AN EXPRESSION ON VACANCY

Demand for Calgary office space remains strong
Mario Toneguzzi
Postmedia News Jun 6, 2012

CALGARY • Demand for downtown office space is expected to remain strong through 2012, even if it’s unlikely to match last year’s frenzied pace.

“At this point, all of the economic indicators are still very, very strong,” said Todd Hirsch, senior economist with ATB Financial, who spoke Tuesday at the Calgary Real Estate Leasing Conference. “We look at that office-space vacancy and how it’s come down. We look at the building permits, they’ve been picking up. Everything at this point, the momentum is all moving in the right direction.”

The one threat, he said, is a continual slide in oil prices that could soften demand.

According to Colliers International, office space absorption was a positive 2.8 million square feet in the downtown market in 2011. The Beltline and suburban office markets accounted for about one quarter of that amount. The first quarter of this year saw about 866,000 square feet of office space fill up.

In the fourth quarter of 2011, the downtown office vacancy rate was 4.5%. It fell to 4.2% for the first three months of this year.

Randy Fennessey, president of Colliers International in Calgary, said the downtown office market is expected to remain strong given the ongoing low vacancy rate overall.

“But having said that, we’re get-ting a sense that things are starting to taper off a little bit just because commodity prices, particularly oil, have fallen recently and a series of geopolitical conditions are not conducive to rising oil prices,” said Mr. Fennessey, who spoke at the conference. “So it makes one wonder how long this level of heady demand is going to continue.”

JUST LIKE A HEATWAVE

Condo pace picks up steam in city
By Claire Young
Calgary Herald May 18, 2012

Compared to the last three months of 2011, resale condos sold faster from Jan. 1 to the end of March in three of four quadrants of the city, says the Calgary Real Estate Board.

All of the board’s zones except for Zone A — which roughly corresponds to the city’s northwest — sold more quickly than during October to December.

In Zone A, condos took an average of 58 days to sell — three more than during the last quarter.

Condos in Zone B, which roughly consists of northeast Calgary, averaged 58 days on market, down from 64 in the first quarter.

Meanwhile, Zone C — roughly southwest Calgary — saw the hottest sales with an average of 49 days on market, down from 60.

And Zone D, which is roughly consists of southeast Calgary, saw a six-day drop to an average of 50 days on market.

The new year brought many more listings for condos.

From Jan. 1 to the end of March, there were 2,702 new listings in the city compared with 1,644 during October to December.

The bulk of the new listings were in Zone C, with 1,492 added. This zone also saw the most sales at 783, up again from last quarter’s 612.

The only neighbourhood to hit triple-digit sales in 2012’s first quarter was Connaught in Zone C, which saw a tidy 100 sales averaging $309,451.

Other neighbourhoods in Zone C that sold well were Victoria Park with 48 sales averaging $351,754, and Bankview with 32 sales averaging $262,512.

The most expensive neighbourhood from Jan. 1 to the end of March was Varsity Estates in Zone A, which had two sales averaging $598,750.

The most affordable neighbourhood was also in Zone A — Highland Park, which had one sale for $79,000.

During the first three months of 2012, the average sale price increased in all zones except Zone D — where this quarter’s average sale of $259,768 marked a decline from last quarter’s $268,998.

Zone C had the highest average sales at $307,822, an increase from $298,960.

Zone A’s average sale was $281,193, up almost $10,000, while Zone B was up a little more than $4,000, with an average sale of $173,544.

CORE VALUES

Downtown office space fills up at record rate
Central core vacancy drops to 5.7 per cent
By Mario Toneguzzi
Calgary Herald December 22, 2011

Demand for Calgary downtown office space reached new heights in 2011 with record leasing activity.

A report by CBRE Ltd., published Wednesday, says the downtown market saw net absorption - the change in occupied space - of close to 2.6 million square feet in Calgary in 2011. That pushed the overall central core vacancy rate down to 5.7 per cent in the fourth quarter of this year from 7.0 per cent in the third quarter.

A year ago, the downtown office vacancy rate was 13.0 per cent.

"The fourth quarter capped a stellar year for Calgary," said Greg Kwong, executive vice-president and regional managing director for Alberta for CBRE. "The delivery of The Bow in 2012 will mark the continuation of our momentum and will symbolize the bright future that lies ahead for Calgary.

"Office demand was high again this year for the same reasons as 2010. The oilsands sector is booming again and related companies are leasing space to accommodate expansion. . . . We should get at least one more new building announced next year."

The Bow and its nearly two million square feet of office space will be home to energy giants Encana and Cenovus.

On Tuesday, the owners of Eighth Avenue Place announced they were going ahead with the second tower on the downtown site, a 40-storey, 850,000squarefoot office building that should be ready for occupancy in 2014. A 49-storey, 1.1 millionsquare-foot office tower exists on the site of the old Penny Lane complex.

Oxford Properties is in the pre-leasing stage for a proposed 25-storey, 615,000-square-foot tower.

Susan Thompson, business development manager of real estate for Calgary Economic Development, said the downtown office market is primarily driven by the oil and gas industry. "And we've seen fairly strong growth in that category this year. They're obviously growing and looking for more space," Thompson said.

"Every indication is there that it will continue to grow in the new year."

In its report, CBRE said the overall Calgary office market, including the suburban category, saw its vacancy rate drop to 7.1 per cent in the fourth quarter from 8.0 per cent in the previous quarter and 13.2 per cent in late 2010.

CBRE said the Calgary industrial market added 900,000 square feet of space this quarter, the most since the fourth quarter of 2008 as developers look to take advantage of economic growth in the region.

The overall availability rate in Calgary's industrial real estate market rose to 4.9 per cent in the fourth quarter from 4.3 per cent in the third quarter.

In its National Office and Industrial Trends Fourth Quarter 2011 Summary Report, CBRE said total absorption of office space across the country was just under eight million square feet, up from five million square feet in 2010.

The vacancy rate for Canadian downtown offices fell from 6.3 per cent last quarter to 6.1 per cent in the fourth quarter. The suburban market, however, saw vacancy rise by 10 basis points to 10.7 per cent, the second quarterly increase this year.

"Despite the apparently never-ending problems in Europe, the Canadian commercial real estate market continues to move forward, albeit slowly," said John O'Bryan, vice-chairman of CBRE.