Calgary Outlook 2024

January 9, 2024 7 Minute Read

Skyline of Calgary City

2024 | Real Estate Outlook Series

Alberta is leading Canada with renewed economic optimism and Calgary is seeing some green shoots in its much maligned office market.

Downtown office vacancy continues to drop, finishing the fourth quarter of 2023 at 30.2%, down 2.4% from the same period a year earlier. Last year also saw a total of 677,000 square feet of positive net absorption of office space, the market’s strongest performance since 2014.

Calgary’s industrial market has been a hive of development, with 6.03 million square feet delivered in 2023, the second-most of all-time, and 3.1 million square feet of it coming in Q4 alone. This drove the industrial availability rate from 3.8% to 5.5% in Q4, a two-year high.

And there’s another 4.64 million square feet currently in the pipeline.

We spoke to CBRE’s Alberta Regional Managing Director Greg Kwong about what the coming year holds for Calgary’s commercial real estate market.


There was a tremendous amount of office leasing activity in the last half of 2023. That resulted in no net growth in terms of absorption but a lot of movement through mergers and acquisition activity and companies renewing leases or moving. But again, not a lot of net growth. So the end result is that the vacancy rate is still high.

Like businesses in most cities, HR directors and CEOs here are still struggling to get people back to the office. But in Calgary I see it with my own eyes that our attendance rates seem to be increasing. Tuesday, Wednesday and Thursday it’s almost normal, and even Monday and Friday there are people in the offices. I am almost certain that Calgary’s attendance rate is higher than in other major cities for various reasons, such as shorter commute times.

On the sales side, there are office buildings selling but at 20 to 25 cents on the dollar compared to five years ago, especially Class B and C buildings. There have been a few forced sale or foreclosures and more pain will be felt in 2024.

The good thing about downtown Calgary is that the majority of it is owned by pension funds and larger financial investors who are not over-leveraged. Unfortunately more turmoil is expected but there’s a lot more resiliency than in the 80s and 90s when there was a bunch of individual private equity owners who couldn’t withstand a pretty severe downturn. We’ve had a high vacancy rate for yearsand frankly the cyclical nature of the energy industry has trained investors to be more resilient and proactive especially when it comes to leasing strategies.

There’s liquidity and a level of optimism at a provincial level based on what we’re hearing from other investors outside of Alberta and on an international level outside of Canada. They’re saying Alberta should be the shining star in the next 18 months as far as being able to place capital in this market.

Everybody wants to talk about the office conversion program in Calgary. The facts are, 13 properties got approved for the program and got grants; three were converted; one or two are close to starting. Eight are saying they’ll go ahead but there’s no evidence of that yet.

As I’ve said in the media, the city has rightfully stopped the program to see if it’s been a success before doing another. The gauge for success is reducing office vacancy and providing housing for people. So far we’re not there, but let’s wait and see how things play out.

In terms of Calgary’s suburban office market, it’s a microcosm of what’s happening downtown. The vacancy rate is not as high but is still at 24.2%. We’re seeing a lot of landlords trying to find a balance with some internal layoffs and cost cutting. The major discussion across Canada is whether or not entities are overweighted with office in general, not just in Calgary.

Alberta should be the shining star in the next 18 months as far as being able to place capital in this market - Greg Kwong


Industrial is taking a respite from the tremendous leasing activity experienced from 2021 to 2023, as we have seen a drop-off in a lot of the big users looking for space. There were more than 10 companies in excess of 300,000 square feet looking for space in summer 2022 with only a handful in the market today. Demand from the large bay distribution centre user has dropped off, but that is a phenomena that is North America wide.

We’ve got over 10 industrial projects being built on spec, and decent pre-leasing activity has been secured. By this summer we’ll know where the market is headed; no one is expecting a crash but certainly a slowdown is coming in terms of higher vacancy rates and less demand.

Vancouver logistics businesses have been a good chunk of our demand over the past two years. That has waned but there’s evidence of the trend continuing.


It’s probably the craziest market right now in terms of rental rate growth and the amount of investors looking at that asset class. In addition, construction costs are going through the roof.

Local governments are trying to assist the private sector in dealing with the high cost of rents but so far to no avail. In December Calgary recorded a 10.4% year over year increase in average rent, among the highest of the major Canadian markets.

We’ve had a huge amount of net migration into the province, both interprovincially and immigrants from around the world with as many as 250,000 people moving to Alberta in 2023. The same is expected this year as job vacancies (mainly in the trades and service industries) are still high.

There are a number of multi-family projects (representing more than 4,000 units) slated for construction to capture this demand but so far these are being tempered by high construction costs.


What’s kept our retail market afloat in terms of its strong growth is that we have a limited amount of land to re-develop into retail. By far Calgary and Edmonton have the highest disposable incomes in the country, in spite of our growing cost of living and rental rates. So retailers are clamouring to get out here.

Retailers that made it through the COVID years are getting back on their feet but many are still struggling to pay back the CERB and grant money the governments gave them. High-end fashion retailers are facing challenges but the food and beverage sector is booming and we should see new concepts continue to open here. Again, that speaks to the disposable income.

In terms of new retail projects, we’re looking at community malls opening up on the west side of Calgary and in South Calgary, where the new residential districts are growing. So we expect to see more convenience, strip retail and medical centres being built and opened up in those areas.

Baby boomers are starting to downside and South Calgary is benefitting from that. Condos there are being marketed to those downsizing boomers. They sold their $4.0 million house and bought a $1.5 million condo and want to go out every night and spend money. Hence the booming restaurant sector.


The new event centre is starting construction this spring, with 22,000 seats in two hockey arenas, and lots of community space. There’s a $1.8 billion hospital project set for Red Deer, but lots of the people working on it will come from Calgary. The Green Line LRT is a six-year project that just started. Arts Commons, a central hub for music and art, has a multi-million dollar budget to keep construction moving forward.

Part of the fuel for that infrastructure development is the provincial budget surplus for this year. Alberta will run a projected $5.5 billion budget surplus in 2023/24, with ongoing surpluses in the next two fiscal years. And with a provincial election 24 months away that money will be flowing to support growth in the provincial economy.

We’re not without our challenges, but after a lot of tough years it feels good to talk optimistically about Calgary. Calgarians deserve this moment to shine.

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