A good streak of positive absorption activity in the Calgary office real estate market came to an end in Q4 2022, according to aThe Calgary office market saw -120,519 sq. ft of absorption in Q4, primarily in the Downtown Calgary market, which accounted for -219,840 sq. ft and was softened by the positive absorption in the Suburban market and Beltline market .
Despite the undesirable ending, however, Calgary finished 2022 with +131,820 sq. ft of absorption, with Avison Young describing the year as one of the strongest leasing environments Calgary has seen in several years.published by the City of Calgary in Fall 2022 quantified what most in the Calgary office market had already been aware of for years: Calgary had accumulated too much office space too quickly in the past decade or so.
“Much of the last six months had a negative cloud over it with an anticipated recession coming,” Avison Young notes. “Many industry experts are predicting a slow down for the entire CRE sector in 2023 with investment levels anticipated to be in flux amidst an environment of fiscal restraint.”The overall vacancy rate is now at 23.8% — down 2.2% compared to Q4 2021 — as a result of a headlease rate of 19.3% and a sublease rate of 4.5%. Class AA and A space had the lowest vacancy rate, at 16.
“Submarkets outside of Downtown had a banner year, and much of that is attributed to the diversity of tenants the segment lends itself to,” Avison Young says. “The healthcare, engineering, and energy sectors were the most active in 2022.”