With 2023 well underway, Calgary’s 2022 commercial real estate reports have been solidified. 2022 was a big year for Calgary as we saw the city’s economic growth thrive after pandemic-related stagnation in the past few years. With high energy prices, improved diversification, and a relatively low cost of living, Calgary experienced the highest growth from 2021 to 2022 than any other major Canadian city at a 6.1% year-over-year rate.
The numbers tell of our ability as a city to bounce back from global challenges and reveal the adaptability and resiliency of our commercial real estate sector. Below, we summarize Calgary’s 2022 year-end report for commercial real estate.
According to JLL’s Year-End Canadian Commercial Real Estate Outlook, 2022 was a record year for Calgary in the industrial sector:
Total sales reached $782m
The vacancy rate fell from 6.2% in 2020 to 1.5% by the end of 2022, the most in any other Canadian market
An impressive 7.8 million square ft net absorption
The growth for industrial commercial real estate is driven by an increase in demand for distribution spaces as the online shopping industry continues to expand. While the oil and gas sector experienced a dip, Calgary’s ideal location puts the city as a top choice for distribution and logistics centres.
Although rents are up 16% from 2021, Calgary’s rental rates remain some of the most affordable compared to other major metros like Vancouver, Toronto, and Montréal. Rental rate growth projections in 2023 range from 8% in the early parts of the year to 6% by the end of 2023.
2022 saw the first year of positive net absorption since 2019 for Calgary’s downtown office buildings, leading to an increase in assessed value.
Overall office commercial property vacancy fell 120 bps to 26.1%
Downtown office commercial property vacancy fell 200 bps to 28.4%
With the city’s Development Incentive Program providing partial subsidies for the cost of office building conversions, developers are continuing to convert office spaces to residential units in 2023.
Calgary’s retail sector has bounced back faster than other major Canadian cities, with suburban retail properties continuing to outperform downtown – a sign that the retail landscape is changing rapidly. In 2022, we saw the completion of several large retail developments:
The 158,000 sq ft Bow River Shopping Centre developed by ONE Properties
The 400,000 sq ft Taza (The Shops at Buffalo Run) developed by Canderel
Distribution centres and warehousing continue to gain traction in the retail sector, with large retailers and e-commerce-related businesses looking to third-party logistics providers (3PLs) and warehouses to manage inventory. In 2022, 3PLs made up 41% of new transactions over 50,000 sq ft.
Despite challenging years, industrial and commercial real estate in Calgary remains strong. With a mix of a younger population and old-school values, Calgary has the ability to adapt to evolving markets – including e-commerce, tech, and flex spaces – while continuing to support our fundamental oil and gas industry.
Calgary commercial real estate experts are looking toward the future with optimism – and so are we. At CMS Real Estate Ltd., we are an industrial and commercial real estate brokerage with our ear to the ground in Calgary’s growing market. We can help with your sales, leasing, and property management needs. Contact us today to learn more.
Blog posts from CMS Real Estate are for general information only. The content should not be considered real estate management or investment advice. If you are in need of professional real estate advice, please contact our team.
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