Troy Media – By Dan Sumner
During the 2008/09 financial crisis and commodity price collapse, it looked like a massive oversupply of office space in Alberta was on the horizon. But thanks to a rebound in the economy and oil prices, office markets in Calgary and Edmonton have improved more quickly than anticipated.
According to Colliers international, the downtown vacancy rate in Calgary – the largest downtown office market in Alberta by far – fell to a two-year low of 7.8 per cent in July of this year. In Edmonton, the near completion of the Epcor building has bumped the vacancy rate higher to 9.9 per cent.
With a massive amount of supply coming on-line between 2009 and 2012 in Calgary, it looked like the perfect storm was brewing for the city’s downtown office market during the recession. Some predictions were for vacancy rates to hit a staggering 20 per cent. However, after peaking at 15.2 per cent in July of last year, companies have snapped up office space and cut the vacancy rate nearly in half. Interest has been particularly strong at the upper end of the market with vacancy rates of AA class properties at only 3.5 per cent.
Edmonton’s downtown office market, which was not impacted as dramatically as Calgary’s during the recession, has also seen fairly robust levels of leasing activity, despite the recent increase in the vacancy rate.
The strong recovery in downtown office leasing activity in Alberta is a sign that many firms still have an eye towards growth and expansion in the province over the next few years. It also suggests that new office projects could start sooner than previously thought.
Dan Sumner, ATB Financial