Oak Street Real Estate Capital of Chicago has bought the one-million-square-foot twin-tower Western Canadian Place complex in downtown Calgary for $475 million from the firm that manages the pension fund for B.C.'s public employees.
The towers were purchased in November from the British Columbia Investment Management Corp. (BCI) and its real estate arm QuadReal, according to CBRE, Calgary, which brokered the deal.
BCI manages investments for B.C.’s public-sector employee pension program.
Energy giant Husky has 12 years remaining on a lease for 85 per cent of the towers until 2033, according to CBRE. The office towers are 100 per cent leased, but much of it is available for immediate sublease, including the entire 30-storey south tower.
Western Canadian Place covers 1.06 million square feet, comprising 394,600 square feet of office space in the south tower and 666,500 square feet in the 40-storey north tower. It is located at 700 9th Avenue SW and connected to the Core Shopping Centre and Bankers Hall.
Built in 1983, the complex has undergone a recent $10 million refurbishment, according to CBRE.
CBRE data shows that in 2021 five downtown Calgary office buildings have sold for a total value of $1.7 billion. In 2020, there were two sales for $34.2 million and in 2019 there was only one sale for $10.7 million.
“I would say there’s renewed optimism for the downtown office market,” Duncan MacLean, senior vice-president of CBRE, told the Real Estate News Exchange.
The largest of these deals was the purchase of the iconic Bow Tower in August by Oak Street, which paid $1.21 billion for the landmark building at 500 Centre Street SE.
Calgary’s downtown office market has an inventory of 43.2 million square feet. Currently 14.2 million square feet are vacant with negative absorption of 1.6 million square feet this year through the end of the third quarter (Q3), according to a CBRE market report.
CBRE said the downtown office market recorded 80,000 square feet of negative absorption in Q3 as the vacancy rate increased 20 basis points to 32.9 per cent, considered the highest office vacancy rate ever recorded in a major Canadian city.
However, due to its huge inventory of office space, Calgary has 29 million square feet of downtown office space fully leased, which is more than the total office space in downtown Vancouver, which is considered the second-strongest office market in Canada.
Vancouver has 27 million square feet of downtown office space, 5.9 per cent of which was vacant as of Q3 2021, according to Colliers Canada.