Calgary office vacancy rate expected to peak at around 28%

Greg Guatto of Aspen Properties believes it will be a while before another office building is built in the city

Greg Guatto is president and CEO of Aspen Properties.

Greg Guatto
Greg Guatto

What’s happening in the downtown Calgary office market?

Guatto: It feels like the market is stabilizing. There’s still a glut of vacancy and not much growth in the use of office space. Twelve of the past 15 quarters had negative office absorption, but now two slightly positive quarters in 2018. All the new inventory from the last development cycle has been completed except for Telus Sky.

We see the vacancy rate peaking soon around 28 per cent. We’re seeing a ‘flight to quality’ whereby many tenants are taking advantage of the soft market and renewing early or moving into better buildings for less rent than what they’re paying today, all at the expense of buildings of lower quality and inferior location. Rents are holding in the better buildings in strong locations.

What’s Aspen’s philosophy in terms of attracting and retaining tenants in this high vacancy rate environment?

Guatto: The Edison, our most recent redevelopment, is a good example of where we’re moving – hosting Social Thursdays and other events in the building, tenant lounges attached to conference space; we’re dog friendly, and have many unique amenities including an outdoor dog park, fitness centre, golf simulator, indoor basketball court, outdoor patio, and adjacent park space which houses an outdoor sport court in the summer and rink in the winter where tenants participate in lunchtime shinny or free skate.

We offer different leasing options for companies in our buildings, including co-working opportunities where companies of all sizes lease suites by the month in a shared office environment conducive to collaboration.

At Aspen, we’re doing what we can to develop a sense of community within our buildings and help our tenants attract and retain the best talent possible. We’re attempting to be more than just a landlord – we’re asking our tenants “how can we help you develop the culture you want?”

We’re managing our assets with the best people we can find; industry leaders who are customer focused, listen to our tenants and exceed their expectations.

What’s your sense of what’s happening in the Calgary economy right now and where it’s headed?

Guatto: Although oil prices are back up and the energy sector seems to be stabilizing, investment dollars are not flowing to the Alberta energy industry like they have in the past. A primary reason for this is due to uncertainty over pipelines and access to world markets for both oil and gas.

It’s a shame because we have the opportunity to be the world leader in providing clean, environmentally responsible energy.

I expect we won’t see much job growth coming from the oil and gas sector until the investment dollars return, and that puts us at a critical juncture as a city. People talk about the need for diversification and I would agree, but it’s not something you can force. To attract tech companies from elsewhere we need to have the talent they’re looking for. Diversification happens organically and it takes time, but as a city, we have the core ingredients to do so. I’ve already seen some very cool young tech companies in a range of sectors emerging and growing in our portfolio. These exciting new startups are attracting both angel investment and venture capital dollars, which is an encouraging sign.

With the energy industry not producing jobs and diversification moving slowly, I believe there are things we can do to help our city today. Most importantly we need to attract and retain talent here. Calgary needs to be a cool place to live, work and play. We all have a role in this – developers need to be creative; our universities need to develop programs that prepare graduates for the new world economy, companies need to provide the right corporate culture to name a few.

I believe we should support the 2026 Olympic bid – in my opinion the benefits far outweigh the investment given the positive long-term impact it will have. We can’t lose our focus on what a great city this is and what an even greater city it can be. We’re poised for an exciting future and the entrepreneurial ‘can do’ attitude that this city is famous for will get us there.

How long do you think it will be before we see another downtown office building built in Calgary?

Guatto: I think it will be a while. We need to repurpose and revitalize what we have.

Speaking of which, what can you say about your future plans for the towers by the Calgary Tower? Is this something you’re still contemplating?

Guatto: The Calgary Tower is an icon and will be the centrepiece for any development. We currently have three great office towers and an existing parkade attached to the site. With its prime location and trend of people wanting to live in the downtown with direct access to all it has to offer, we’re considering the opportunity of residential towers with entertainment-style retail at its base.

– Mario Toneguzzi

aspen calgary

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