Calgary commercial real estate vacancies hit historic highs, according to report

The hollowing out of Calgary's core has hit its highest level in more than 30 years and the situation in what was once the energy industry's thriving financial pulse is likely to worsen, a commercial real estate firm says.

In a report released Wednesday, CBRE Canada estimates the city's downtown office vacancy rate was 20.2 per cent in the first quarter ended March 31, almost twice as high as the 11.8 per cent vacancy rate in the same period a year ago.

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GregKwong, regional managing director atCBRE, said it's the first time since 1983 that more than one fifth of office space was available in downtown Calgary, and the city is on track to hit a new record above the 22 per cent rate hit that year.

"It's going to get a little bit worse before it gets better," saidKwong. "Unless oil jumps back to $80 a barrel, I don't think we'll go down to the teens."

Barclay report

A report issued on Tuesday also says Calgary's downtown offices got a bit emptier in the first three months of the year as vacancies rose 2.2 percentage points from last quarter.

The Barclay Street Real Estate Ltd. report says vacancies rose to 19.5 per cent as about 938,000 more square feet were on the market. It said by 2018 the vacancy rate could be close to 24 per cent.

The increased vacancies come as energy companies continue to announce layoffs and consolidate operations due to low oil prices.

Subleases

According to the Barclay Street report, MEG Energy is trying to sublease more than 300,000 square feet, Shell Canada is offering more than 183,000 square feet and Penn West Energy has 73,000 square feet available.

It says vacancies are at historic highs, with eight million of the downtown area's 41 million square feet of office space available and subleases making up close to half of what's on offer.

In the quarter, the price of oil hit US$26 a barrel, its lowest point since the downturn, but has since rebounded to above US$40.

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