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September 22nd, 2005, 06:06 AM
Calgary Downtown Office Vacancy Falls to 3.7%
Core crunch for offices
Vacancy rate lowest since 1999
By IAN WILSON, BUSINESS EDITOR
Businesses may be hard pressed finding office space in downtown towers, such as Canterra Tower, as the vacancy rate in the city's core is at 3.7%. (Jim Wells, SUN)
The vacancy rate in Calgary's core is the lowest it's been in a decade and the space crunch is just beginning, according to a Royal LePage Commercial report.
The national office report, released yesterday, shows overall vacancy in the core fell to 3.7% during the third quarter, while vacancy in the city's Triple A towers -- such as Bankers Hall and Petro-Canada Centre -- dropped to 3.5%, its lowest level since 1999.
"We're the hottest market in Canada," said Chris Anderson, vice-president and general manager of Royal LePage Commercial in Calgary.
"Everybody's talking Calgary again and how hot of a market it is, particularly when it comes to office leasing downtown."
Year-to-date absorption -- the amount of additional space that becomes occupied during a year -- is up to 1.4 million sq. ft. and it's projected to hit a 10-year high of 1.75 million sq. ft. by the end of 2005.
Leasing demand is also up.
It climbed to 1.8 million sq. ft. over the third quarter, up from the previous four quarters, when it averaged 1.5 million sq. ft.
"The problem with downtown Calgary space is there's not enough of it," said Anderson.
"Some of the larger tenants in Calgary are doing what they can to scramble to get space for expansion because there's nothing available out there and they also are doing early renewals on their existing space to make sure that they keep control of it."
The situation is driving rates up and it's also pushing offices out of the core and into the suburbs, where vacancy rates dropped from 10.4% in the second quarter to 9.2% in the third quarter.
"We're achieving rates now that we haven't seen since the '80s," said Anderson.
"Those that don't have to be downtown are looking elsewhere and the suburban market has become a viable alternative to downtown."
New construction is on the horizon -- Bentall Real Estate's Livingston Place towers at 2 St. and 3 Ave. S.W. will bring 900,000 sq. ft. to the market and EnCana Corp. is proposing a two-million-sq.-ft. tower in the heart of downtown.
But such projects won't be ready for occupancy for at least two years.
Core crunch for offices
Vacancy rate lowest since 1999
By IAN WILSON, BUSINESS EDITOR
Businesses may be hard pressed finding office space in downtown towers, such as Canterra Tower, as the vacancy rate in the city's core is at 3.7%. (Jim Wells, SUN)
The vacancy rate in Calgary's core is the lowest it's been in a decade and the space crunch is just beginning, according to a Royal LePage Commercial report.
The national office report, released yesterday, shows overall vacancy in the core fell to 3.7% during the third quarter, while vacancy in the city's Triple A towers -- such as Bankers Hall and Petro-Canada Centre -- dropped to 3.5%, its lowest level since 1999.
"We're the hottest market in Canada," said Chris Anderson, vice-president and general manager of Royal LePage Commercial in Calgary.
"Everybody's talking Calgary again and how hot of a market it is, particularly when it comes to office leasing downtown."
Year-to-date absorption -- the amount of additional space that becomes occupied during a year -- is up to 1.4 million sq. ft. and it's projected to hit a 10-year high of 1.75 million sq. ft. by the end of 2005.
Leasing demand is also up.
It climbed to 1.8 million sq. ft. over the third quarter, up from the previous four quarters, when it averaged 1.5 million sq. ft.
"The problem with downtown Calgary space is there's not enough of it," said Anderson.
"Some of the larger tenants in Calgary are doing what they can to scramble to get space for expansion because there's nothing available out there and they also are doing early renewals on their existing space to make sure that they keep control of it."
The situation is driving rates up and it's also pushing offices out of the core and into the suburbs, where vacancy rates dropped from 10.4% in the second quarter to 9.2% in the third quarter.
"We're achieving rates now that we haven't seen since the '80s," said Anderson.
"Those that don't have to be downtown are looking elsewhere and the suburban market has become a viable alternative to downtown."
New construction is on the horizon -- Bentall Real Estate's Livingston Place towers at 2 St. and 3 Ave. S.W. will bring 900,000 sq. ft. to the market and EnCana Corp. is proposing a two-million-sq.-ft. tower in the heart of downtown.
But such projects won't be ready for occupancy for at least two years.