Canada’s oil and gas capital is making a clean start as an influx of renewable energy companies helps absorb the glut of office space that followed the double whammy of the 2015 drop in oil prices and the COVID-19 pandemic.
Downtown office vacancies fell to 29.6 per cent in the third quarter, down from close to 34 per cent in spring 2022 as consolidation in the energy sector saw companies give back space.
But a renewed energy in the market is helping absorb the excess space as startups chart a course for the future.
“We’ve tracked close to 300 companies that have started up the last 18 months that are specifically designed for the clean energy sector,” Greg Kwong, managing director in Calgary with CBRE Ltd., said at the end of October. “[There’s] a lot of optimism there.”
Three years ago, the Alberta Energy Transition Study by Calgary Economic Development identified the need to see the future through a clean-tech lens.
A scan of the clean-tech sector found that 70 per cent of the 950 clean-tech companies active in the province at the time were headquartered in Calgary.
“Calgary is a headquarters city, and we’re always going to be the energy capital of Canada, so I think that is a very strong draw and value proposition,” said Chris Brown, senior director, business development, with Calgary Economic Development. “We’ve always had a long history of clean-tech success in Calgary. Now they’re getting a lot more attention.”
Renewable energy companies Metlen Energy of Greece and Neoen SA of France recently set up national headquarters in Calgary, following in the steps of South Africa-based hydrogen power company ESSNA Inc.
The commitments bear out a recent Pricewaterhouse Coopers-Urban Land Institute report that hailed Calgary as the top market for investment in 2025.
Metlen’s office commitment followed last year’s acquisition of 1.4 gigawatts of solar power projects from Westbridge Renewable Energy Corp. Representing an investment of $1.7 billion, the five projects will employ approximately 1,560 workers during construction and 115 staff once operational.
Calgary’s tech sector at large has also seen significant success, with CBRE ranking it among the fastest growing in North America. Calgary boasted 59,500 tech workers in 2023, a 78 per cent increase from 26,100 workers in 2018.
Alberta’s population as a whole grew by 200,000 residents last year, boosting demand for housing in Calgary. Re/Max Canada is reporting exceptionally strong competition in the city for units among both homebuyers and renters. Rental starts have overtaken apartment condo starts in the city for the first time in response.
“Multi-family purpose-built rentals in the city are the top-performing asset,” Re/Max reported this summer.
More people has also driven demand for goods and services, in turn supporting the city’s industrial market.
“Our city has consistently ranked high as a place to live, not only in North America but the globe,” said Marshall Toner, managing director in Calgary with brokerage JLL and the firm’s national lead for industrial. “It bodes well for all asset classes, specifically industrial.”
Population growth-combined with Calgary’s strategic location midway across the Wes, is supporting demand from distribution and logistics companies as well as companies serving these companies.
Toner expects vacancies to rise to 4.5 per cent by mid-2025, making for tough comparables versus a year ago, but spec construction is already pulling back. Conditions remain tight, with vacancies still below the five per cent mark he said represents a balanced market.
“It’s not a doom-and-gloom picture, it’s just a function of where we are in the cycle right now,” he said. “We’re going to be fine.”
