There’s good news and iffy news about Calgary’s downtown real estate. While the downtown office vacancy rate is still high, the silver lining cautious good news is that it has been decreasing.
According to commercial market analysts like CBRE, BMO, CREB and Avison Young, the overall downtown market has jitters and uncertainty. About the economy, the impact of tariffs and the turbulence of mergers and acquisitions.
Despite all that, Calgary’s Class B office vacancy is trending downward, driven mostly by residential conversions and recently, positive absorption of more than 70,000 square feet. There is also encouraging and much-awaited good about a bit of a turnaround. At least in Q1, more space was leased than was vacated.
The most recent Avison Young Calgary Office Market Report tracks that after a strong 2024, this year’s Q1 had a slump and a modest negative (179,503 square feet) of absorption citywide. Tenants were active, Avison Young says, but a lack of pen-to-paper caused a slight increase in the overall vacancy rate.
Ambiguity is overshadowing the broader economy; stalling Calgary’s market momentum and uncertainty is taking its toll.
Calgary trends and stats show that Q1 2025 was challenging, with downtown vacancy spiking to over 30 per cent. A lot of the blame was pinned on Chevron’s exit from the Calgary downtown office market, and CREB cautions that future tariff threats being imposed on Alberta’s energy exports could hinder downtown Calgary’s office occupancy growth in the short-to-medium term.
In fact, the downtown vacancy numbers are still well above the national vacancy rate of 19.9 per cent, second only to London, Ontario which is at 32 per cent.
Avison Young underscores that the downtown office market was, at least, stable in Q1, and is now moving forward with some creative ways of addressing the issue of underutilized downtown space.
One positive example is the collaborative project between the City of Calgary and the University of Calgary to relocate the School of Architecture, Planning and Landscape into 180,000 square feet of space at 801 Seventh Avenue SW.
The numbers also indicate that downtown space trends are shifting towards short term leasing. The Beltline recorded negative absorption of 38,996 square feet, and landlords are implementing capital improvement strategies to support efforts to drive leasing activity.
The numbers show that tenant preferences seem to prioritize short-term leasing arrangements, while traditional landlord incentives, such as free rent allowances, are showing signs of moderation.
The Avison Young Report cites: “Demand for high-quality office space remains robust, even as the supply of premium spaces is constrained. This has driven up the costs for tenants seeking to upgrade, leading many to carefully evaluate their options before making a move.”
