The void in Calgary: How office towers emptied in a once bustling downtown

Photo illustration shows 3D rendering of downtown Calgary

THE GLOBE AND MAIL, Source: Google Earth Studio

The void in Calgary

Even before the COVID-19 pandemic, Calgary had the highest rate of commercial vacancies in Canada as an economic downturn driven by the price of oil hollowed out the city’s downtown office towers. Calgary is now struggling to figure out what that means for the city — and how to fix it.

Jeremy Agius and James Keller

Published October 14, 2021

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Thanks to the heft of Alberta’s oil and gas industry, Calgary has always had an outsized downtown core for a city of 1.3 million, with double the amount of office space per capita of Toronto’s city centre. The number of workers in those towers has become a barometer for the state of the economy. When the price of oil falls, companies lay off staff or go out of business, leaving empty desks behind.

The city has struggled through recessions and busts in the oil patch before, but never like this. And COVID-19 has only compounded the problem. Almost 13.5 million square feet of downtown office space now sits unoccupied, roughly enough capacity for 90,000 workers. Calgary’s vacancy rate is almost three times that of Montreal and four times as high as Toronto, and it’s only expected to get worse in the coming years.

Even if the oil sector recovers to what it was before the current downturn, the industry has become leaner and more automated, meaning many of the jobs that have been lost likely won’t return.

Calgary is now searching for ways to fix a problem that has left the city’s downtown – which already had a reputation as a lifeless collection of skyscrapers filled with people who clear out at the end of every workday – a shell of its boom-time self.

The municipal and provincial governments are now searching for ways to reinvent downtown Calgary – through some combination of luring more people into the core to live and play, rebuilding an economy that’s less dependent on oil and gas, and finding new uses for empty buildings.

As Calgary’s downtown office towers cleared out, the entire character of the city’s core has changed.

Downtown Calgary was already known as a sleepy commercial district, and the job losses have made that worse, with fewer office workers visiting cafés, eating at restaurants and walking through the city’s Plus 15 indoor pathway system. Even before COVID-19 sent people home to work, some areas felt like a ghost town.

Photo illustration shows buildings with vancancies in Calgary's downtown

THE GLOBE AND MAIL, Source: Avison Young; Google Earth

The vacancies in Calgary’s downtown are spread across these 170 office spaces.

These eight buildings are more than 90-per-cent vacant.

Together, they alone account for about 14 per cent of the vacant space in Calgary’s downtown.

Four more are at least 75-per-cent vacant ...

... and yet another 24 are more than half-empty.

A total of 123 buildings in Calgary’s downtown were built before the mid-1980s. According to Avison Young, a commercial real estate firm that tracks vacancies, 35 per cent of Calgary’s downtown towers fall within the 40- to 49-year-old range, making them prime for redevelopment. The useful lifespan of a building is approximately 50 years, without capital investment in maintenance and improvements.

Three of the four buildings in Calgary with the most space available – more than 500,000 square feet – were all completed in the early 1980s

Western Canadian Place, North Tower, with 97-per-cent vacancy, has 648,000 square feet available – the most in the city.

All 597,000 square feet of 801 Seventh – formerly the Nexen building – are sitting empty.

First Tower, which is only 31-per-cent occupied, was constructed in 1981.

Photo illustration shows 3D rendering of the Bow

THE GLOBE AND MAIL, Source: Google Earth Studio

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Although its vacancy rate of 29 per cent may be lower than others, the Bow, a 57-storey tower that has become a defining feature of Calgary’s skyline since it was finished in 2012, contains the second-largest amount of available office space, with 530,343 square feet sitting empty.

The Bow was initially built for energy giant Encana Corp. and for Cenovus Energy Inc., which was hived off from Encana in 2009.

Encana’s successor, Ovintiv, announced in 2019 that it was moving its head office to Denver. The company still has its Calgary office in the Bow, though last year it announced plans to cut its work force by 25 per cent. Cenovus moved its staff out of the Bow after the company merged with Husky Energy Inc. earlier this year, which has already resulted in significant layoffs.

Like the Bow, many other buildings were being completed around the time oil prices collapsed in 2014. The Bow and eight other buildings have been completed in the past 10 years; together they hold around 1.5 million square feet of empty office space.

Energy companies still make up the largest share of tenants downtown, but the industry’s presence is shrinking. The oil and gas sector occupied 58 per cent of leased downtown office space in 2012. That fell to 45 per cent in 2021.

Much of the debate around how to solve Calgary’s downtown problem, particularly at the provincial level, has focused on rebuilding the economy – bringing back oil and gas jobs, while also attracting industries such as IT and green energy.

There’s also a push to entice more people to live downtown in a city known more for suburban sprawl than density near the core.

Almost 40,000 people live downtown and in the neighbourhoods located just south and east of the core, according to a recent Statistics Canada report that looked at the downtown population of Canadian cities. That’s 2.8 per cent of the city’s population – a significantly lower proportion than Toronto and Vancouver. There were 3.5 times as many jobs downtown as people in 2016, according to the Statistics Canada report, nearly double the Toronto figure.

But an even smaller number live in the downtown core itself – about 7,500.

To bring more people downtown, several office towers have already been turned into apartments, and the federal government has set aside $300-million to convert commercial properties across Canada to rental housing.

The East Village, a relatively new neighbourhood just east of City Hall with a mix of commercial space and more than 8,000 units of housing, could be a model for future residential development in and around downtown. The city has created a development plan for an area called the Rivers District, which includes enough housing for up to 8,000 people, in addition to commercial and retail space, built around the new arena that will replace the Saddledome.

The glut of office space downtown has played havoc with the city’s finances.

The vacancy rates sent property values for the city’s most lucrative real estate plunging, with some office towers losing more than half their value in the span of a year. Commercial properties outside the downtown core were left to pick up the slack, and some of them faced tax bills that had more than quadrupled.

Total non-residential property

assessment value in Calgary’s

commercial core

Billions of dollars

$25.9

Total property value fell 64 per cent since 2015

$9.4

2005

‘07

‘09

‘11

‘13

‘15

‘17

‘19

‘21

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Total non-residential property assessment

value in Calgary’s commercial core

Billions of dollars

$25.9

Total property value fell 64 per cent since 2015

$9.4

2005

2007

2009

2011

2013

2015

2017

2019

2021

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Total non-residential property assessment value in Calgary’s commercial core

Billions of dollars

$25.9

Total property value fell 64 per cent since 2015

$9.4

2005

2007

2009

2011

2013

2015

2017

2019

2021

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Total non-residential property assessment value in Calgary’s commercial core

Billions of dollars

$25.9

Total property value fell 64 per cent since 2015

$9.4

2005

2007

2009

2011

2013

2015

2017

2019

2021

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Total non-residential property assessment value in Calgary’s commercial core

Billions of dollars

$25.9

Total property value fell 64 per cent since 2015

$9.4

2005

2007

2009

2011

2013

2015

2017

2019

2021

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

The city responded by slashing municipal services, digging into its rainy-day fund to blunt the tax increases, and asking homeowners to pay more by contributing a higher proportion of the city’s budget.

Distribution of municipal taxes

between taxpayer groups

Residential

Non-residential

62%

60%

52%

50%

48%

40%

38%

2005

2010

2015

2020

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Distribution of municipal taxes

between taxpayer groups

Residential

Non-residential

62%

60%

52%

50%

48%

40%

38%

2005

2010

2015

2020

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Distribution of municipal taxes between taxpayer groups

Residential

Non-residential

62%

60%

52%

50%

48%

40%

38%

2005

2010

2015

2020

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Distribution of municipal taxes between taxpayer groups

Residential

Non-residential

62%

60%

52%

50%

48%

40%

38%

2005

2010

2015

2020

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Distribution of municipal taxes between taxpayer groups

Residential

Non-residential

62%

60%

52%

50%

48%

40%

38%

2005

2010

2015

2020

THE GLOBE AND MAIL, SOURCE: CITY OF CALGARY

Vacant Calgary: This is part of an ongoing series on the future of Calgary’s downtown, hit by years of economic decline that has left its office towers nearly a third vacant, and the solutions that could drive a recovery.

Vacancy data for this project were provided by Avison Young and are current to Q2 2021. Mapping was done by joining data with Open Street Maps building footprints using GIS software. They were manually verified and then rendered over Google Earth 3D imagery.

The void in Calgary

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