Calgary’s popular Beltline neighbourhood, just south of downtown, is the only area in the city to experience a positive absorption rate in office space so far this year.

A first-quarter report by Avison Young Commercial Real Estate in Calgary said three office buildings are under construction in the Beltline containing more than half a million square feet with 92 per cent of the space pre-leased.

Absorption in the office market refers to the change in occupied space from one period to the next. The Beltline currently has 5.5 million square feet of office space in its inventory.

The Beltline is in a better position right now in relation to other markets throughout the city, said Larry Gurtler, principal with Avison Young in Calgary.

“I still think, compared to the downtown, it’s a better alternative with respect to access and egress during rush hour or peak times. Better parking ratios. Better parking rates. Better (rental) rates. And you’re walking distance to your clients downtown.”

The Avison Young report said the vacancy rate for the Beltline for the first quarter was 5.6 per cent, up from five per cent in the fourth quarter 2008 and from the three per cent a year ago. Further to that is an additional 2.7 per cent of sublease space available for a combined vacancy of 8.3 per cent in the first quarter.
“The Beltline is the only area of the city with positive absorption yearto-date,” said the report by research manager Susan Thompson. “Total absorption recorded for the quarter was 74,000 square feet. Similar to the downtown market, the Beltline has not recorded negative annual absorption since 2002.

“It is estimated that the Beltline will be the exception to the forecasted negative annual absorption for the city this year.”

With pre-leasing complete or nearly completed on the three buildings under construction in the Beltline, Avison Young said it expects the market to remain steady through the coming year.

The commercial real estate firm said the vacancy rate in the f irst quarter for the suburban north office market hit 12.6 per cent (14.3 per cent including sublease space), up from 12 per cent at the end of the fourth quarter 2008 (12.2 per cent including sublease space) and 4.7 per cent a year ago (5.2 per cent including sublease space).

Avison Young said the vacancy rate for the suburban south office market is seven per cent in the first quarter of this year, up from 6.3 per cent at the end of the fourth quarter of 2008 and 2.6 per cent a year ago.

Through the f irst quarter, the Calgary suburban office market has experienced a significant downward adjustment as a result of economic conditions, said a report by commercial firm CB Richard Ellis Ltd.


“Key forces driving the shift include second-generation space coming to market as result of relocations into new construction, slowdown in the engineering sector releasing project and excess space as sublet availability, speculative new supply available at a high construction cost base, national and global companies contracting or pulling out of Calgary and a general climate of uncertainty as to what the next few years will hold for businesses, causing a climate of inactivity and hesitation,” it said.