Downtown Calgary has been searching for ways to manage a high office vacancy rate. In an effort to attract tenants, one property owner has transitioned his office building into residential real estate. The move comes after a thorough investigation of the Alberta real estate market and the growth in residential versus business leases.
A spokesperson for the investment trust that owns the building says that the office building market in downtown Calgary is not expected to fully recover for another five to 10 years. Currently, the vacancy rate in the downtown core for office buildings is 27 per cent. The building undergoing the transition to residential apartment is currently 50 per cent vacant.
Meanwhile, turning the buildings into residential real estate offers an opportunity to bring more cash flow for the property owner. Other owners of office buildings are trying to differentiate their spaces by modernizing them to appeal to millennial businesses. Developers hope that by creating appealing places for younger Alberta residents to work, play and live, they may be able to revitalize their buildings and decrease vacancy rates.
The building that is being transitioned into residential real estate was built in 1958 and has been an office building since that time. Changing its use is a calculated decision based on the current market in Alberta and Calgary, and it is just one of many creative solutions being used by downtown landlords to respond to high vacancy rates and low retention of commercial tenants. Property owners, buyers or sellers with questions about the legal process of changing the use of a building should contact a lawyer.
Source: Globalnews.ca, "Downtown Calgary office building owners get creative to fill floors - Calgary", Tony Tighe Consumer, Oct. 27, 2017