Industrial real estate market hopes to maintain momentum in 2018

When it comes to the Calgary commercial real estate market, downtown office space grabs all the headlines.
Just like in sports, where star players occupy the limelight and grinders are often overlooked, the struggles of the downtown office market continue to dominate discussions of commercial real estate, while the industrial sector has quietly weathered the economic storm over the past three years.

Calgary's commercial real estate market could be poised for a rebound in 2018

All eyes will be on Calgary's commercial real estate market this year, with hopes that the downtown office sector, which continued to struggle in 2017, will rebound in 2018.

The office market has grabbed everyone's attention over the past three years, as vacancy rates have soared to historically high levels following the collapse of oil prices and the subsequent waves of layoffs that ravaged employment ranks in downtown Calgary. Thousands of people were cut loose, and a vast amount of office space suddenly became vacant in the downtown core.

Calgary's industrial market shows signs of turning the corner

While Calgary's downtown office sector and its plunging vacancy rates overshadowed all commercial real estate activity in 2016, the city's industrial market has better weathered the storm and is poised to grow in 2017, say experts.

According to Barclay Street Real Estate, vacancy for the industrial real estate sector finished 2016 at 7.76 per cent. It had peaked at 7.8 per cent in the third quarter of the year. In 2015, it was 6.57 per cent.

"Absorption was a negative 127,373 square feet for Q3. This was the only quarter of negative absorption we have had since the '90s," said Jon Mook, executive vice-president of Barclay Street Real Estate's industrial division.

Real estate officials expect conditions to support turnaround in downtrodden commercial market

Calgary's commercial real estate market is showing signs it is finally moving on from tough economic conditions that sent vacancy rates soaring and rents plummeting over the past two years, say officials.

''There is a sense in the market that the worst is behind us and that conditions will gradually improve," said Joe Binfet, managing director/broker of Colliers International in Calgary.

Calgary retailers making the most of high vacancy rate

Calgary commercial experts say local retailers are becoming increasingly savvy in their fight for market share, challenging the traditional brick-and-mortar concept of doing business in favour of a pop-up model.

''I do think the trend is becoming more popular because of online shopping," said Barclay Street Real Estate retail associate Amy McGregor, who is working with Calgary Economic Development to research pop-up shops and facilitate a process for new business owners by connecting with landlords.

"Online retailers kind of want to dip their toe in the retail market and it's a low investment way to do that. There's more opportunity and more likelihood that landlords will give them the opportunity for the shorter-term leases."

Commercial landlords thinking outside of the box in wake of high vacancy rates

Landlords in Calgary's suburban office market continue to display increasing creativity in the face of rising vacancy rates that are not expected to stem any time soon, says a new report.

In a third quarter report issued earlier this month, Barclay Street Real Estate noted the overall vacancy rate in suburban Calgary rose by
1.1 per cent from the second quarter to 22.3 per cent. Research director Anthony Scott attributed the slight increase to the introduction of new inventory that came to market with significant unleased space.

Calgary's industrial sector showing signs of strain

Calgary's industrial market continues to hiccup along in a weakened economy as vacancy rates have risen over each of the last four quarters and are likely heading toward the bottom of the cycle, said a second-quarter market report by Cushman & Wakefield.

"One positive is that the amount of space under construction has been cut substantially; helping to prevent future jumps in the vacancy rate," read the report.

Ownership model opening new doors for developers, businesses

Calgary's emerging office condo market remains hot this year, according to Barclay Street Real Estate.

The commercial real estate brokerage noted in a report earlier this month that development and sales activity in the local market has been robust thus far in 2016, which, "has led to a fertile market in which developers are diversifying their portfolios among different real estate assets such as office buildings, hotels, mixed-use retail and residential real estate by adding office condo buildings and professional centres to their holdings."

Commercial vacancy rates near all-time highs, according to reports

A new report is summarizing Calgary's downtown office market in one word: scary.

CBRE Ltd. first-quarter results released earlier this month show that the vacancy rate in Calgary's core ballooned to 20.2 per cent during the first quarter of 2016. That's up from 11.8 per cent the same time last year, and 17.6 per cent from the fourth quarter of 2015.

Greg Kwong, who heads up the commercial real estate firm CBRE Ltd's office in the heart of the oilpatch, expects the worse is still to come for Calgary's office market as the local economy sputters in response to depressed oil prices.