Downtown Calgary office vacancy continued to move downward in the fourth quarter of 2023, says a new Avison Young report.
Downtown vacancy declined 30 basis points quarter-over-quarter to 26.9%, marking the second straight quarter of positive absorption. The downtown submarket recorded a total of 119,933 square feet of positive absorption in the fourth quarter of 2023.
The positive absorption was accompanied by a slow by steady trend of declining vacancy.,
“Vacancy in the class AA space remains relatively low, as the flight to quality continues to gain momentum,” states the report.
Future absorption swings are likely as energy companies’ leases expire, the report adds.
The Calgary office market has been ravaged by high vacancy stemming from the COVID-19 pandemic, a global energy market downturn, hybrid work patterns and a supply glut due to new product deliveries planned years beforehand. To reduce vacancy, the City of Calgary introduce a highly popular downtown office-to-residential conversion incentive program that has been put on hiatus because its budget was exhausted.
In the fourth quarter of 2023, office investment activity increased as investors traded assets with more office than residential upside. Avison Young indicated that the office-conversion program’s suspension factored into the investment increase.
Monte Stewart serves as Content Director - Canada for Connect Commercial Real Estate.
Based in Vancouver, British Columbia, Monte provides daily news coverage of major Canadian commercial real estate markets, including Vancouver, Toronto, Montreal and Calgary. He has written about the real estate sector for various media outlets and Avison Young since the early 2000s.
In addition, he has covered sports, general news and business for several leading wire services and publications, including The Canadian Press, The Associated Press, The Calgary Herald, The Globe and Mail, Research Money, The Daily Oil Bulletin, Natural Gas World and The Toronto Star.
Monte is active in his community as a youth basketball coach and raises funds for such charitable causes as Movember.