Office conversion incentive halted as Calgary seeks more funding, makes changes

The PetroFina Building is one of the latest projects that's been approved for a grant from Calgary's downtown development incentive program. It will see 130,000 square feet of office space converted into 105 residential units. (Supplied/The Government of Alberta)

The City of Calgary is pausing an incentive program meant to encourage developers to transition former office buildings into housing and other projects.

It's because the number of existing applications has overwhelmed the currently available funding.

Announced in August 2021, Calgary's downtown development incentive program helped pave the way for building owners to convert unused office space into residential buildings, hotels, schools or performing arts spaces.

The program had an initial investment of $45 million and offered $75 per square foot for residential conversions, up to a maximum of $10 million.

An additional $108 million was committed to the program since then and the city says there are 17 projects in the works; 13 approved and four in the review process.

At this stage, officials say they are suspending applications to the incentive program because of a requirement to update its terms of reference to better align with the downtown real estate market and Calgary's housing strategy.

Additional funding for future projects also needs to be secured, the city said.

"We plan on using this time to better align the program with the city's commitment to accelerate the development of more student, market and non-market housing, while also encouraging further private investment in Calgary's downtown," said Sheryl McMullen, manager of investment and marketing for downtown strategy, in a statement.

If all of the pending projects are approved, they will create 2,300 homes for Calgarians and remove 2.3 million square feet of unused downtown space.

Two other incentive programs – the downtown office demolition incentive and downtown post-secondary institution incentive – are not affected by this change.

Further information about the programs, including details on the approved projects, are available on the city's website.