Calgary is expected to experience the tightest office market in the country by the end of 2012, with Class A vacancy "scraping the bottom of the barrel at 1.2 per cent," says a new report from Cushman & Wakefield.
The report, published Monday, says Calgary's office market is once again in the midst of a boom cycle and competition for skilled labour is becoming "fierce."
"With central Class A vacancy at an astonishingly low 4.0 per cent, the market in downtown Calgary is now characterized by an extreme shortage of large blocks of space - which is not expected to change in the foreseeable future," says the report.
"The Bow, set to bring 1.9 million square feet of space to the market in the second quarter of 2012 is not only already 100 per cent leased, but the space that will be displaced by the two companies moving there, Encana and Cenovus, is also substantially leased."
Two years ago, there were expectations that vacancy rates would reach 20 per cent in Calgary.
But Bob MacDougall, senior managing director for C&W Calgary, said high oil prices combined with strong continued capital investment in heavy oil projects in northern Alberta have been the primary drivers behind the strong office demand.
In the third quarter of this year, the downtown office vacancy rate was 6.4 per cent overall and it is forecast to drop to 4.3 per cent by the fourth quarter of 2012.
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