The market's overall office vacancy rate fell by 0.5% annually in the second quarter
Calgary residential conversions are helping reduce overall vacancy in the region’s office segment, according to Avison Young.
The commercial real estate services firm’s report specifically pointed at Calgary’s Downtown Development Incentive Program (DIP) as a successful template that municipalities across North America can use to resolve rising office vacancy rates and at the same time address housing issues.
“As hybrid work appears to be the consensus going forward, under-utilization of office space will have significant repercussions for companies, cities, and the economy,” Avison Young said. “Office retrofitting is a serious consideration in most major markets.”
The market’s overall office vacancy rate fell by 0.5% annually in the second quarter, settling at 24%.
“The biggest impact is in the C Class space, with a 7.6% decrease in vacancy,” Avison Young said. “Class B properties experienced a 6.2% drop.”
Keith Reading, Senior Director of Research at Morguard, highlights the shift towards remote and hybrid working models after the COVID-19 pandemic, leading to questions about the future of office spaces.https://t.co/c9pQBK0131#commercialmarket #mortgageindustry #interestrates— Canadian Mortgage Professional Magazine (@CMPmagazine) August 24, 2023
Moving forward, tenants’ decisions regarding renewals and the size of their office footprint will likely be significantly dictated by the DIP. Phase 2 of the program has launched during the second quarter, Avison Young reported.
“It covers five buildings comprising 500,000 sf, bringing the total to 10 buildings and 1.1 million sf,” Avison Young said. “Several projects are already underway, some with aggressive occupancy timelines.
“The intent is to capitalize on the city’s low rental availability and create downtown housing opportunities that didn’t previously exist.”