Truth be told, the past few years have been tough on the Canadian economy, especially here in Alberta. From uneven employment to unstable energy prices (and everything in between), the Canadian commercial real estate sector has been shaken in recent times, to say the least.
In Calgary, the impacts have been especially visible in downtown. Office vacancy rates increased by 4% to 16.3% in 2015, and it is projected that by the end of 2018, vacancy rates will reach 21.7%. Understandably, such rapidly rising vacancy rates have left many business owners feeling uncertain.
Glass half empty or half full?
These vacancy projections, although significant, may not need to cause alarm. After all, a large portion of the projected increase will be attributed to the completion of five developments this year, which will add another 3.5 million square feet of office space to downtown Calgary.
Is that opportunity knocking?
Without a doubt, rising vacancy rates have shifted the landlord-tenant balance. In some major Albertan cities such as Calgary, Edmonton, and Lethbridge, business owners have taken advantage of this increased supply of commercial property by seizing the opportunity to not only reduce space and rental costs, but also to increase existing footprints, move into higher quality spaces, or in some cases, to consolidate operations into a single building.
In addition, more and more tenants are getting creative with their commercial property management initiatives. For example, some companies are opting to sublease their excess office space by offering various incentives such as fully furnished spaces and even free rent, so long as the subtenants cover all bills related to operating costs.
Calgarians remain proud and optimistic!
Well, it is no secret that Alberta has seen its fair share of ups and downs over the years, but one thing is for certain: we will weather this storm like we did the storms that came before. In the meanwhile, our ability to make lemonade from the lemons we have been handed speaks to our resilience as a population.
I hope this blog post has provided you with useful information that can be used to make the most of our city’s current commercial real estate vacancy rates. For more information, follow the link below to access “Guest post: The changing face of commercial property management in Alberta” by Avery Swartz, which speaks on this topic in greater detail.