Calgary’s downtown is the city’s central business district and is a major economic hub for the region that extends beyond the province’s vast energy industry. Indeed, Calgary is home to numerous corporate headquarters, financial institutions, law firms, and professional services companies.
Like any dynamic and vibrant downtown, Calgary’s downtown core is also characterized by an iconic skyline with tall skyscrapers, the Suncor Energy Centre and Brookfield Place. Modern architecture contributes to the uniqueness and overall urban landscape in Calgary.
But under today’s economic conditions, how is the Calgary commercial real estate market performing?
Put simply, Calgary’s downtown core remains vibrant.
Numerous office spaces, retail outlets, restaurants, and entertainment centres are doing well, supported by a wide range of factors, particularly its public transportation system, including the CTrain and the pedestrian pathways. Meanwhile, over the years, Calgary’s downtown area has undergone rapid urban development. This includes new office buildings, residential towers, and mixed-use developments.
The objective has been to create a vibrant and livable downtown, focusing on helping businesses thrive while ensuring the area is attractive for people by creating walkable streets, clean and spacious public spaces, and numerous amenities for residents and workers.
Has this been achieved?
In many ways, yes. In some ways, no.
A New Initiative in Calgary
The latest developments in the commercial real estate market have prompted city officials to think outside the box and keep downtown Calgary robust.
One of the strategies was introducing the Downtown Calgary Development Incentive Plan in 2021. This program provides a $75-per-square-foot subsidy to developers for converting offices to residential. Since then, ten buildings have been approved for this fund. Converting these spaces constructs more than 1,200 new homes and eliminates about one million square feet of commercial office space. In other words, Calgary’s downtown core could receive an enormous facelift.
“Commercial office markets are experiencing a transformational shift in the aftermath of the pandemic,” said Christopher Alexander, the president of RE/MAX Canada, in a statement. “Downtown cores were virtually decimated by Covid restrictions and have yet to come back to life in many Canadian centres. The conversion programs now underway ensure that our city centres remain vibrant in the future, restoring vital foot traffic that is the lifeblood of the country’s core urban areas. The retrofit and renovation activity not only brings desperately needed residential product.”
Demand for office space and retail outlets is growing, and Calgary’s downtown is focused on urban revitalization efforts. The Calgary Office Revitalization and Expansion (CORE) Working Group was created in May 2021 to provide suggestions to the government to help revitalize downtown Calgary as a healthy and energetic area to work and live in. The Alberta government is committed to this goal by providing over $615 million in funding for small businesses through the Small and Medium Enterprise Relaunch Grant. An investment and growth strategy has also been created with a $75 million investment designed to attract investors to Alberta and make it more competitive. An additional $50 million is being invested in Technology Innovation and Emissions Reduction to support clean technology and energy projects.
These measures are likely to have a long-term impact on Calgary and will bolster Calgary’s potential in the years to come. More jobs will be created, and revenues for businesses and investors will likely increase. Overall, Calgary’s downtown core continues to enjoy significant attention, and there is a long-term plan to build and revitalize this region even more in the coming years.
Spillover in Manufacturing?
Recent data show that investors from British Columbia and Ontario are branching out to other commercial real estate markets in the country. One of these places? You guessed it: Calgary.
This spillover effect is amplifying demand for industrial and multi-unit residential options. As a result of greater demand, industry experts note that Calgary has circumvented the national trend, leaving availability rates in industrial and office leasing declining in the first quarter of 2023.
In addition, the out-of-province spillover trend has become a significant source of business in the industrial sector, buoyed by a growing investment demand for distribution and warehousing facilities. But is there enough stock in the Calgary commercial real estate market? New data suggest that availability rates fell to 3.9 per cent in the first quarter of 2023, down from 5.5 per cent at the same time a year ago.
That said, the positive story is that companies are creating new supply. For example, De Havilland Canada is one of the recent companies to set up shop in Calgary and construct a state-of-the-art facility.
Companies are eyeing Calgary, businesses are building new facilities, and demand only continues to grow. It looks like Calgary is giving tremendous competition to its major urban centre rivals.