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Calgary Market Overview

Suburban Market: Flight to quality

Calgary Construction: Back on track

The Office Report The Calgary Market In Review Cautious Optimism for 2011


he Calgary office market continues its recovery from 2010 with a strong first quarter. This is due in large part to strong energy prices with a rebounding economy also contributing. The overall vacancy rate in the city has declined from 10.6% in Q4 2010 to 9.8% in Q1 2011. According to a report published by RBC Economics, real GDP growth is estimated to be 4.3% in 2011 for Alberta, the best since 2006. The report also forecasts nearly 50,000 net new jobs to be created for the province in 2011, the highest since 2007. With unrest in the Middle East, crude oil prices have spiked dramatically in recent months. Particularly concerning is the possibility of instability spreading to oil rich countries such as Iran and Saudi Arabia. Combined with the growing energy needs of emerging economies such as China, the abundance of untapped oil supply in Alberta appears increasingly attractive to global oil companies. This has been reflected in positive absorption of downtown office space of 375,000 square feet through the first quarter of 2011. The vacancy rate including sublet space for both class AA/A office space in the downtown core has decreased from respectively 8.2% and 8.0% for Q4 2010, to 5.9 % and 7.5%. Dominated primarily by oil and gas energy companies, improved economic conditions and a very positive outlook on energy pricing, tenants have strong confidence to expand and take on additional space. Driven by demand,

A Greener Outlook: Is Calgary onside?

Q1 2011

average asking rates have increased in the downtown core. While both class AA and newly constructed space held steady at $34 per square foot and $40 per square foot respectively, rates increased slightly across the board for class A, B and C space. The flight to quality trend is likely to continue as tenants move to better quality properties. A trickle-down effect continues throughout various districts in the city with companies taking advantage of affordable quality space becoming available due to the additional inventory added in 2010. With continued addition to the office inventory throughout the latter half of 2011 and early 2012, there will be modest upward pressure on vacancy. Vacancy in the downtown core will likely peak upon completion of The Bow. Consistent with the downtown core, tenant demand for beltline space also increased in the first quarter of 2011. Overall vacancy rate in the beltline decreased from 8.2% in Q4 2010 to 7.5% in Q1 2011, with positive absorption of 41,000 square feet.

Downtown Calgary Notable Lease Deals - First Quarter 2011 Tenant Schlumberger Canada* Suncor Energy Bell Canada* Shaw Communications Meyers Norris Penney* Canadian Forest Oil Ltd.*

Area Leased (SF) 154,000 120,000 82,000 82,000 70,000 43,000

Building Palliser One Suncor Energy Centre - East Palliser South Scotia Centre 640 - 5th Avenue SW 640 - 5th Avenue SW

* Indicates transactions Avison Young was involved with

Vacancy Type Headlease Headlease Headlease Headlease Headlease Headlease

Lease Type New Expansion New New New New

AVISON YOUNG The Office Report - Q1 2011

Suburban Office Market

of the strong demand by oil and gas companies in the downtown core, engineering firms have in turn taken the lead in suburban areas.

Higher demand for quality space

In the first three months of 2011, tenants demonstrated a strong demand for larger pockets of higher quality office space. A number of newer buildings completed in the past few years have omentum for Calgary’s suburban office experienced significant leasing activity. Building 300 market was quite different between the of Centron Park, Airstate Centre, and Douglasdale north and the south. Overall vacancy rate for Executive Centre all obtained significant lease the suburban north increased from 10.3% in Q4 commitments in the first quarter of 2011. Deals 2010 to 11.7% in 2011. Sublet vacancy increased for new construction also occured during the from 1.8% in Q4 2010 to 2.4% in Q1 2011 for first quarter with Remington’s Parkside at Quarry the suburban north. Leasing transactions were Park and GWL Realty Advisors’ building 4 of the predominantly for smaller pockets of space, Westmount Corporate Centre getting lead tenants. with negative absorption of 119,000 square feet. With significant uptake of available space, average Consistent with historical trends, the northeast asking rates held steady, and in some cases edged quadrant lags behind the overall market in the upwards for higher quality spaces. Downtown Calgary Notable Lease Deals - First Quarter 2011 recovery. Tenant Area Leased (SF) Building Vacancy Type Lease Type


Schlumberger Canada* Palliser One Meanwhile, the overall vacancy 154,000 rate for the Suncor Energy 120,000 Suncor Energy Centre - East suburban south dropped from 13.1% in Q4 2010 Bell Canada* 82,000 Palliser South ShawinCommunications 82,000for class A Scotia Centre to 10.8% 2011, while vacancy rates Meyers Norris Penney* 70,000 640 - 5th Avenue SW buildings have decreased from 12.9% in Q4 2010 Canadian Forest Oil Ltd.* 43,000 640 - 5th Avenue SW to 9.5% for Q1 2011. Indicative *ofIndicates the decrease transactions Avison Young was involved with in vacancy, the suburban south had positive Parkside at Quarry Park absorption of 200,000 square feet. As extension

Headlease Headlease Headlease Headlease Headlease Headlease

New Expansion New New New New

Suburban Calgary Notable Lease Deals - First Quarter 2011 Tenant

Area Leased (SF)


Vacancy Type

Lease Type

Stuart Olson Dominion Construction


Westmount Corporate Campus - Building 4



Critical Mass


Atlantic Avenue Art Block



Cimarron Engineering*


Parkside at Quarry Park



Flint Energy Services


Airstate Centre



Kasian Architecture*


Atlantic Avenue Art Block



Global Raymac Surveys


Centron Park - Building 300



Vista Projects


Centron Park - Building 300



* Indicates transactions Avison Young was involved with

© 2011, Avison Young Real Estate Alberta Inc. The information contained herein was obtained from sources deemed reliable and, while believed to be correct; is not guaranteed by Avison Young.

AVISON YOUNG The Office Report - Q1 2011

Construction In The City

2012. As a sign of renewed confidence in the market, developers are once again evaluating developments that were put on the shelf through the recession. Developers are encouraged by positive economic indicators including employment growth and crude oil prices, and in particular the continued healthy absorption of quality office space (particularly in the downtown core).

Renewed Confidence


he recently completed Eighth Avenue Place east tower added 1 million square feet of office space to the downtown core, with approximately 90% of the space leased. The north block of the The Bow is slated for completion this year, adding approximately 1.8 million square feet to the Calgary downtown office inventory. Fully leased by energy firms EnCana and Cenovus, phased relocation is anticipated to occur throughout 2012. A number of other office developments are currently under construction. In the beltline area, Hanson Square is underway with over 40,000 square feet epected for Q2 2012. The WinSport Canada athletic and office complex will add to the Northwest market 100,000 square feet of office space in Q3 2011. Construction is also moving ahead for building 4 of the Westmount Corporate

Campus in the SW, consisting of approximately 150,000 square feet expected for Q4 2012. While in the Southeast, Remington Development’s master planned mixed use subdivision Quarry Park continues to be the biggest story in the suburban market. Two office buildings in the development consisting of over 270,000 square feet, Quarry Central and Parkside at Quarry Park, are slated for occupancy by September


Up to 82,000 Sq. Ft. Downtown Office Head Lease Opportunity

8 West

Up to 78,194 Sq. Ft. Downtown Office Headlease \ Sublease

635 - 8th Ave SW

Up to 117,568 Sq. Ft. Downtown Office Sublease Opportunity

One of the more exciting developments being discussed in the market is the potential development of the west tower of Eighth Avenue Place. The developer is in discussion with at least one tenant that could result in the second tower starting construction within the next 12 months. Most recently, Prism Developments announced that they’re moving forward on the previously proposed LEED Candidate 11-storey building with over 200,000 square feet of office space in the beltline district. Construction is slated to start in May this year with completion in Q1 2013. Developers and investors are certainly paying attention to the continued demand of quality space in the market place.

For full brochures, please visit us at:

Jamieson Place

24,680 Sq. Ft. Downtown Office Sublease Opportunity

Weston Centre Up to 12,580 Sq. Ft. Suburban South Office Head Lease Opportunity

Riverbend Atrium One From 781 to 3,827 Sq. Ft. Suburban South Office Head Lease Opportunity

Sustainable Green Buildings

Canada’s first LEED Platinum high-rise office building, Eighth Avenue Place was pre-certified LEED Platinum by the U.S. Green Building Council in December 2010.

More Tenants Demand Green


t is worth noting that a growing number of proposed office developments and recently completed buildings strive to incorporate green building elements and compliance with an environmental certification program. Office building owners and operators increasingly recognize the various benefits of an environmental friendly building. Higher building efficiency not only reduces operating costs, but also increases overall property value. However, the real drivers behind environmental sustainability are the tenants who occupy the space. With global sensitivity surrounding the environmental impact of Alberta’s oil sands, energy companies and other major corporations have placed an emphasis on the environment. Firmly entrenched as part of their corporate identity and strategy, this focus naturally extends to their selection of office space. This trend will continue well into the future, with a premium for office buildings meeting or exceeding recognized green standards. In order to remain competitive for tenants over the long term, it will not be uncommon for existing buildings to undergo retrofits to enhance operating efficiency and incorporate sustainable design elements whenever possible.

The Bow, slated for completion in the latter half of 2011, incorporates a number of sustainable design features for lower energy consumption and more efficient air quality control.

Calgary Beltline office building, 1520, 4th Street SW, managed by GWL Realty Advisors, obtained Level 1 BOMA BESt Certification in 2011.

Is Calgary Getting Greener? Where We Stand on Sustainability


commercial office projects in Calgary have obtained the BOMA BESt (Building Environmental Standards) Certification since 2008. (Source:

Calgary Office Leasing Team Matt Evans


Tracy Fu


Steve Goertz


Larry Gurtler


Eric Horne


Peter Jenkins


Allen Jovica


Andrew King


Ben Morrison


Alexi Olcheski


Mark St. Pierre


Doug Pilip


Nairn Rodger


Glenn Simpson


Peter Thorpe


Todd Throndson


Stephen Woodward


Alex Wong


Allan Zivot


Business Condominium Team Pali Bedi


Fred Clemens


AVISON YOUNG Gulf Canada Square #309, 401 - 9th Avenue SW, Calgary, AB T2P 3C5 T 403.262.3082 F 403.232.3325 Avison Young Real Estate Alberta Inc.


commercial office projects in Calgary have obtained the LEED (Leadership in Energy and Environmental Design) Certification with the US Green Building Council or the Canada Green Building Council since 2007. (Source: and

AVISON YOUNG The Office Report - Q1 2011

Avison Young Calgary Office Report (Q1 2011)  

Avison Young Calgary Office Report (Q1 2011)

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