The market brings with it significant momentum from last year, new report says
Calgary’s office market is showing bright spots with the right fundamentals to perform well in 2023, despite a predicted slowdown for the entire commercial real estate sector this year, according to Avison Young.
The market will benefit from significant momentum from the fourth quarter of 2022, which represented the culmination of “one of the strongest leasing environments the Calgary office sector has seen in years,” Avison Young said.
The overall office vacancy rate in the region dropped by 2.2% annually to 23.8% in Q4, with greater drops registered in the downtown vacancy rate (down by 2.5% to 27.2%) and the class AA vacancy rate (down 2.9% to 14.8%).
“This was a year where the picture became much clearer with regards to the shape of the recovery from the pandemic and another test of the Calgary commercial market’s resiliency in the face of economic hardship,” Avison Young. “A strong rise in office leasing activity was a win for Calgary’s economy this year.”
However, current trends are painting a much less rosy picture for the market in the near future, Avison Young warned.
Sustained local, national, and global pressures will likely drive a widespread slowdown for the Canadian commercial real estate sector in 2023, “with investment levels anticipated to be in flux amidst an environment of fiscal restraint.”
Still, Calgary is better placed than most as “the strong environment for commodity prices is predicted to remain elevated for some time to come, creating a favourable environment for [Calgary’s] economy,” Avison Young said. “The strength of the city’s industrial, residential, and land sectors will continue to bring investment and relocation to the market.”
