Low oil prices hollow out Calgary's downtown core - Action News
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Calgary

Low oil prices hollow out Calgary's downtown core

Silent cubicle farms, abandoned offices and empty coffee rooms. As our city's energy sector sheds jobs to cut costs, the physical makeup of the downtown core is changing.

Silent cubicle farms, abandoned offices and empty coffee rooms where bustling towers used to stand

Calgary's downtown feeling the pinch of low oil prices

9 years ago
Duration 4:22
The stubbornly low oil prices could mean a major shakeup in the towers downtown and the way we define our city.

The heart of our city is hollowing out.

Gone are thousands of downtown whitecollar office jobs, as oil and gas companies cutemployees and slash entire departments.

The core is the economic powerhouse of Calgary a measure of our vitality as a city.

The towers are our icons.

Calgary suffered a net loss of 6,800 jobs in Calgary in 2015, which has contributed to the growing vacancy rate in downtown office space. (davebloggs007/Flickr)

Whether seen against the flat prairie, or against the backdrop of themountains, they are the enduring image of Calgary. They are part of who we are.

To a Calgary eye, cranes symbolize good times. A darkened office floor is an economic black eye.

The CBC's Rob Brown met up with Mary Moran, CEO of Calgary Economic Development,fora tour thoughsome of our city's silent cubiclefarms,abandoned officesand empty coffee rooms.

They talked about who's been, who's goneand who couldmove in to give our city a much needed economic boost.

  • You can watch the video of their tour above.
  • Keep reading below for a condensedtranscription of their conversation. It has been edited for clarity.
The downtown vacancy rate is currently estimated to be as high as 18.5 per cent. (davebloggs007/Flickr)

What does this emptying out of downtown office spacedo to the city's psyche?

I think it's tough for people to come to work every dayand see empty office space. For a lot of people, particularly young people, they haven't been through such adramatic recession before.

I would say the more seasoned people have probably a little bit more tolerance for it, because they haveseen it before. Calgary had significant growth inthe late '70s, from a downtown office space perspective. In some ways, it was almost harder in the '80s, because all of a sudden you have extra capacityadded on in a rapid rate and then contracted very quickly.This is definitely different than 2009, whereoffice space was threatening to be as high as it was today.

Many of Calgary's future jobs could be concentrated in fields like agribusiness and logistics, according to Mary Moran, president and CEO of Calgary Economic Development. (Monty Kruger/CBC)

There's a school of thoughtthat post-2009 and during the boom, a lot of thesecompanies expanded too aggressivelyover-expanded. They were fat. Do you really thinkthatonce things turn around for the price of oil, that all this office space will be filled again? Or will we continueto have large vacancy rates?

I think there aretwo things happening. It's actually a very interesting crossroad forCalgary.We know from a national perspective that Calgary has a disproportionate numberof office towersconcentrated in the downtown core.

We have the lowest percentage of residential in the downtowncore, so when you talk about this quality buildings, it might be an opportunity to actuallyrepurposesome of the buildingsto residential.

Other things, such as incubation space for the Millennialswhowould like to work and have a placeto collide and collaborate on ideas.We know there'sa lot of creativity being considered from the real estate industry, and we knowthere arelots of ideas being considered from the actual building owners on how they can repurpose.

The emptiness in downtown offices does not sit well with Mary Moran, President and CEO of Calgary Economic Development. (Monty Kruger/CBC)

The big buzz word these days is "diversification." Do you think we're capable ofdiversifying to the point of making up for the jobs lost, if not short term, then in the long term?If so,in what sectors?

I do think we're capable of diversifying. We've seen diversification within thiscommunity. It's probably not as recognized in the downtown core because this has been hit the hardest,but we know from all the indicators we watch.

Last year, we only lost 6,800 jobs in Calgary. Net loss ofjobs. So we know the other industries have grown.Some of it's been related to population growth, and some of it has been related to industries that we, asan organization, have certainly been supporting in terms of diversification.

But I think the big thingis, you have to remain committed to diversification. For organizations such as ourselves, we have tobe focused on diversification in good times and bad times.So, there's lots of low hanging fruit in diversificationlogistics is one, but that's not going to helpthe downtown core.

We're also looking at agribusiness.We're looking at renewables.We're lookingat innovation.I think there's opportunity for some of these industries to occupy under-utilized or unutilized officespace in the downtown core. There's also industries right nowwhere there's lots of merger andacquisition activity happeningoutside there energy industry.Shaw and Wind Mobile, Dow andDuPont all Calgary-based companies that we may have an opportunity to attract.

"We have to go out and get the Amazon and other consumer goods distribution houses that will strengthen our position, we're perfectly located for it," says Moran. (Monty Kruger/CBC)

Do you thinkwe, as a city,have tostart thinking of Calgary as more than just the white-collar jobs in those offices downtown?

Absolutely. But I thinkwe have a lot of great assets to diversify into sectors thatmakes sense for us.I can't emphasize enough: for the region, logistics makes the most sense. For the region, agribusinessmakes the most sense.

Just to clarify what I mean by agribusiness: it's about added value products,about actually producing things here rather than shipping things out and buying them back. We havegreat, locally growncompanies here in the agricultural sector, and they ship product out to Italy, have itcured, buy it backand sell it in their stores.

So we as Calgariansbuy beer.We buy prosciutto.We buy pasta.We buy mustard.We buy lentil soup, and all the products come from here, but we buy them back in a bag, a box or a can. There's anopportunity to do added value in the agricultural businesswhich will help Calgary.

The heart of Calgary is its downtown, and the signs its pulse is weakening are everwhere. For example, Impark reported a 7 per cent drop in monthly users, while the number of people taking the C-Train downtown fell by 4 per cent last fall. (Getty Images)

It is closely linked to logistics, because if we set up Calgary as a western distribution hubright now [with] theHome Depots, the Sears, the Canadian Tires. We had Target. We have Sobeys we have to go out andget the Amazon and other consumer goods distribution houses that will strengthen our position, butwe're perfectly located for it.

What you have to remember, with both moderate and high quality office buildingsand indoor residential buildings, they're typically part of a large worldwide inventory of verysophisticated developers and financiers.It's not like they're going to start liquidating holdings in downtown Calgary because we have a downturnfor a year. I think everyone knows demand for energy will always be. Prices will be unpredictable, and unpredictability is market access, which all Canadians should support.

In terms of occupancy of these buildings, do you think they may sit for vacant foryears on end?

I think is going to be slower absorption thanit has been, in the last fiveyears,but Ithink there's no need to panic at thisstage.

But where are the people going to come from?

If we diversify, they're going to come.


Calgary at a Crossroads is CBC Calgary's special focus on life in our city during the downturn. A look at Calgary's culture, identity and what it means to be Calgarian. Read more stories from the series atCalgary at a Crossroads.