Nexen has announced it will move into 290,000 square feet of sublease space in the iconic Bow tower, among the bright signs as analysts eye the bottom of the cratered Calgary office sector.
Nexen, a leader in the oil and gas industry, has taken the sublease space from Cenovus Energy in the 58-storey tower. Nexen will move from its current headquarters at 7th Avenue and 8th Street SW in Calgary’s downtown.
Meanwhile, analysts said the bottom of Calgary’s office market, which is flirting with at least a 25 per cent vacancy rate, is becoming visible.
“There are signs the market is reaching bottom,” according to Cresa, a commercial real estate firm, in its second-quarter report on Calgary’s office market.
Cresa noted that the current vacancy rate is 24.9 per cent, up 0.5 per cent from the previous quarter.
But Cresa added that 13 Calgary office properties have sold in the past year, a “natural indicator of the low point of a market trough.”
Cresa added, “It would seem that some landlords are viewing now as the time to enter the market.”
Avison Young agrees that the office market is recovering.
“The Calgary office market appears to have found its bottom. Vacancy has moved around within a very narrow 40-basis-point range over the last five quarters,” the commercial agency stated in its second-quarter report.
Avison Young pegs Calgary’s overall office vacancy rate at 23.5 per cent, up from 23.2 per cent in the first quarter.
But Avison Young also reports a higher downtown office vacancy rate, which it pegs now at 26 per cent. Total vacancy for the downtown office market is 12 million square feet, represented by 8.8 million square feet of headlease space and 3.2 million square feet of sublease space, according to Avison Young.