Calgary has one of the highest amounts of office construction in North America. Still.
Says a new report by commercial real estate firm Colliers International.
Business reporter Mario Toneguzzi has the story.
The firm’s most recent office outlook ranks Calgary eighth in North America — and first in Canada — with 5.2 million square feet of space under construction.
Houston leads North American cities with 12.3 million square feet.
Canada’s No. 2 city (ninth on the North American list) is Toronto, with 4.8 million square feet.
The pace of construction relative to the size of the market is even more impressive.
Colliers said Calgary was third in North America when looking at construction as a percentage of existing inventory (7.8%). Using that measure, North America’s top cities are San Jose, with 7.8 million square feet under construction (10.1%) and Edmonton, with 2.2 million square feet (8.3%).
“With seven new office towers under development, and coming to the market between now and 2018, it is no surprise that Calgary is leading the way in new construction in North America. The new developments will add an additional 12% of new inventory to the downtown market,” said Joe Binfet, managing/broker for Colliers International in Calgary.
“Add to this the new developments in the suburban, retail and industrial markets and it is clear Calgary would be among the top cities in terms of new construction.”
According to the report, falling oil prices have had a negative impact on occupancy in energy-reliant markets in the West.
“Particularly hard hit was Calgary, where the vacancy rate jumped 242 basis points in one quarter to 13% from 10.6% in Q1, while Edmonton’s vacancy rate climbed 59 basis points to 11.2% from 10.6% in Q1,” it said.
It said Calgary gave up 1.7 million square feet of office space during the quarter.
“Calgary’s office market ramped up when oil prices were above $100 per barrel and is feeling the effects of the sharp decline in prices to below $50 per barrel as companies such as ConocoPhillips, Nexen and Talisman have announced mass layoffs at their Calgary offices,” said Colliers.
The report said 12.3 million square feet is under construction in central business districts across the country led by Toronto (3.8 million) and Calgary (3.4 million).
“Toronto’s downtown office vacancy rate has declined once again, currently at 2.6%. Demand for space is strong, driven by the financial services sector, where many of the newly-constructed buildings have no available space and of the 3.8 (million square feet) currently under construction, most of the space is fully pre-leased.