Northwest office market under-serviced for new space

Cambrian Office Centre is 62,000 square feet

The suburban office market in Calgary is mirroring these days what’s happening in the downtown core.
Demand has slowed but there’s still that trend toward a flight to quality for office space.
According to commercial real estate firm Avison Young, suburban north office vacancy is up at 12.2 per cent from 8.7 per cent at this time last year. But this is largely due to SMART Technology’s restructuring which has resulted in three additional floors of their northwest building being put on the market for sublease.
Year-to-date, suburban north office space absorption – the change in occupied space – is a negative 122,191 square feet.
“I think the suburban office market is similar to the downtown market. It’s experiencing a little bit of an increase in vacancy,” said John Savard, vice-president of office leasing for Avison Young. “What we’re seeing is a flight to quality most specifically where landlords of C and B class buildings if they’re not currently upgrading their buildings when faced with a vacancy tenants will look at the C class product and decide whether or not they want to be there.
“And typically they’ll upgrade from C to a B for only a slight price increase potentially and even what tenants will do is look at what their monthly payments are, their annual payments are, and realize they could move into a new high quality A class building.”
Savard said many business people live in northwest Calgary but there haven’t been many options for them in terms of office space close to where they reside.
“The fascinating thing about the northwest of Calgary is that it’s been an under-serviced market for available space in the last decade or so,” said Savard, who is leasing the 62,000-square-foot Cambrian Office Centre just off Memorial Drive and Shaganappi Trail N.W. “Anecdotally, you’d see tenants asking to see the inventory in the northwest and over the years we provide them with the list of inventory that was there and their decisions would be such that they would remain in the Beltline or the west end of downtown or just go to the southern part of the city.”
He said the Cambrian Office Centre, a standalone building with four floors currently available for lease with underground parking on site, is an example of fairly new inventory now on the market.
“This building was finished around 2009. It did have a tenant in place but the medical use tenant is no longer here. Now it’s ready to go,” said Savard, adding the building is close to downtown and major transportation routes as well as being near amenities such as the University of Calgary, Foothills Hospital, the Alberta Children’s Hospital, Winsport, the Bow River and the bike path system.
 
By Mario Toneguzzi, Calgary Herald October 10, 2014