Calgary is a major economic hub in western Canada. In recent years, the decreased demand for office space in the downtown core has impacted Calgary’s real estate market. However, the city’s economy has been showing signs of recovery, and the demand for commercial and industrial real estate and commercial property sales is expected to increase in the coming years.
2025 is set to present both challenges and opportunities. According to CRBE, improvements are expected in liquidity and capital costs, although mortgage renewals may still lead to higher borrowing costs. Beyond the commodities sector, the fundamentals for office leasing remain strong. Additionally, population growth, which directly influences demand for all types of real estate, is anticipated to be higher in Canada than in any other G7 country.
Economic growth is expected to slow down and rebound this year as highly anticipated cuts come for interest rates. Inflation is still a primary concern in the short term, but the future is still very bright in the long term.
Economic Resilience and Diversification
Calgary has made significant strides in diversifying its economy beyond oil and gas, with industries like technology, healthcare, logistics, and renewable energy driving growth. These sectors are expected to fuel the demand for commercial real estate in the coming year.
Investments in technology are positioning Calgary as a leader in the digital infrastructure space.
Population growth remains a key driver, supported by record immigration levels and interprovincial migration. As of 2024, Alberta’s population grew by 4.3%, with Calgary accounting for more than half of this increase. While the pace of growth is expected to moderate to 3.6% in 2025, the influx of skilled professionals will sustain demand for office, retail, and industrial spaces.
Shifting Market Trends
Flexible Workspaces and Mixed-Use Developments
Businesses continue to prioritize flexibility in their office setups, driving the demand for tech-enabled workspaces that cater to hybrid work models. Flexible office spaces with features like hot-desking, bookable meeting rooms, and collaborative zones are becoming essential. Meanwhile, mixed-use developments combining residential, retail, and office spaces are gaining traction, particularly in East Village and Beltline areas.
Sustainability and Smart Buildings
Sustainable practices and energy-efficient designs are now key features in commercial developments. Buildings with LEED certifications, smart technology integrations, and energy-saving systems reduce operational costs and align with the growing demand for eco-conscious spaces. These innovations are expected to shape the majority of new projects in Calgary’s downtown core and suburban growth areas.
Industrial Sector Adjustments
In recent years, Calgary’s industrial real estate market has experienced record-breaking growth, but demand from large-bay distribution users has slowed. Despite this, the city remains a top choice for industrial development due to its central location and cost advantages. Speculative industrial projects are still underway, with strong pre-leasing activity indicating continued interest from businesses.
Interest Rates and Market Conditions
The Bank of Canada is expected to continue to cut interest rates by late Q2 2025, reducing the policy rate from 5.00% to approximately 4.00% by year-end. While inflation remains a short-term concern, its expected stabilization will provide relief for businesses and investors alike. Lower borrowing costs will likely spur renewed activity in both sales and leasing markets, encouraging businesses to expand and investors to re-enter the market.
Emerging Opportunities in Calgary’s Submarkets
Technology and Data Centers
Calgary’s transition into a tech-driven economy is creating opportunities in data centers and tech parks. Many ongoing infrastructure projects underscore this trend and highlight the city’s potential for attracting significant capital investments in technology infrastructure.
Logistics and Warehousing
The growth of e-commerce businesses continues to drive demand for logistics and warehouse spaces in suburban areas. Locations near major transportation hubs, such as Deerfoot Trail and Stoney Trail, are particularly appealing for businesses seeking cost-effective distribution solutions.
Master-Planned Communities
Integrated communities like Livingston, Seton, and Carrington are seeing increased interest from businesses looking to capitalize on built-in customer bases and modern infrastructure. These areas offer a mix of retail, office, and residential spaces, making it an ideal location for businesses seeking proximity to their target markets.
Investment Opportunities in Calgary
Calgary continues to offer compelling investment opportunities in 2025, driven by its diversified economy, strategic location, and growing population. The city’s affordability and lower cost of doing business compared to other Canadian markets make it an exciting destination for domestic and international investors.
Mixed-use developments are gaining traction, providing a blend of residential, office, and retail spaces that meet modern tenant demands. Logistics hubs and distribution centers remain in high demand due to Calgary’s central location and proximity to major transportation routes.
Challenges to Watch For
Despite its positive outlook, Calgary’s commercial real estate market faces challenges that could impact growth:
- Economic Volatility: While diversification efforts have reduced dependency on oil and gas, fluctuations in global energy markets could still influence investor confidence.
- Construction Costs: Rising material and labour costs may slow down new developments and increase prices for completed projects.
- Regulatory Changes: Potential shifts in real estate laws, taxes, and mortgage policies could create uncertainties for buyers and investors.
Looking Ahead to 2026
Calgary’s commercial real estate market is poised for transformation, driven by economic diversification, innovative developments, and a focus on sustainability. The city’s unique mix of affordability, accessibility, and growth potential makes it a compelling destination for businesses and investors alike.
Whether you’re seeking flexible office space, investing in industrial properties, or exploring mixed-use developments, understanding these trends will be key to capitalizing on Calgary’s dynamic market.
Partner with CMS Real Estate
At CMS Real Estate, we are committed to helping businesses and investors navigate Calgary’s ever-changing commercial real estate landscape. With decades of experience and a deep understanding of market trends, we provide expert guidance tailored to your goals.
Ready to learn more about our commercial real estate services in Calgary? Contact CMS Real Estate today.
- Gerry Macdonald Sr: (403) 219-0151
- Gerry Macdonald Jr: (403) 219-0161
- Jessica Macdonald: (403) 291-0425
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.