Young reports.
It is not as tight in Calgary's Beltline, the suburban markets, where the office vacancy rate has edged up to 8.8 per cent, ending five consecutive quarters of a decline in vacancies. Most of the empty space is sublease, including 70,000 square feet in the new Calgary Board of Education Centre.
The mood is bullish in Calgary, Avison Young notes. Calgary's oil-fired economy is forecast to grow at 3.4 per cent this year, the second strongest of all major urban centres in the country, according to the Conference Board of Canada.
