Calgary’s office market is seeing a shift as private investors step in to fill the void left by institutional divestment, says JLL.

Private investors have capitalized on opportunities in the office sector as institutional owners exit. A notable example is the sale of Bow Valley Square by Oxford Properties and CPPIB to Armco Capital for $140 million, or approximately $100 per square foot.

Calgary posted the highest net office absorption in North America in 2024, totalling nearly 1.35 million square feet, according to JLL. The rise marked the city’s strongest annual absorption level in over a decade and contributed to a year-over-year drop in office vacancy to 23.6% from 26.3%.

“Calgary has a much higher office-utilization rate,” Scott Figler, the report’s lead author, told Connect.

“So the typical company in Calgary is using their office space more. They have their people in more, which is putting putting upward pressure on demand.”

Calgary’s in-office work has increased 35% since 2020—the highest rate among Canadian markets, according to JLL.

Calgary’s office market is outperforming Toronto, the largest market in Canada, Figler noted. Lower occupancy costs are aiding Calgary’s cause.

“In Calgary, because it’s a softer market in general, companies can lease space for a fraction of the cost that they can do it in Toronto,” said Figler. “So, that’s driven a lot of demand as well.”

Meanwhile, the City of Calgary’s launch of a new $53- million funding round for its highly popular Downtown Development Incentive Program (DIP), an initiative largely aimed at converting vacant office space into residential use, has boosted investment and development in the sector. DIP was paused for more than a year after its initial funding was exhausted due to the strong investor interest in conversions.

However, with construction costs potentially rising due to trade tensions with the United States, developers have voiced concerns that the city’s current $75-psf subsidy may need to increase to ensure economic feasibility, JLL noted.

Retail Market Strengthens

Meanwhile, Calgary’s retail market is also experiencing positive momentum, with net absorption strengthening as demand for space outpaced supply, leading to a decline in availability.

Over the final six months of 2024, the dining sector accounted for 47% of major retail openings, followed by 16% in apparel and accessories and 14% in entertainment and specialty retail. Southwest Calgary has become a hotspot for apparel and accessories stores, while major malls continue to attract trendy brands such as Uniqlo and JD Sports.

A large population influx is driving demand in both the office and retail sectors as the city gains from strong employment and housing affordability, said Figler.

Pictured: Office buildings in downtown Calgary.

Photo: JLL