Property experts see optimism in the next chapter for the downtown office market

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Much has been made of the dire state of our real estate industry, particularly in the downtown office market. But according to Justin Mayerchak and Aly Lalani, both executive vice presidents and partners of Colliers’ Calgary office, the downtown office market is making a comeback.

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According to Mayerchak, the story of Calgary’s economy and office market has changed subtly over the past 12 months and it’s time for the rest of the country to take a closer look at the market.

“Of course, the overall vacancy rate is around 28.41% according to Colliers data,” says Mayerchak, “but availability is considerably lower in well-appointed, higher-class buildings. It’s also clear that we’re not in the third year of a pandemic-caused office downturn, but we’re actually finding our way through the sixth or seventh of energy-related economic lethargy in difficulty.

Energy and related companies once occupied about 75% of the downtown office market, and ancillary service providers such as environmental and engineering firms were the largest occupiers of space outside the downtown core. . Today, that number in the city center is closer to 55%, as the energy sector has stabilized, energy prices are high, and additional investment in renewable and clean energy technologies also have a positive effect.

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Lalani says renewed leasing activity, efforts to diversify the local economy and strategies to reduce or convert aging office inventory are grounds for optimism and new opportunities in Calgary. “Since November, the office market has been increasingly active, with new entrants and companies exiting before their leases expire in search of newer, better space to meet their needs and to attract employees to the office.”

Around the city center and the Beltline there is a lot of building work on old office towers, especially at street level to make entrances more welcoming.

A good example is the $30 million renovation of Stephen Avenue Place by landlord Slate Asset Management which is attracting new tenants with its fourth-floor conference center, featuring a full kitchen, gym, bike studio, and fitness centre. wringer, lockers and showers, plus a large tenants’ lounge on the ground floor.

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Lalani and his downtown Colliers leasing team have successfully leased the once near-empty office tower with companies including WeWork and mCloud.

The property is also home to the popular Major Tom restaurant on 40and floor, and this summer another great restaurant will open at the 8th Avenue entrance that has been vacated by Scotiabank. It will be an attractive new presence along Stephen Avenue.

Another indication of the current confidence within our real estate industry is the record growth of Calgary’s tech sector.

“The influx of tech interest has led to a revitalization of many downtown properties, creating mini-clusters throughout the Core and Beltline,” Mayerchak says. “At Colliers, we’ve seen a surge of interest from technology companies over the past five years, and we only expect that trend to continue.”

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He adds: “The city is recognized as a hub for the growth of technology companies. Amazon Web Services recently announced plans to open its second Canadian infrastructure region in Calgary, creating more than 950 jobs. Indian tech giant Infosys has leased 45,000 square feet downtown to create its Western Hub and we’re continually seeing interest from other tech companies who are clearly paying attention to what’s happening in Alberta.

Mayerchak and Lalani are concerned about the mislabeling of our downtown vacancy rate which is a recurring stain on our notebook. They report that all building categories are doing quite well, and paintbrush conditions are creating inaccurate expectations among business owners and investors outside of Calgary.

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Remarks:

For the past 24 years, Kirstin Evenden has been a strong supporter and guide of our heritage. She spent many years at the Glenbow and, after stepping down as Chief Executive Officer, was appointed General Manager of the national and provincial venue at Lougheed House. Sadly, it’s time to say goodbye as Evenden leaves Lougheed House to accept the position of Head of Business Development and Partnerships at the National Trust for Canada.

David Parker appears regularly in the Herald. Read his columns online at calgaryherald.com/business. He can be reached at 403-830-4622 or by email at [email protected]

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