A report from Avison Young shows that, although the vacancy rate in downtown Calgary was up to 23.89 per cent in the first quarter of 2017 from 17.6 per cent a year earlier, it held steady from the last quarter of 2016.
“Downtown Calgary appears to have reached a pause in its rising vacancy,” said Todd Throndson, Avison Young Principal and Managing Director of the company’s Calgary office. “By 2018, with the exception of new inventory coming on stream, there is a strong probability that the first quarter of 2017 will be recognized as the point when the downtown office market turned the corner and finally saw a stop to tenants shedding excess space.”
However, through to the middle of 2018 the vacancy rate could reach 29 per cent due to new inventory, unless there is a significant change in the Calgary economy.
The first quarter of 2017 saw the first increase in positive absorption in the market since the downturn began in 2014 and Throndson believes that some tenants could do well to sign new leases.
“We believe, in many cases, that 2017 will be the best time to lock in a new lease of three years or longer or to restructure an existing lease,” adds Throndson. “Rental rates appear to offer good value today. They are down 20 per cent to 60 per cent from two years ago, depending on the market segment.”
More market update:
Following the downturn in Calgary’s office market following the decline for the energy sector, the market now appears to be on the verge of rebounding.