Calgary office leasing activity surged in the first quarter, says Cushman & Wakefield in its latest quarterly report on the sector.

Overall office leasing activity spiked 60% year-over-year to 1.6 million square feet from 1 msf. Meanwhile, the overall average net asking rate rose slightly to $15.84 per square foot from $14.97 psf in the fourth quarter of 2024.

But Beltline and suburban net asking rents declined, even though most leasing activity activity (1.2 msf combined) occurred in those submarkets.

Subleasing activity continued to be “a harbinger of good things” as sublease space declined almost 500,000 sf year-over-year. The decline equated to a 50-basis-point reduction to 14.2% of total vacant office space in the Southern Alberta city.

The overall office market posted 183,000 sf of positive absorption, marking a 200,000-sf increase from the first quarter of 2024, when negative absorption occurred.

The downtown market saw a 1.6-msf reduction in office space during the first quarter of 2025 due to the pending conversions of 640 Fifth, Atrium I and II, Dominion Centre, Five Ten Fifth, Palliser I, Place 800 and Rocky Mountain Plaza.

Approximately, 290,000 sf of office space has been converted primarily to multi-residential and other uses, such as hotels.

The conversion projects and 83,000 sf of positive absorption reduced downtown vacancy by 160 bps to 26% from 27.6% quarter-over-quarter.

The downtown office market has been plagued by high vacancy during the past decade due to surplus supply that was in the construction pipeline before the COVID-19 pandemic, changes in hybrid work patterns and a downturn in the global energy market.

Cushman & Wakefield expects leasing activity and absorption to soften during the second quarter due to uncertainty surrounding the recent federal election and troubled Canada-U.S. trade relations.

Pictured: Downtown Calgary office buildings and the Calgary tower.

Photo: Calgary Downtown Association

Register to Attend | May 28, Toronto | Connect Canada is taking place at Malaparte in Toronto, on May 28. Be there to get the leaders outlook for multifamily demand, dealmaking across asset classes, navigating a shifting political landscape, and more. www.ConnectCanada2025.com | May 28, 2025 | Malaparte, Toronto.