CALGARY - Record leasing activity in the downtown office market in 2010 means job growth isn't far behind, says a commercial real estate expert.
John Savard, vice-president of CITI Commercial Real Estate Services, said absorption of office space in the central business district hit 2.6 million square feet last year - four times the 10-year average of 640,000 square feet.
He said the average tenant occupies about 300 square feet per employee therefore the downtown area will employ an additional 8,667 jobs are a result of the leasing activity.
"When groups take on space, it means there's planned hiring," said Savard. "You don't take on office space without a plan to hire people."
He said the demand in office space has been fuelled by the heavy oil industry, service companies and engineering firms.
Calgary's downtown office vacancy rate dipped to a low of 0.5 per cent in 2006 but then climbed to 15.7 per cent in 2009, said Savard. It ended 2010 at 14.4 per cent.
CITI is projecting the downtown vacancy rate to be 14 per cent this year and 12 per cent in 2012 despite the addition of the massive Bow tower project, and its 1.7 million square feet, and Eighth Avenue Place, and its one million square feet, to the office inventory.
Savard said the job growth stemming from the leasing activity will have a spinoff effect as more amenities will be needed for them and more positions will therefore be created as well.
The amount of occupied office space in the city's core hit a peak of 33.6 million square feet in 2007, said Savard, and it's projected to climb to 35.7 million square feet in 2012 - above the amount when Calgary experienced its economic boom.
"How could anyone have anticipated four times the historical absorption of space (last year)?" said Savard. "And all of that with severely depressed gas prices."
He said the demand for jobs will impact net migration with more people moving to the city which will also create more demand in Calgary's housing market.
According to Statistics Canada, Calgary's unemployment rate was 6.0 per cent in January, the same as the previous month. The Calgary census metropolitan area saw an increase of 3,200 jobs from December but the number of people employed remained 4,000 below the level of January 2010.
