Calgary’s suburban office market recorded its third-consecutive quarter of positive absorption, says a new Avison Young report.

The absorption streak signals growing tenant demand despite broader economic headwinds, according to the global advisory-services company.

In the second quarter of 2025, the suburbs saw 192,613 square feet of positive absorption, bringing the annual total to 385,630 sf and lowering the submarket’s vacancy rate to 15.6%.

Across the broader Calgary office market, conditions remain mixed. Overall vacancy climbed to 21.7%—up 80 basis points from the first quarter—driven by a sharp decline in the downtown core. Elevated construction costs, political uncertainty and slower tenant decision-making are weighing on the leasing environment. Still, optimism in the energy sector and interprovincial migration continue to support long-term fundamentals, with potential for renewed momentum in the latter half of 2025.

The downtown market was hardest hit, posting negative absorption of 784,771 sf in the second quarter, raising its vacancy rate to 25.7%. Major energy-sector mergers and relocations, including Canadian Natural Resources Limited’ move from Bankers Hall and Home Oil Tower, contributed to the losses. With more sublease space expected as post-merger restructuring continues, downtown vacancy could climb further while putting downward pressure on rents.

Meanwhile, the Beltline, located just off downtown, saw minimal change in the second quarter, with vacancy nudging up by 0.1% to 18.05%. However, the area is beginning to show signs of transition, with projects like the Beltline Block pointing to future office-to-residential conversions as a possible long-term solution to excess supply.

The overall Calgary office-market slowdown has affected all asset classes. But class AA remains significantly lower than all other types, sitting in healthy territory.

Pictured: Shepard office campus in southeast Calgary.

Image: Government of Alberta