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Calgary’s Commercial Real Estate Momentum


Positive. Encouraging. Uptick. Momentum. They are just some of the early-2023 ways to describe Calgary’s commercial real estate market, particularly the recent office space situation in the downtown core. In fact, some experts are going as far as to guardedly suggest that Calgary’s industrial real estate market is even booming.

The cautious optimism is laced with important lessons learned in 2022. It was a recovery year for Calgary commercial real estate’s three-year bumpy ride of dealing with a slumped economy and the leftover fallout from pandemic disruptions which not only forced Calgary businesses to scramble but transformed workplaces, triggering alarmingly high office space vacancy rates.

Early 2023 commercial real estate stats, trends and indicators are now showing that, with a few lingering speedbumps, Calgary’s commercial real estate market is on the rebound. The positive absorption and vacancy momentum started showing signs at year-end 2022.

The latest Avison Young Calgary Office Market Report stats show that last year’s Q4 capped off one of the strongest leasing environments the Calgary office sector has seen in years. Downtown vacancy sits at 27.2 per cent, down 2.5 per cent from the year before.  Overall vacancy is 23.8 per cent, down 2.2 per cent from Q4 2021.

Suburban office markets recorded a seventh straight quarter of positive activity – with healthcare, engineering and energy sectors demonstrating the most activity in the suburbs in 2022.

The Report also underscored that ‘flight to quality’ remains a theme for 2023, in the war for talent attraction and retention, and that Calgary workplaces must be modernized. While the specifics of actual rates and percentages may vary slightly from expert to expert, Calgary’s commercial real estate trending is finally on a positive trajectory.

As of year-end 2022, overall stats (Downtown and Suburban) absorption was +200,000sf and average net rental rates hovered around $13.50. For AA space (Downtown and suburban), vacancy was 14.8 per cent, absorption was +315,285sf, and average net AA rental rates were $22.95. Purely for comparison, A-space was a vacancy of 30.6 per cent, absorption was -56,887sf and average net A-space rental rates were $16.67. Commercial real estate professionals forecast that Calgary leasing rates will continue to face upward pressure in 2023.

Todd Throndson, the managing director at Avison Young Calgary points out that 2022 was an important learning curve. “It was a year where the picture became much clearer about the pandemic recovery and other tests of the Calgary market’s durability in the face of economic hardships.”

John Fisher, executive vice president at CBRE Calgary underscores the important commercial real estate lesson learned. “The Calgary market is very resilient, especially in the face of some challenging economic conditions. We have and continue to espouse an entrepreneurial approach to filling vacancy, developing new properties and re-developing old and unused ones, throughout Calgary but particularly in the downtown core.”

In addition to the all-important Class AA, A, B and C rates and vacancies, how Calgary businesses are strategizing and reacting to the new realities of the changing trends is a key factor. Three months into 2023, and with what Fisher calls ‘the entrepreneurial approach’ to managing and leasing, office space continues with some redefined dynamics. “There are two camps of commercial real estate clients. Some are looking for savings, and if they can also increase the quality of their office at the same time, that’s even better.

“Others are looking to re-imagine and re-purpose their office space, as they encourage and continue readying for employees to come back for conventional full-time or hybrid flex time in-person office schedules. Those leasing clients spend more, researching and executing more creative interior design and seeking the best quality buildings within their affordability.”

Throndson points out a transforming new mindset as a new and important component of Calgary’s rebounding (and redefined) commercial real estate market. “There have been noticeable trends that have been picked up by landlords and tenants all over Calgary, to make their workplaces more appealing and inviting. For example, among those trends either adopted or considered: downsizing space, a move to open floor concepts, shared collaboration spaces, hotel desking and coworking.

“A greater shift toward the employee experience is front of mind,” he says. “This can take the form of on-site amenities like food and beverage offerings, recreational space and other essential services. On the wellness side, more natural light, improved ventilation and modern furniture are becoming more and more important, not just nice-to-haves but must-haves.”

Another indicator of Calgary’s rebounding commercial real estate market is the sometimes-astronomic figure that is the actual assessed value of, particularly, downtown commercial real estate.

Year-to-year stats track that the combined value Calgary’s downtown commercial buildings has been in a slump since 2015, just about the time when Alberta and Calgary were broadsided by various factors of the sagging economy. The assessed value of office buildings, just in the city’s core, dropped some 68 per cent, between 2015 and the end of last year.

“Ever since 2015, the reduction in oil prices mixed with the pandemic and an increase in the work-from-home routines led to many of the offices becoming substantially more vacant than we have typically experienced in our downtown’s history,” explains the upbeat Eddie Lee, City Assessor and Calgary’s director of Assessment and Tax.

Calgary commercial real estate assessment facts and figures show that, in 2020, downtown offices were worth a staggering total $10.63 billion. As of the 2022 valuation, total downtown office was worth $8.19 billion. “While the 2019 to 2022 totals represent a 23 per cent drop in downtown office buildings, we did see a four per cent increase year over year,” Lee says.

“This year’s increase in downtown office value has been driven mostly by the strength of AA and A class properties, due to the continued flight to quality.” He adds that lower B and C class properties still experience valuation pressures, due to high vacancy and limited demand.

But now that the storm has abated, and Calgary’s commercial real estate pendulum is swinging back, Eddie Lee cites another indicator of positive momentum. “For the first time in eight years, the value of office buildings in the city’s core has increased by nearly four per cent to $8.2 billion from the previous year. Definitely a positive sign, especially to the downtown market.”

Some City stats illustrate the value recovery happening in the downtown core.


An exciting positive in the Calgary commercial real estate market, often misleadingly focused on high-profile, downtown office buildings, is the sometimes-overlooked boom in industrial space.

“The industrial market was moving at a blazing pace through 2022,” Todd Throndson adds, “which is the continuation of a trend of the past few years. Vacancy is at an all time low, rental rates are on the rise, and space is in high demand. Alongside these key metrics, the story has mainly been the delivery of space, with the city and region experiencing a run on industrial land that is unprecedented and a record amount of space in the construction pipeline. This has been pushing delivery timelines of new builds further and further back.”

CBRE’s John Fisher echoes the industrial space enthusiasm. “Industrial continues to be a shining light within the Calgary real estate market. There has been immense growth in this sector pushing the total inventory to nearly 150 million square feet. The driver of the historically low vacancy of 2.1 per cent has been primarily e-commerce users however, the emergence of data centres, life science users and a resurgence in manufacturing have all contributed.”

There’s a commercial real estate consensus that 2023 and beyond looks steady and mostly strong. “Downtown offices will continue to experience value recovery in the highest quality properties,” Eddie Lee says. “Uncertainty around hybrid and remote working arrangements, and the overall economy, may impact lower quality properties. But investment in the downtown, like expanding Arts Commons, renovating the Glenbow Museum, revitalizing Olympic Plaza and refreshing Stephen Avenue, will continue to turn vacancy to vibrancy.”