Calgary’s downtown office vacancy rate has spiked back to 25.7 per cent, up from 24.6 per cent a year ago, with four office towers now totally empty and another five at 25 per cent occupancy or less, Avison Young reports in a third-quarter survey.
“It is not as bad as it looks,” commented Susan Thompson, Avison Young, Calgary, research manager, noting that the overall downtown vacancy is slightly lower than at the 2017 peak, and that most the empty downtown towers are smaller properties.
The most significant is 801 Seventh Avenue S.W. — the former Nexen building — which emptied out 597,000 square feet last year when Nexen Energy moved all of its employees to The Bow office tower.
The next largest is the 119,366 square-foot SNC Lavalin Centre, which is now in receivership, and for sale at around $18 million. The remaining empty downtown towers – Eau Clair Place and the Lougheed Building, which is undergoing renovations – are less than 76,000 square feet.
There are an additional five downtown office towers which are more than 75 per cent empty.
These include Canadian Centre (833 - 4th Avenue SW) with a total of 150,340 square feet, of which 83 per cent is vacant; and Panarctic Plaza (815 - 8th Avenue SW) where 80 per cent of its 140,455 square feet is vacant, according to Avison Young.
In all, there are 13 downtown office towers that have more than 100,000 square feet available in a contiguous block.
In the third quarter, office absorption – total leases minus sublease space returned to the market – in downtown Calgary went negative by 311,000 square feet, the worst performance for any quarter since the third quarter of 2016 when 1.2 million square feet of space was shoved back onto the market. Of the current 11.9 million square feet of vacant space downtown, 21 per cent of it is sublease space, reports Avison Young.
However, there are 41 downtown office towers in Calgary that have no vacancies at all, representing about 17 per cent of the total downtown office inventory.
In a best-case scenario looking into 2021, Calgary’s downtown office vacancy rate will remain at current levels: in the worst-case, it would spike above 30 per cent, according to Avison Young.
The office sector is not much stronger outside of Calgary’s downtown. The vacancy rate in the Beltline is 22.5 per cent, up from 22.2 per cent a year ago, but it is the only submarket where the absorption has been positive this year, gaining 33,000 square feet of lease-up.
In the suburbs, the overall office vacancy rate in the third quarter was 19.6 per cent and absorption went negative by nearly 600,000 square feet.