Page 1 - Eyes Wide Open - With a Narrowing Focus Page 4 - Notes from all Over Page 6 - BOMA Insider Page 8 - The Skies the Limit with New Builds in Calgary TOC NEWS WINTER 2013 Eyes Wide Open – With a Narrowing Focus Sandy McNair n the past six months the amount of office space in Calgary that is under construction Ihas doubled. There are currently 25 office buildings under construction containing 7.9 million square feet of office space. Despite the fact that 56.3 per cent of that new supply has been pre-leased, there is significant pressure on the existing office inventory due to dis- closed and undisclosed backfill pressure. Our 225 6th Avenue SW, Calgary 300 3rd Avenue SW, Calgary 620 3rd Avenue SW, Calgary current best estimate is that there are eight Q4 2017 – 1,399,600 sq. ft. Q2 2015 – 810,987 sq. ft. Q1 2017 – 588,324 sq. ft. large blocks containing 1.5 million square feet of space that have not yet been disclosed, but will become available as the new buildings are Figure 1 completed. % of Total Existing New Supply Spikes Put Pressure Vancouver Edmonton Calgary Toronto Ottawa Montreal Office on Existing Office Buildings Inventory Expressed as a percentage of total exist- Under ing office inventory, Calgary has the highest 7.9% 1.1% 11.9% 4.6% 5.7% 2.9% level of office space under construction, as Construction illustrated in Figure 1. © Altus InSite, a Division of Altus Group Limited 1 Figure 2 If there had been a new supply drought in Calgary, the current spike in construction activity could be viewed as a catch-up in BOMA Calgary News response to pent-up demand… BOMA Calgary News is a co-publication of BOMA Calgary and Business in Calgary. Business in Calgary 1025, 101 - 6 Ave. SW, Calgary, AB T2P 3P4 Tel: 403.264.3270 • Fax: 403.264.3276 [email protected] www.businessincalgary.com The office space currently under construction has staggered completion dates going out to 2017 (see Figure 2) which will provide the marketplace BOMA Calgary 120, 4954 Richard Road SW, Calgary, AB T3E 6L1 more time to grow into and absorb the vacant space being left behind as the Email: [email protected] • Web: www.boma.ca new buildings are completed and tenants move in. Tel: 403.237.0559 • Fax: 403.266.5876 Figure 3 If there had been a new supply drought in Calgary, the current spike in COMMUNICATIONS construction activity could be viewed as a catch-up in response to pent-up % of Total COMMITTEE demand, but there has been very significant growth in Calgary’s office inven- Existing Vancouver Edmonton Calgary Toronto Ottawa Montreal Chair - Leah Stewart, tory since 2000 as illustrated in Figure 3. Inventory Sizeland Evans Interior Design The best building managers and their leasing teams achieve superior results Bobbi Joan O’Neil, Business in Calgary Pre 1960 16.2% 9.8% 3.1% 13.0% 3.1% 18.7% Giovanni Worsley, MNP LLP relative to their peers throughout the business cycle. As the marketplace Jamie Zachary, Calgary Herald Jay de Nance, Fairfield Commercial Real Estate experiences some or all of the following – soft demand, increased vacancy, 1960 thru 61.9% 78.4% 66.3% 71.0% 77.3% 68.0% Kim Bogner, 20 Vic Management 1999 Lia Robinson, BOMA Calgary declining leasing velocity, increased supply of new and backfill space from Rita Reid, First Capital Realty landlords and sub-landlords and reduced rent expectations – not all office Roger Hanks, Skyline Roofing Since 2000 21.9% 11.8% 30.6% 16.0% 19.6% 13.3% Siobhan Koroll, Calgary Herald buildings and portfolios will experience the same success or pain. Board of Directors © Altus InSite, a Division of Altus Group Limited CHAIR Chris Howard, Avison Young Real Estate CHAIR-ELECT Ken Dixon, ATCO Group SECRETARY TREASURER Chris Nasim, GWL Realty Advisors Very rare is the firm or team that PAST CHAIR Don Fairgrieve-Park, Bentall Kennedy (Canada) LP has the people and money to do PRESIDENT & CSO William G. R. Partridge, CAE, BOMA Calgary everything they can think of, let alone Directors Fred Edwards, Servpro Cleaning at a very high level of performance. Steve Weston, Brookfield Properties Marjorie Cone, H & R Property Management Ltd. So the key has been, and will Robert Brazzell, Altus Group Corrine Jackman, Hopewell Real Estate Services Cam Gresko, Cadillac Fairview continue to be, focus. Dustin Engel, Alberta Infrastructure Richard Morden, Bentall Kennedy (Canada) LP Lee Thiessen, MNP LLP Loy Sullivan, 20 VIC Management Very rare is the firm or team that has the people and money to do The Building Owners and Managers Association of everything they can think of, let alone at a very high level of perfor- Calgary publishes BOMA Calgary News quarterly. For advertising rates and information contact Business mance. So the key has been, and will continue to be, focus. Focusing your in Calgary. Publication of advertising should not be deemed as communication initiatives, service refinements and capital budgets on endorsement by BOMA Calgary. The publisher re- serves the right in its sole and absolute discretion the two or three key items and programs where they will have optimum to reject any advertising at any time submitted impact on your tenants’ intention to stay and ideally pay a premium to by any party. Material contained herein does not Working hard? Servpro keeps your oce clean for productive work days. necessarily reflect the opinion of BOMA Calgary, its do so, is essential to success. members or its staff. © 2013 by BOMA Calgary. Printed in Canada. SANDY MCNAIR IS THE PRESIDENT OF ALTUS INSITE, A DIVISION OF ALTUS GROUP. SINCE 1997 ALTUS INSITE HAS CONDUCTED MORE THAN 1.7 MILLION TENANT SATISFACTION Superior cleaning service. Making homes and offices sparkle, since 1964 SURVEYS FOR MANY OF CANADA’S LEADING OFFICE BUILDING OWNERS AND MANAGERS. [email protected] WWW.ALTUSINSITE.COM 403.520.7777 | | servprocleaning.com 2 3 Figure 2 If there had been a new supply drought in Calgary, the current spike in construction activity could be viewed as a catch-up in BOMA Calgary News response to pent-up demand… BOMA Calgary News is a co-publication of BOMA Calgary and Business in Calgary. Business in Calgary 1025, 101 - 6 Ave. SW, Calgary, AB T2P 3P4 Tel: 403.264.3270 • Fax: 403.264.3276 [email protected] www.businessincalgary.com The office space currently under construction has staggered completion dates going out to 2017 (see Figure 2) which will provide the marketplace BOMA Calgary 120, 4954 Richard Road SW, Calgary, AB T3E 6L1 more time to grow into and absorb the vacant space being left behind as the Email: [email protected] • Web: www.boma.ca new buildings are completed and tenants move in. Tel: 403.237.0559 • Fax: 403.266.5876 Figure 3 If there had been a new supply drought in Calgary, the current spike in COMMUNICATIONS construction activity could be viewed as a catch-up in response to pent-up % of Total COMMITTEE demand, but there has been very significant growth in Calgary’s office inven- Existing Vancouver Edmonton Calgary Toronto Ottawa Montreal Chair - Leah Stewart, tory since 2000 as illustrated in Figure 3. Inventory Sizeland Evans Interior Design The best building managers and their leasing teams achieve superior results Bobbi Joan O’Neil, Business in Calgary Pre 1960 16.2% 9.8% 3.1% 13.0% 3.1% 18.7% Giovanni Worsley, MNP LLP relative to their peers throughout the business cycle. As the marketplace Jamie Zachary, Calgary Herald Jay de Nance, Fairfield Commercial Real Estate experiences some or all of the following – soft demand, increased vacancy, 1960 thru 61.9% 78.4% 66.3% 71.0% 77.3% 68.0% Kim Bogner, 20 Vic Management 1999 Lia Robinson, BOMA Calgary declining leasing velocity, increased supply of new and backfill space from Rita Reid, First Capital Realty landlords and sub-landlords and reduced rent expectations – not all office Roger Hanks, Skyline Roofing Since 2000 21.9% 11.8% 30.6% 16.0% 19.6% 13.3% Siobhan Koroll, Calgary Herald buildings and portfolios will experience the same success or pain. Board of Directors © Altus InSite, a Division of Altus Group Limited CHAIR Chris Howard, Avison Young Real Estate CHAIR-ELECT Ken Dixon, ATCO Group SECRETARY TREASURER Chris Nasim, GWL Realty Advisors Very rare is the firm or team that PAST CHAIR Don Fairgrieve-Park, Bentall Kennedy (Canada) LP has the people and money to do PRESIDENT & CSO William G. R. Partridge, CAE, BOMA Calgary everything they can think of, let alone Directors Fred Edwards, Servpro Cleaning at a very high level of performance. Steve Weston, Brookfield Properties Marjorie Cone, H & R Property Management Ltd. So the key has been, and will Robert Brazzell, Altus Group Corrine Jackman, Hopewell Real Estate Services Cam Gresko, Cadillac Fairview continue to be, focus. Dustin Engel, Alberta Infrastructure Richard Morden, Bentall Kennedy (Canada) LP Lee Thiessen, MNP LLP Loy Sullivan, 20 VIC Management Very rare is the firm or team that has the people and money to do The Building Owners and Managers Association of everything they can think of, let alone at a very high level of perfor- Calgary publishes BOMA Calgary News quarterly. For advertising rates and information contact Business mance. So the key has been, and will continue to be, focus. Focusing your in Calgary. Publication of advertising should not be deemed as communication initiatives, service refinements and capital budgets on endorsement by BOMA Calgary. The publisher re- serves the right in its sole and absolute discretion the two or three key items and programs where they will have optimum to reject any advertising at any time submitted impact on your tenants’ intention to stay and ideally pay a premium to by any party.