Calgarys Office Market Sees First Signs of Growing Tenant Demand Since Downturn

Momentum gathers in Canada’s office market with largest amount of tenant activity in a decade

Toronto – October 16, 2017 – Growing business confidence, and increasing stability in the oil patch, led to the office market in downtown Calgary recording the first quarter of positive tenant demand since the downturn. According to CBRE’s Canada Q3 2017 Quarterly Statistics Report, Calgary’s downtown core saw 113,000 square feet of positive absorption, the commercial real estate industry’s measure of tenant demand, to drop the office vacancy rate by 30 basis points (‘bps’) to 27.4%. It represents the first decline in vacancy since Q3 2014 and the increase in tenant demand was also reflected in Calgary’s suburban market, which saw a drop in vacancy from 22.0% to 21.4% during the quarter. This renewed tenant activity comes at a time of growing momentum in Canada’s national office market, which has experienced the best start to a calendar year since 2007, with over 6 million square feet of absorption recorded.

“Let’s be clear, the Calgary office market still faces extensive challenges, but in a marketplace that has been devoid of good news for the last three years, this is a very encouraging sign,” commented Greg Kwong, Regional Managing Director of Alberta at CBRE Canada.

“There is a greater sense of confidence amongst business owners, the wider economy is strengthening and there has been an, albeit modest, pickup in both drilling and hiring. While we’re confident that the office market has now found the bottom, the bigger question mark is around the pace of recovery. Though the increase in the number of deals being made between landlords and tenants gives us optimism, we cannot ignore the fact that downtown Calgary has just delivered 1.4 million square feet of new office space, and will deliver another 430,000 square feet in 2019 that it must grapple with. However, this quarter’s results show there is some light at the end of the tunnel for owners of office property in Calgary.”

The positive quarter in Calgary was also reflected in the city’s industrial market, which saw its strongest quarter of tenant demand in over two years. An additional 1.7 million square feet of space was absorbed in Q3 2017, dropping the availability rate by 80 bps to 8.5%, the lowest since the end of 2015.

“This is the third straight quarter of rising tenant demand in Calgary’s industrial market and, given that the industrial commercial real estate market has long been regarded as a bellwether for the wider economy, this speaks to a growing recovery. Investor confidence is returning to this market, highlighted by the recent announcement of the speculative development of a 400,000 square foot industrial facility in Balzac. Led by Bentall Kennedy alongside Highfield Investment Group and Hillwood, the decision to start construction without any leases in place is a real statement of confidence in the long-term vitality of the Calgary market. Developers had largely turned off the taps of new supply over the last two years, so we anticipate that the industrial availability rate will continue to fall further into 2018 with demand outstripping new supply,” added Kwong.

Nationally, Canada’s office market continues to gather momentum and has recorded the largest amount of tenant demand year-to-date since 2007. Tenant activity is being propelled by an economy that is set to lead the G7 in growth and a falling unemployment rate of 6.2%, which is now below pre-financial crisis levels. The national average office vacancy rate fell by 30 bps to 12.8%, with Vancouver and Montreal leading the way in tenant demand. Downtown Vancouver’s vacancy rate fell by 190 bps to 5.0%, the lowest since Q2 2013, and downtown Montreal fell by 70 basis points to 8.7%, the lowest since Q4 2013.

“2017 is emerging as a standout year for the Canadian office market and its success might no longer be one of Canada’s best kept secrets with international investors increasingly taking note. It’s list of achievements keeps growing, Downtown Toronto has the lowest vacancy rate in North America, with Vancouver not far behind, and vacancy has fallen by over 20 per cent in downtown Montreal in the last 12 months alone. The role of tech has become paramount in this increasing tenant demand. If you take Vancouver as an example, of the total number of tenants in the market for space, over half are tech tenants. Tech has become a key driver of jobs in Canada,” added Paul Morassutti, Executive Managing Director at CBRE Canada.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at

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