Suburban office vacancies encouraging landlords to be flexible

Calgary's downtown office vacancies might have been getting all the attention so far this year, but commercial real estate experts point out it's not alone as the city's suburban office market continues to experience similar challenges.

"We're in the doldrums right now," said Ian Robertson, associate specializing in the suburban office market for Barclay Street Real Estate. "There's too much space chasing too few tenants. So it's a bit of a malaise.

"We saw this coming. It took a while for landlords or the market to accept what was happening. But now we accept the reality of where we're at."

Lower-class spaces feeling brunt of energy downturn

Vacancy rates in Calgary's downtown office market have hit historic highs in 2016, and commercial real estate experts are forecasting further declines moving forward.

According to a second-quarter market report by Colliers International in Calgary, the overall vacancy rate in the core has jumped to more than 22 per cent from 20.5 per cent the previous quarter – the equivalent of 618,716 square feet of office space.

Vacancy rates between classes varied, but were steepest in the B-class at 31.8 per cent and C-class at 28.1 per cent. AA- and A-class vacancies were also up from the previous quarter at 17.6 and 18.9 per cent, respectively.

Commercial vacancy rates near all-time highs, according to reports

A new report is summarizing Calgary's downtown office market in one word: scary.

CBRE Ltd. first-quarter results released earlier this month show that the vacancy rate in Calgary's core ballooned to 20.2 per cent during the first quarter of 2016. That's up from 11.8 per cent the same time last year, and 17.6 per cent from the fourth quarter of 2015.

Greg Kwong, who heads up the commercial real estate firm CBRE Ltd's office in the heart of the oilpatch, expects the worse is still to come for Calgary's office market as the local economy sputters in response to depressed oil prices.

Commercial market outside the core still active

Calgary's suburban commercial market is bucking the trend and chugging along in the face of Alberta's current economic downturn, say industry experts.

"The perception is that all commercial real estate is facing challenging times, but the reality is our industrial market and our suburban office market and our retail market are very resilient," said Colliers International managing director and broker Joe Binfet.

"And, while I wouldn't say robust, I would say active."

Commercial vacancy rates represent market outlook

Nearly one out of five floors in the office towers that make up Calgary's famous skyline now sit empty, according to CBRE, which anticipates vacancy rates to increase further in 2016.

"Oil and gas companies on every level – from junior start-up to intermediate to major companies – everyone has gone through some form of layoff and therefore and have excess space," said Greg Kwong, managing director at the commercial real estate services firm.

Calgary's downtown office market ended 2015 with vacancy rates topping 17.4 per cent – nearly double from 9.8 per cent in 2014, according to CBRE's 2016 Commercial Real Estate Market Outlook.

Vacancy rates spike as downturn makes its presence felt

Calgary's commercial sector has not been spared from prevalent weakness in the provincial economy, with prime spaces in the city left empty for most of 2015.

Vacancy rates in Calgary's commercial office sector increased by 5.8 per cent from the beginning of the year to the end, noted commercial real estate firm Avison Young. In downtown specifically, vacancy jumped 7.2 per cent, which accounted for approximately three million square feet.

In comparison, office vacancy rates tripled from four to nearly 12 per cent during the last economic downturn in 2008/09.

Calgary's commercial sector still going strong

The Calgary Tower's new, much-discussed exterior lighting system may serve as more than an eye-catching attraction. It might also shine new light on the city's burgeoning commercial sector, which, according to new statistics, is leading the country in a number of key categories for 2014.

Commercial leasing activity in the city is among the most active in Canada, with companies having snatched up 1.2 million square feet of space through the first nine months of 2014, according to commercial real estate firm CBRE Limited.

Calgary's commercial sector still among nation's busiest markets

With cranes a seemingly permanent fixture of Calgary's growing skyline, it's of little surprise the city's commercial market has been one of Canada's busiest.

According to a report from commercial real estate services and investment firm CBRE Ltd., demand for office space in Calgary and Toronto has contributed to a decline in the national office vacancy rate, which fell for the first time in two years during the third quarter of 2014.

"The Canadian economy may not be firing on all cylinders, but the Toronto and Calgary office markets turned out quite a performance last quarter," said CBRE chairman John O'Bryan.

Calgary's office market is still one of the best performers in the country, however a new report says the city will need a strong performance to absorb all the new supply set to come online.

In a report from CBRE, Calgary and Toronto were singled out as the best office markets in the country. Due to a heightened level of activity, the report did identify the possibility of an overabundance of supply.