Plunging Calgary office values linked to high oil and gas unemployment rate

A commercial realtor says a 32 per cent decline in Calgary's downtown office building property assessment this year will likely translate into lower costs for some tenants, but he doesn't expect much improvement in the vacancy rate.

Greg Kwong, Alberta managing director for realtor CBRE, says companies will have to start replacing the thousands of energy industry workers laid off following the oil price crash of late 2014 before the city's downtown vacancy rate will recover from its year-end level of 26.4 per cent.

• Why homeowners, not businesses, are paying more and more of the property taxes in Calgary

Calgary Chamber of Commerce spokesman Mark Cooper says lower values in the downtown means property taxes are likely going to have to rise for businesses throughout the city to make up the difference.

He says investor confidence needed for job creation in Calgary is low thanks to Alberta oil prices which failed to keep up with last year's global oil price rally due to discounts blamed on a lack of export pipeline capacity.

The city says the total assessed value of downtown office properties fell by $5 billion over the past year and now makes up only 18 per cent of the total non-residential base, down from about 32 per cent in 2015.

It says the crescent-shaped Bow Tower, home to oil companies Cenovus Energy Inc. and Encana Corp., lost 18.6 per cent of its value in 2018, falling to about $779 million. In 2015, it was valued at $1.43 billion.

Residential property assessments in Calgary are down one per cent compared with the previous year and retail assessments were little changed.

• MORE CALGARY NEWS|Flu season isn't over yet, doctor warns as infection dips in new year
• MORE CALGARY NEWS|Windy day in Calgary expected as wind warnings blanket southern Alberta
• Read more articles byCBC Calgary, like us onFacebookfor updates and subscribe to ourCBC Calgary newsletterfor the day's news at a glance