Following years of high vacancy rates and shifting market dynamics, the commercial real estate market in downtown Calgary is showing new signs of life.
At the same time, the turnaround is taking place as billions of dollars flow into a series of revitalization projects in the area that creates reason for continued optimism in the core’s future, say industry experts.
“Right now, we are seeing things moving in right direction,” says David Wallach, owner and broker of Barclay Street Real Estate, who points to occupancy of head leases in downtown Calgary at more 80 per cent.
“It will take time and it will be slow and steady. But the arrow is in the right direction.”
Industry reports noted a downward trend in downtown office vacancy rates near the end of 2024 – the lowest rate since pre-pandemic. However, more recent data from the end of the first quarter of 2025 reveal a return to the 30 per cent seen for much of the last several years, sparked by consolidation in the energy sector and ongoing uncertainty due to tariff threats.
Overall, Wallach is bullish about the downward trend he was seeing in the market last year, singling out plenty of supply to choose from, along with return-to-work policies by many companies.
He also credits what he believes will be a long-term turnaround to a renewed sense of optimism in a core that continues to diversify and invest outside of the office space. He cites a recent real estate services conference hosted by Barclay last fall in which international delegates were toured through downtown.
“They were shocked – with the library, with Ampersand, with Bell Studio… They didn’t know we had anything like that,” he says, noting most of the delegates were from the U.S.
Wallach anticipates anchor attractions such as a new event centre and redeveloped Arts Commons will continue to spell good news for Calgary’s commercial real estate sector.
Construction crews broke ground in Victoria Park last July on the much-anticipated $926-million Scotia Place. The new home of the Calgary Flames, which is scheduled to open by summer 2027, is part of a larger $1.2-billion initiative that will include improvements to the surrounding culture and entertainment district.
Meanwhile, a $660-million transformation of the Arts Commons between 9th Avenue and 8th Avenue SW represents the largest cultural infrastructure project in Canadian history.
Led by the Calgary Municipal Land Corporation (CMLC), the transformation will include a new 200,000-square-foot performing arts facility, a re-imagining of the adjacent Olympic Plaza and a complete modernization of Arts Commons’ existing building. Construction on the project kicked off in December, with completion scheduled by 2028-29.
“It’s all great news for our downtown. A vibrant downtown represents life for the city. It sets the tone of the city,” says Wallach. “I think we have a great future in downtown.”
However, he adds these highly anticipated attractions are not enough on their own.
“It’s a good start. But for someone to move here, there has to be a package,” he says.
“For me to move my business, I want to know that my employees will move with me and have access to good food establishments, an arts scene, hockey, football … maybe one day NBA. That’s why the event centre and Arts Commons and the library and Bell Studio are important. But they have to be part of a larger package.
“Nobody moves just because Arts Commons is going to have a new development or because the Flames will be in the playoffs. If we give them … all the amenities and the opportunities and the ability to buy, that’s when people will move.”
Of note, he says the City needs to address affordability issues within the retail sector, where many companies are being priced out of the core due to vacancy rates that are below four per cent.
Peter Harris has had a front-row seat to downtown Calgary’s transformation. The partner/leader of the PwC Calgary real estate practice moved to Calgary 14 years ago, and has seen the core become a destination where companies and their employees can have it all.
In addition to a trove of amenity-rich buildings in the core, he notes a diverse mix of hosting spaces such as the newly expanded BMO Centre, along with a bustling food and cultural scene, is creating a compelling case for businesses looking to set up shop.
“These days, when you look at talent attraction, people want everything. They want the gym, they want the amenities, they want to make sure they’re doing everything to attract talent to come to the office and build relationships and networks,” says Harris.
In a report released late last year titled 2025 Emerging Trends in Canadian Real Estate, PwC singles out Calgary as a top market to watch in this year’s survey of Canadian real estate companies.
Of note, the report points to the City’s office conversion program as a source of optimism amid vacancy rates for downtown office space that were still hovering 30 per cent in the second quarter of 2024 due to oversupply that predated the work-from-home trends that took hold in 2020.
Announced in 2021, the downtown development incentive program grants developers $75 per square foot of vacant office space being converted to residential, up to a maximum of $15 million per project. The goal is to remove six million square feet of office space from the downtown area by 2031.
The program was put on pause in 2023 after the city maxed out its $153-million original budget, but revived last fall with a $52.5-million infusion from the federal Housing Accelerator Fund.
Currently, there are 11 office conversion projects totalling 1.57 million square feet of space in the project’s pipeline – working out to more than 1,400 residential units. The City does not release funding to approved projects until construction is complete.
Harris says while it’s too early to call the City-led initiative a success just yet, he acknowledges it has generated obvious interest in properties that otherwise would likely still be sitting empty.
“A lot of entities have basically said it would be very hard to do that conversion if they didn’t do that,” he says.
Cairo Development president Ash Mahmoud echoes Harris, crediting the City of Calgary for a program that “makes it easy” to turn these projects a reality. He notes that in contrast to other jurisdictions in Canada, Calgary only requires developers obtain a building permit as part of the incentive program – which can speed up the process by more than a year.
“It’s a quick turnaround to be in construction, and that makes things feasible,” says Mahmoud, whose company is currently involved in nearly half a dozen office-to-residential conversations in the city – and was involved in the 112-unit Cornerstone project in the downtown west end that was the first to be completed as part of the City-led initiative.
Mahmoud says the conversions make added sense for Calgary as it provides a more attractive and sustainable way for the city to grow.
“It’s a significant thing to try to build our downtown. If we can diversify ours like Vancouver or Toronto where you have offices, residents and everything else, that’s going to make our city more preferable,” he says.
“People love to work and live in their area. Having access to 17th Avenue or Stephen Avenue, that would be so much (more) effective than trying to go out and build a new community. People would love to live in that kind of environment.”
