Calgary’s downtown development incentive program is serving as a template for North American cities as they grapple with high office vacancy and housing shortages, says Avison Young.

The City of Calgary program rewards developers that convert office space to residential units. The program has helped reduce Calgary’s B and C class office vacancy, says Avison Young a new report.

C class office space have seen the biggest drop as vacancy fell 7.6% to 25.9%, says the commercial real estate services firm in a new report. Meanwhile, B class office vacancy declined 6.2% to 39.4%.

The program provides a municipal grant of $75 per square for office-to-residential conversions. City administrators approve grants up to $15 million for projects. Grant requests of more than $15 million require council approval.

In the largest conversion reported on the city’s website, Peoplefirst Developments received $7.8 million from the city as 112 new residential units comprising 104,000 square feet.were created at the Cornerstone at 909 5th Avenue S.W.