Could the Worst Be Over For Calgary?

April 7, 2021 5 Minute Read

Outlook 2021: Calgary

Twelve months into the worldwide health crisis, there is mounting evidence that the worst could be over for Calgary. CBRE’s recent Calgary Market Outlook pointed to the shoots of new growth that are appearing in various sectors of the economy and the feeling of cautious optimism that is returning among consumers and investors.




With the sharp rise of ecommerce, industrial real estate is one sector that’s actually benefitted from the pandemic. Very little space remains in Vancouver, Toronto, Montreal, all with availability rates hovering around 2%. Companies that run major supply chains are looking to Calgary as an alternative.

The overall industrial availability rate in the U.S. was 7.4% at the end of 2020; in Canada it was 3.3%. With an availability rate of 9.2% in Calgary, there are more options available to organizations looking for large spaces. There have been a dozen lease transactions of 100,000 sq. ft. or more in Calgary since Q3 2020.

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Calgary has become an attractive market for distribution and logistics companies. Both the CP and CN rail companies have invested millions of dollars in their intermodal facilities in Calgary. Goods shipped to the portside markets such as Vancouver can be received in Calgary in one day.

“In 2020 we had groups who rewrote their supply chain programs to centre on Calgary as their inbound location for containers arriving from Asia,” CBRE Vice Chairman Iain Ferguson said in his Outlook presentation.

With an abundance of shovel-ready industrial land, Calgary is one of the few places in Canada where a facility can be built within 12 to 18 months. Added to this are a network of experienced developers and a supply of capital that make Calgary a compelling market upon which to centre a distribution network.


The energy sector continues to be the dominant occupier of downtown office space in Calgary. Over the last five years there has been a steady downsizing of the energy sector as a result of falling commodity prices, the exit of foreign companies from the Calgary market, and M&A activity. This has led to a contraction of the sector’s office footprint.

Executive Vice President Angus Fraser noted in his Outlook presentation that Calgary posted an overall vacancy rate of 32.3% in the first quarter of 2021, “and that’s on the back of 1.25 million sq. ft. of negative absorption, which was driven primarily by M&A activity in the energy sector.”

But there is reason for hope. Since 2019 the tech sector has leased over 370,000 SF of downtown office space and has emerged as a source of growth for the local economy. Investments in post-secondary technology departments, combined with efforts to attract new business to the city and the availability of prime downtown office space, should succeed in drawing new tech companies to town.

Office landlords have the opportunity to innovate and reposition their properties. They can create spaces that will help companies meet sustainability goals, adopt new technologies and mitigate risk. “There’s a new challenge for the supply side of the market. In the fight for occupancy, owners can really lean in and do more with their real estate to capture market share,” said CBRE Senior Vice President Stuart Watson.


Many Calgary retailers have been ravaged by shutdowns and stay-at-home orders. The full extent of the fallout from the pandemic will be clear once government subsidies expire.

Forced to pivot, retailers have implemented significant changes, including the expansion of their multi-channel sales and the improvement of the integrated customer experience. Curbside pickup, for example, will no doubt continue long after the pandemic. Retailers have used this time to re-evaluate underperforming stores, to open new stores in under-served areas and are taking advantage of prime real estate locations that have come available in this softer rental environment.

“COVID-19 gave the retail tenant the ability to evaluate their entire portfolio and if there were non-performers or old concept stores, they closed many of those stores,” CBRE Senior Vice President John Moss said in his Outlook presentation.

As more people receive vaccinations, resurgent consumer confidence is leading to a revival of quick-food service and the health and wellness industry. Grocery and discount retailers continue to thrive as do ethnic supermarkets. And retail leasing will likely resume once Calgary emerges from the pandemic.

Capital markets

Real estate investment volumes fell last year and institutional money was sidelined, but part of the vacuum was filled by the nimbler and more opportunistic private investors who are driving renewed activity in the market. Private investors accounted for 61% of Calgary real estate market activity in 2020 and smashed through their historic $15 million ceiling, doing deals in the $50 million range.

“In the last few weeks, it is starting to feel like we are past the bottom and that we have started to turn a corner.”
Senior Vice President Duncan MacLean

“In the last few weeks, it is starting to feel like we are past the bottom and that we have started to turn a corner,” said Senior Vice President Duncan MacLean.

This year began where 2020 ended for Calgary. Deals trickled in and many were being done on an off-market basis. Lately there has been a noticeable increase in market activity. COVID-19 has created a buildup of capital across the country that will lead to more competition for high quality assets. As the economy continues to open, the investment market will follow suit.

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