AN EXPRESSION ON VACANCY

Demand for Calgary office space remains strong
Mario Toneguzzi
Postmedia News Jun 6, 2012

CALGARY • Demand for downtown office space is expected to remain strong through 2012, even if it’s unlikely to match last year’s frenzied pace.

“At this point, all of the economic indicators are still very, very strong,” said Todd Hirsch, senior economist with ATB Financial, who spoke Tuesday at the Calgary Real Estate Leasing Conference. “We look at that office-space vacancy and how it’s come down. We look at the building permits, they’ve been picking up. Everything at this point, the momentum is all moving in the right direction.”

The one threat, he said, is a continual slide in oil prices that could soften demand.

According to Colliers International, office space absorption was a positive 2.8 million square feet in the downtown market in 2011. The Beltline and suburban office markets accounted for about one quarter of that amount. The first quarter of this year saw about 866,000 square feet of office space fill up.

In the fourth quarter of 2011, the downtown office vacancy rate was 4.5%. It fell to 4.2% for the first three months of this year.

Randy Fennessey, president of Colliers International in Calgary, said the downtown office market is expected to remain strong given the ongoing low vacancy rate overall.

“But having said that, we’re get-ting a sense that things are starting to taper off a little bit just because commodity prices, particularly oil, have fallen recently and a series of geopolitical conditions are not conducive to rising oil prices,” said Mr. Fennessey, who spoke at the conference. “So it makes one wonder how long this level of heady demand is going to continue.”