Business in Calgary

Calgary office market rising from its
current level of 4.5 to 6.4 per cent
by the end of 2014, increasing again
to 9.4 per cent in 2015 and 2016, and
continuing to rise to 12.6 per cent in
2017 and then to 15.3 per cent in 2018.
While the overall vacancy rate is
important there are other factors to
consider. First, there are several different
office markets within Calgary.
Downtown, beltline and suburbs all
have distinct features and drivers.
However, within downtown the options
for tenants vary by size of space –
small, mid-size, large and very large
tenants have very different choices.
The number of appropriate choices
matters. Second, the velocity in the
leasing market can affect pricing as
much, or more than, the vacancy rate.
A market that completes a lease transaction
each week will have different
pricing than a market that completes
only one leasing transaction a quarter.
While most landlords benefit from a
tight market, as it softens, the pain
will not be felt equally.
When we compare today to the
mid-1980s a few key differences add
perspective: a) inventory growth
rates are more modest and closer to
actual growth in demand for space;
b) better market information leading
to better decisions; c) lower vacancy
and availability rates today; d) stronger
landlords and in many cases
stronger tenants; e) capital budgets
are in many cases being scaled back,
not eliminated; f) the energy industry
is now better able to focus on
production and technology efficiencies
rather than exploration risks; g)
better alignment of goals nationally
and internationally and an apparent
willingness for government and
industry to take positive action.
So while there are still lots of risks
and room for significant positive and
negative surprises, I see an environment
where better managers, better
strategies and better buildings will
outperform the rest of the market. •
Figure 1
Figure 2
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SANDY MCNAIR IS PRESIDENT OF
ALTUS INSITE, CANADA’S LEADING PROVIDER
OF MARKET DATA AND PERSPECTIVE TO
THE COMMERCIAL REAL ESTATE INDUSTRY.
FOR MORE INFORMATION VISIT
WWW.ALTUSINSITE.COM.
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