While the real estate market in Vancouver and Toronto continues to boom, the collapse of oil prices has taken a massive toll on the Calgary market.
Calgary office space is seeing a vacancy rate nearing 15%. According to real estate brokers, vacancy rates are at a 5-year high and rents are at the lowest point in more than a decade, reports Oilprice.com. That’s because many of the energy company employees who once worked in Calgary’s office buildings simply aren’t there anymore. Current tenants are asking for breaks in rent and even subletting their offices at discounted prices, according to Oilprice.com.
The vacancy rate in Calgary dwarfs the norm in Canada. In Toronto, for example, the vacancy rate in office space is at just 5%. Alexi Olcheski, an office-leasing principal with Avison Young Canada in Calgary, told Oilprice.com that the situation was “a bloodbath. We’re at the highest point of fear and uncertainty now.”
The vacancy rate in downtown Calgary hit 14% in the third quarter. There’s also about 2 million square feet of “shadow vacancy” – office space that companies have leased but can’t fill. When that’s factored in, the rate is up to 16%.
Office vacancies in Calgary rose by 548,700 square feet in the third quarter, bringing the total up to nearly 1.85 million square feet – a record for the city.
“The pace of additional space coming on the market picked up when compared to the second quarter of this year,” Michael Gugliuk, Newmark Knight’s vice president, told the Edmonton Journal. “A few large energy and energy-services firms announced or initiated sizable layoffs during the third quarter which helped translate to just over 400,000 square feet of sublease space coming on the market.”
And the situation has worsened since those numbers came out, Gugliuk said.
“Since the report was done, we’ve already seen another firm, Harvest Operations, put two floors onto the sublease market,” he said. “That’s another 28,500 square feet.”