Rightsizing has become a key trend in Calgary’s office market as organizations reassess their space needs amid shifting operating models, according to Avison Young’s latest Calgary office market report.

The firm attributes the rise of rightsizing to energy-sector companies adjusting headcounts, consolidating operations following mergers and acquisitions, and re-evaluating long-term workplace strategies. As a result, space reconfigurations and the return of surplus space to the market are accelerating, while tenant demand is increasingly focused on higher-quality buildings. Market-wide absorption totalled 159,391 square feet during the fourth quarter of 2025, reflecting early signs of rebalancing as rightsizing activity intersects with a broader flight-to-quality trend.

Downtown Calgary recorded 198,702 square feet of positive absorption in the fourth quarter, lowering the vacancy rate by 0.2 percentage points quarter-over-quarter to 27%. A significant contributor was ATB’s announced relocation to Suncor Energy Centre, although the move is expected to eventually return eight floors at Eight Avenue Place West to the market in a future quarter. Over the past year, downtown has seen space added back to inventory as a result of energy-sector consolidations, tenant relocations, and ongoing corporate reviews. Avison Young expects further consolidation through 2026, increasing available sublease space and creating relocation opportunities for tenants. While elevated construction and refurbishment costs continue to constrain some occupiers, enhanced landlord inducements and strategic timing are expected to support a more competitive leasing environment.

The Beltline continued to gain momentum, posting 20,972 square feet of absorption in the quarter. The City of Calgary’s office-to-residential conversion program expanded into the Beltline in the fourth quarter with the announced conversions of Joffre Place and Epique House. Flight-to-quality demand is increasingly extending into the area as landlords upgrade amenities, improve parking options, and adjust inducement packages to attract tenants, particularly given the limited supply of higher-quality office space.

Suburban markets remained in demand, particularly among healthcare, consulting, and marketing tenants. Although the suburbs recorded negative absorption of 60,286 sf in the fourth quarter, year-to-date absorption remained positive at 73,250 sf Imperial Oil’s planned exit from Quarry Park is expected to return a significant amount of space to the market, which may put upward pressure on vacancy but also create opportunities for tenants seeking improved-quality space.

Overall, Avison Young notes that rightsizing and sublet vacancy growth are expected to remain key themes entering 2026 as large energy-sector tenants continue to adjust their operating models. As larger blocks of space come back to the market, the resulting increase in higher-quality availability is expected to support tenant upgrades and contribute to a gradual rebalancing of Calgary’s office market conditions.

Pictured: Downtown Calgary office building overshadow a hotel.

Image: Courtesy of Avison Young