Calgary's downtown office space tighter than Tokyo

Calgary is likely the tightest market in the world for high-end downtown office space, according to a new national study.

CB Richard Ellis Limited reports the vacancy rate for "Class A" downtown space is just 0.2 per cent. That's lower than Tokyo, which traditionally has the lowest vacancy rate of any major city in the world, according to the report.

The vacancy rate for office space in both downtown and suburban Calgary now sits at 1.5 per cent, down from 2.6 per cent in the first quarter of 2006.

Calgary, where demand is outstripping supply, also has the highest rents in Canada for prime downtown office space. CB Richard Ellis said "Class A" office space is going for $37 a square foot. Vancouver and Ottawa were next at $24 a square foot.

CB Richard Ellis defines "Class A" office space as state-of-the-art, with quality interior finishes and premium rents.

Blake Hutcheson, president of CB Richard Ellis, predicts the tight market will continue for another three or four years, but will be alleviated by the construction of new buildings.

"Cleary, the situation today where Calgary has such an extremely tight market is not desirable or sustainable and the addition of new office space will be better for both tenants and landlords," he said in a statement.

"However, until the new space comes on stream, Calgary tenants and landlords will have no choice but to do the best they can in a time of an acute shortage of space, the tightest we have ever seen in Canada."

The report looks at office rents for the first half of 2006. The national vacancy rate decreased modestly to 8.4 per cent at the end of the second quarter from 8.6 per cent at the end of the first quarter.

Vacancy rates declined in Vancouver (8.5 per cent), Calgary (1.5 per cent), Edmonton (7.3 per cent), Ottawa (6.7 per cent), Toronto (9.1 per cent), Ottawa (6.7 per cent), Montreal (12.3 per cent) and Halifax (8.8 per cent).