Calgary office vacancy rate declining as business community returning to city's core

After years of decline, demand for Calgary's downtown commercial real estate is showing signs of returning to life.

A new report released by Avison Young says the downtown office vacancy rate now sits at 27.2 per cent, down 2.5 per cent since the last quarter of 2021.

The report also shows leasing rates will continue to face upward pressure this year because of flight to quality and high inflation, which basically means more businesses trying to move to better spaces to try to attract and maintain their workforce.

In trying to have modernize workplaces, Class AA building vacancy rate is now at 14.8 per cent, down 2.9 per cent since the last quarter of 2021.

"We're really happy about the new report that just came out, because it is showing what I think we've been witnessing over the last couple of months," said Mark Garner, executive director of the Calgary Downtown Association.

"Normally, Tuesdays and Wednesdays were our busiest days. And we're starting to see now that it's, we're getting back to that Thursday, Friday, Saturday, type increase."

Garner attributes the increase to some workers coming back to downtown to work full-time and new businesses looking to lease office spaces.

The report found the last quarter of 2022 marked one of the strongest leasing environments in the Calgary office sector, and the vacancy decreases may continue in the first part of the new year.

"I think there is a very much a clear theme of return to office, whether it's three days a week or five days a week for certain companies," said Adam Hayes of Avison Young.

"I think we'll see positive absorption in 2023."

With files from Timm Bruch