Calgary's industrial sector showing signs of strain

Calgary's industrial market continues to hiccup along in a weakened economy as vacancy rates have risen over each of the last four quarters and are likely heading toward the bottom of the cycle, said a second-quarter market report by Cushman & Wakefield.

"One positive is that the amount of space under construction has been cut substantially; helping to prevent future jumps in the vacancy rate," read the report.

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.

Over-supply, fewer newcomers behind increasing vacancy rates

Vacancy rates in Calgary have spiked so far this year and are expected to rise for the foreseeable future, say industry insiders.

And with few signs of significant changes in the economy on the horizon, renters will enjoy plenty of choice and price flexibility, while landlords will need to get aggressive.

"Vacancy started rising pretty rapidly after the spring of last year and it's still been rising," said Gerry Baxter, executive director of the Calgary Residential Rental Association, which has about 850 members, representing between 65,000 and 70,000 rental units. There are more than 700 landlords in the association.

Calgary Economic Development's top boss promotes collaboration, innovation

On the heels of flooding, low oil prices and, now, raging wildfires, Calgary Economic Development's top boss admits it might be easy for people in the province to see the glass half empty.

Yet Mary Moran, as well as other community leaders, urged those people to keep current conditions in perspective before claiming the end is near.

"These are historically challenging times for both Calgary and Alberta's economy," said CED's president and CEO, who likened the province's current situation to a game of Whac-a-Mole. "It seems we barely finished covering up the scars of the flood of 2013 when our number-one energy customer became our number-one very intense competitor.

Calgary vacancy rates quadruple from last year: CMHC

Calgary's once-cramped rental market has space to spare, and it could have implications for the city's new and resale home sectors.

In its recent fall rental survey, Canada Mortgage and Housing Corporation's (CMHC) reported vacancy rates in Calgary's rental sector has nearly quadrupled over the previous year, jumping to 5.3 per cent in October from 1.4 per cent at the same time last year.

"The call volume has dropped off considerably in the last 12 months," said Mainstreet Equity Corp. CEO Bob Dhillon, whose Calgary-based real estate company owns and operates rental properties in the Calgary area, as well as in British Columbia and Saskatchewan.

Renters with kids face uphill battle

After her marriage broke down in 2013, Kelly Farley needed to find a home to rent for her and her two teen daughters. She wanted to stay close to the northwest Calgary neighbourhood where the girls had grown up and to keep them in the same schools.

Eventually she found the main floor of a house; another tenant lived in the basement. It wasn't the best situation, but things got worse before they were better.

The basement tenant moved out and the landlord decided to sell the house. Then, just weeks after Farley moved out, the landlord relisted the main-floor unit — for more money than Farley had been paying, and more than she could afford.

"It was a grim search and I became desperate," said Farley of her house-hunting search. "When you have kids and you're going through a family breakdown, as a renter, all you want to know is that you have a safe, stable place to land."

Pet owners say discriminating landlords distorting vacancy rates

Erika Lagyjanszki is about to make the move from Toronto to Calgary to start her business as a wedding photographer and a new life with her boyfriend.

Looking for a place should have been a breeze for the two given the uptick in vacancy rates in Calgary as of late.

In fact, according to the Canadian Mortgage and Housing Corp. (CMHC), in the Calgary CMA, the overall apartment vacancy rate increased year-over-year from 1.4 per cent in April 2014 to 3.2 per cent in April 2015.

"The increase in the vacancy rate was a result of the universe of rental apartments in Calgary rising at a faster pace than demand for rental units," said Christina Butchart, principal market analyst with CMHC.

Market sees rise in vacancies, rents

Calgarians looking to find rental housing have been treated to more selection in recent months.

According to a report from Canada Mortgage and Housing Corporation (CMHC), Calgary's vacancy rate in April stood at 3.2 per cent. The number is more than double the rate seen last April, when CMHC reported Calgary vacancies at just 1.2 per cent.
Across Alberta's urban centres, the rental apartment vacancy rate was 3.4 per cent in April 2015 compared to 1.8 per cent in April 2014, according to the report.

Still plenty of activity coming to Calgary's commercial sector

Dueling industry reports are challenging expectations of how active Calgary's commercial market will be this year in wake of ongoing energy sector uncertainty.

Commercial real estate firm Cushman & Wakefield indicated in a recent study that Calgary's development cycle has "come to an end." It noted in the first quarter, the downtown office market alone experienced negative absorption of 1.2 million square feet, the largest quarterly decline in the city's history.

Calgary's core office market could see vacancy increases that endure even after a recovery in oil prices

According to a new report from commercial real estate firm Cushman and Wakefield, the negative effects of the drop in oil prices could remain for up to a year after a rebound.

"Although the brunt of the declining oil price was felt in Q1 2015, it is expected that negative absorption will continue throughout 2015," said the report.

"Net rates will drop in the CBD (central business district), while the suburbs will be impacted to a lesser extent. History would suggest that we can expect tenants to begin taking back space once oil prices strengthen and the market regains confidence."