BOMA CALGARY NEWS SUMMER 2009
Page 1 - Offi ce Market Forecasts: True or False? | Page 3 - President’s Message | Page 4 - A Refreshing Outlook for Transportation Page 5 - Conservative Territory | Page 6 - Who’s Who in the Zoo! | Page 8 - Money Down the Drain | Page 10 - David Parker Offi ce Market Forecasts: True or False?
By Sandy McNair and Kevin Antaya, Altus InSite
he continuing economic downturn has generated absorption that began to reverse as new supply began to many doom-and-gloom forecasts, and Canada’s ma- be completed. It should also be noted that current sublet Tjor downtown offi ce markets have not been immune levels are well below the historic average. from grim forecasts. Vancouver has seen a similar, but less dramatic, shift Recent reports of dramatic increases in the amount of from sublet rates which hovered around two per cent in sublet available space in Vancouver, Calgary and Toronto 2004, shrank to virtually zero in 2007 and now approach may not tell the whole story, and without historical con- the levels of late 2004. A lack of signifi cant new supply, text may, in fact, be misleading.
SUBLET SPACE SOARING? In Calgary, the amount of sublet space across the city has increased by over 500,000 square feet since the be- ginning of the year and now stands at around 1.1 million square feet. How- ever, this is almost exactly the same amount of sublet space that was avail- able in late 2004, immediately prior to the beginning of three years of space
BOMA Calgary News 1 especially in the downtown market, In Toronto, the difference is even BOMA Calgary News is a major factor in softening the im- more dramatic, with the amount of pact of reduced demand. space in the same fi ve-year period BOMA Calgary News is a co-publication of On the surface, it may seem that beginning in 2007 being equal to less BOMA Calgary and Business in Calgary. the amount of sublet in Toronto is than 25 per cent of the total space Business in Calgary rising more slowly, but Canada’s larg- added to the Toronto market during 1025, 101 - 6 Ave. SW, Calgary, AB T2P 3P4 est offi ce market has historically had the prior cyclical peak between 1988 4EL s &AX Email: [email protected] higher levels of sublet, with the rate and 1992. Web: www.businessincalgary.com over the past fi ve years ranging from This is not to say that Calgary 1.5 per cent to 2.5 per cent. Even and Toronto will be immune from BOMA Calgary with a relatively large increase since downward pressure on rents and 120, 4954 Richard Road SW, Calgary, AB T3E 6L1 the beginning of the year, sublet now an increased focus by tenants on %MAIL INFO BOMACA s 7EB WWWBOMACA stands at around 2.0 per cent. This reducing operating expenses in a re- 4EL s &AX is close to the historic average, but covering economy. CHAIR well below the peak of almost 3.0 What is very likely is that the new Paul Gauthier, Fujitec per cent in 2003. towers in both cities will be leased up at the expense of existing stock MEMBERS and that each market and sub-mar- Blair Carbert, Stones Carbert Waite LLP NEW SUPPLY SNAPSHOT Michael Kehoe, Fairfi eld Commercial Both Toronto and Calgary currently ket has its own story and dynamics, Miles Durrie, Calgary Herald have relatively large amounts of new with the winners and losers yet to be Carol Lewis, Calgary Herald supply underway, with a total of al- determined. Darlene Davis, Calgary Herald most 14 million square feet currently James Harvie, TELUS Convention Centre under construction (see table oppo- Altus InSite’s mission is to ac- Offi cers site). At the time many of these new celerate the differentiation of projects were announced, new supply commercial real estate offerings PRESIDENT in both markets had been moderate and services by establishing credible Guy Priddle, MBA, RPA, BLJC Facility Management and the outlook for demand was criteria and processes that identify, positive. Put into perspective, the measure, improve, recognize and re- VICE PRESIDENT/PRESIDENT-ELECT Peter MacHardy, GWL Realty Advisors Inc. amount of new supply in Calgary for ward the performance of buildings, the fi ve-year period starting in 2007 owners, managers, occupants and 2ND VICE PRESIDENT is about half of the amount that was their advisers, suppliers and service $ON &AIRGRIEVE 0ARK Bentall LP added during the prior cyclical peak providers. For more information, SECRETARY TREASURER between 1979 and 1983. please visit altusinsite.com. Tom Sullivan, GWL Realty Advisors Inc. PAST-PRESIDENT Wendy Cardell, The Cadillac Fairview Corp. Ltd. EXECUTIVE VICE-PRESIDENT NEW SUPPLY SNAPSHOT William G. R. Partridge, CAE TOTAL UNDER TOTAL Directors PRE-LEASED Chris Howard, Howco Realty Advisors CONSTRUCTION AVAILABLE Domenic Mazzocchi, 20 Vic Management Inc. AREA AREA AREA Gerry Jobagy, Hopewell Real Estate Services (sf) Glen Kitteringham, Brookfield Properties Corporation (sf) (sf) Lee Thiessen, Altus Group Michael Kehoe, Fairfield Commercial Real Estate &RED